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- CUSIP bond identifier: 915260FS7
- Issuer and obligor: University of Wisconsin Hospitals and Clinics Authority
- Impact entity rated by HIP: UW Health System, Wis., as a sustainability bond
- Muni sector: Healthcare
- Closing date: July 25, 2024
- Bond amount: $ 28.2 million
- Coupon: 5%
- HIP Impact Rating: 80.6 of 100, connoting “net-positive” impact
- Opportunity Zones located in the issuing entity: 11 Opportunity Zones in Dane County, Wisconsin, encompassing 575,347 residents
- Climate Threat Resilience Rating: 72.6 of 100, connoting “higher climate resilience”
University of Wisconsin Hospitals have long been ranked as the top hospital system in Wisconsin for outstanding patient care, innovative therapies and exceptional patient outcomes. A $28 million sustainable bond will support the hospitals’ facility modernization plans, as well as expansion of its branch in East Madison.
The expansion projects at UW Health are designed with a strong focus on sustainability. Key features include an energy-efficient HVAC system, a solar-ready roof, and a stormwater retention pond. The existing UW Health East Madison Hospital is already certified LEED Gold and Energy Star. A major addition to the hospital on UW Madison’s main campus, called the D2 Module, is expected to secure both LEED and Energy Star certifications, with a likely achievement of LEED Silver or higher.
The projected site energy use intensity for the D2 Module is more than 30% less than the national median for hospitals. The East Campus Phase 1 Expansion is estimated to fall below half the national average energy intensity for hospitals. These lower energy intensity ratios underscore UW Health’s commitment to exceeding efficiency standards and implementing sustainable practices.
UW Health has committed to the Better Climate Challenge with a goal to reduce greenhouse gas emissions by 50% across its 4.8 million-square-foot property portfolio over ten years, using 2020 as the baseline. UW Health also aims to reduce its energy intensity by 34% by 2027. It has already surpassed last year’s a 20% reduction target, which it set under the Better Building Challenge.
Enhancing health equity
The population in UW Health’s Madison service area increased 6.8% between 2016 and 2022. University Hospital, the flagship hospital of the UW Health system, is located in a federally designated Health Professional Shortage Area, indicating a local shortage of primary care, mental health, and dental health providers. Both the D2 Module Addition and the East Campus Phase 1 Expansion will help UW Health meet the area’s growing demand for healthcare services.
UW Health also has targeted strategies to address health inequity, particularly for women and underrepresented populations. Wisconsin has one of the highest mortality rates for Black infants in the US. In 2022, the UW Health Population Health Department launched ConnectRx Wisconsin, an initiative designed to address racial disparities in birthweight and infant mortality while supporting reproductive justice.
By financing improvements to facilities located in Wisconsin’s Health Professional Shortage Areas and supporting a system with comprehensive initiatives for underrepresented populations, the impact bonds play an important role in promoting health access and health equity in the region.
HIP impact analysis
HIP rates the UW Health System’s sustainability bonds at 80.6 on a 100-point scale, reflecting both the environmental and health benefits linked to the bond’s proceeds. HIP data and ratings track UW’s above-average performance in patient satisfaction, positive health outcomes for patients, and minimal hospital violations.
In one metric HIP tracks, UW Health earned five stars in CMS’s Overall Hospital Quality Rating for mortality, safety, patient experience, timely care, and effective care — well above the national average of 3.2 stars.
Nearly 13% of UW Health’s patient population self-reports as being in “poor” or “fair” health, which is lower than the national average of 16.3%. Access to a strong healthcare system could be one contributing factor.
HIP’s climate threat resilience ratings gauge the investments’ and regions’ risk and capacity to withstand climate challenges, including vulnerability of residents to natural hazard events, the preparedness of state policies addressing climate risk, and the resilience of the built environment. HIP’s climate threat resilience ratings assess Dane County, where Madison is based, at 72.6 out of 100, connoting more resilient and less risky compared to the national average of 47.
Residents are however vulnerable to hazards like extreme temperatures, tornadoes and floods. In May of this year, powerful storms swept through southern Wisconsin, causing significant damage and leaving over 40,000 people without power. UW Health was forced to close four clinics in the Madison area due to power outages.
As temperatures rise and healthcare demands increase, more healthcare facilities will face risks from heat-related damage, extreme storms, and higher precipitation levels. Also, health issues such as heatstroke, respiratory illnesses, cardiovascular disease, and insect-borne diseases could become more prevalent.
UW Health’s sustainability bonds demonstrate a strong commitment to environmental stewardship and health equity as a means of prepardness and resilience for both current and future challenges.
DISCLOSURES: HIP Investor Inc. is a state-registered investment adviser in several jurisdictions, and HIP Investor Ratings LLC is an impact-ratings firm evaluating impact and ESG on 400,000 investment ratings, including 126,000 municipal entities, 270,000 muni-bond issuances, and 14,000 corporates for equities and bonds. HIP Impact Ratings are for your information and education – and are not intended to be investment recommendations. Past performance is not indicative of future results. All investments are risky and could lose value. Please consult your investment professionals to evaluate if any investment is appropriate for you, your goals, and your risk-return-impact profile. This is not an offering of securities.
Liana Lan is an ESG impact investing analyst at HIP Investor Ratings.
