The use of interest rate swaps in hospital capital finance.

This article describes the structure of an interest rate swap as it is commonly employed in hospital capital finance. It explores the role of the swap dealer as a facilitator of interest rate swap transactions and explains the motivation for doing so. Through the use of examples, the article details the incentives for hospitals to engage in interest rate swap transactions, including the desire to lower borrowing costs and/or to reduce exposure to interest rate risk. Finally, the article outlines the types of risks inherent in interest rate swap transactions.