The Federal Housing Administration will now allow hospitals to obtain mortgage insurance for refinancings, the Department of Housing and Urban Development said Monday.
This may be a welcome move for hospitals that have struggled with rising interest rates and fewer financing alternatives as a result of the credit crisis.
Previously hospitals were able to get FHA mortgage insurance only for loans to finance renovations or the replacement of existing structures.
"This refinance program will help hospitals struggling with skyrocketing interest rates and limited credit options," said HUD Secretary Shaun Donovan.
"The savings provided through FHA refinancing should also help hospitals decrease the cost of health care, which is a major priority of the Obama administration."
And although analysts see the move as a positive, it is still unclear how big an effect the program will have.
"The program provides a kick-start to lending activity, which has fallen off a cliff," said David Aubuchon, an analyst at Robert W. Baird & Co. "But with a lot of these [government] programs, it's very early to tell if anyone will take advantage of them."
Aubuchon said the program is likely to benefit more rural hospitals and not necessarily publicly traded health-care real-estate investment trusts.
He said the program adds liquidity to the market and could provide the "momentum" for other lenders to follow suit.
HUD said it expects hospitals will submit applications by August and that the agency would begin issuing commitments for refinancings in October.