May 9—The ability to deliver quality care at an affordable cost is becoming increasingly important to the financial strength and credit quality of not-for-profit hospitals, Moody’s Investors Service says in a new report—so much so that the rating agency soon will focus on not-for-profits’ ability to measure and demonstrate value as determinant of credit worthiness.

Moody’s recently added several new indicators that measure a hospital’s quality and demand for services, according to the report. These indicators include number of unique patients, covered lives, employed physicians, Medicare readmission rates, all payer readmission rates, and risk-based revenues.

“After decades of following volume-based incentives, measuring and proving value will become necessary for healthcare systems to maintain operating stability and distinguish themselves as market leaders,” Lisa Goldstein, associate managing director for Moody’s and an HFMA Board member, says in the report Not for-Profit Hospitals: The Pursuit of Value.

Long-term trends such as excessive cost inflation and reforms in government policies are driving the shift toward value-based business models, Moody’s says. The not-for-profit section faces payment reductions and incentive changes resulting from the Affordable Care Act as well as cuts associated with federal deficit reduction.

The report details four specific objectives hospital managers are pursuing as they respond to the shift toward value-based business models:

  • Achieving breakeven performance with Medicare rates
  • Building scale through nontraditional methods
  • Improving the patient experience
  • Cultivating informed leadership


Publication Date: Thursday, May 09, 2013