A healthy investment

The stock market's near free fall since September could play right into a concentrated bond offering by Kessler Memorial Hospital. The 130-bed community hospital in Hammonton, N.J., a town of 15,000 people halfway between Atlantic City, N.J., and Philadelphia, is offering a 4% annual return for five years to private investors who are willing to lend it money. "In today's market, 4% might look like a good return on an investment," said Brian Socco, a spokesman for the hospital, which serves 60,000 households in 11 neighboring towns. Kessler Memorial fell on hard times after a half dozen years of mismanagement, according to interim chief executive Jim Rossi, who came up with the idea of going directly to the public for funding. "This way was cheaper and quicker than a traditional bond offering," he said. The hospital emerged from Chapter 11 bankruptcy protection last December, but it is still dealing with $8 million worth of high-interest debt, and it could also use a few million dollars for renovations. The private bond offering, which was introduced a few weeks ago, has already attracted more than half the original $5 million goal, according to Mr. Rossi. "At first, I thought this was going to be like trying to raise money during the Great Depression, but we've gotten interest from all over the place," he said. The private-offering status requires that investors be accredited, which is the same standard set for alternative investments such as hedge funds. Of course, the investment standards haven't stopped non-accredited investors from simply donating more than $1.6 million toward the hospital's recovery efforts. The hospital will use the $5 million raised through the bond offering as collateral for a $14 million loan that will hopefully help get the hospital off life support and back on a path toward profitability, according to Mr. Rossi.