6 Value-Based Credit Rating Metrics Hospital CFOs Need to Know

Earlier this year, Moody's Investors Service unveiled several new credit rating indicators it would use to better evaluate hospitals within its portfolio, and the goal of each metric is to better capture the evolving payment and care models, which will soon focus mostly on value instead of volume.

Moody's plans to add more metrics as the healthcare environment continues to evolve. In a report on value-based payment earlier this month, Moody's highlighted six particular metrics, three that measure demand and three that measure a hospital's reimbursement risk.

1. Unique patients. The number of individual patients who receive care a hospital in a 12-month period, regardless if the visit is for inpatient or outpatient care. Moody's said unique patients will help measure a hospital's market better as population health management becomes a bigger focus.

2. Covered lives. The number of individual patients or beneficiaries that a hospital is responsible for, including through an exclusive contract, accountable care organization or some ACO-like structure through Medicare, Medicaid and commercial payors. This also includes beneficiaries of a hospital-owned health plan.

3. Employed physicians. The number of physicians paid by the hospital or the number of physicians associated with a foundation/clinic with a salary or management fee.

4. Medicare readmission rate. Medicare readmission rates for patients with congestive heart failure, heart attack and pneumonia within 30 days of discharge will be more heavily watched due to the government's value-based purchasing program — and the penalties associated with it.

5. All-payor readmission rate. Moody's expects commercial payors will follow in the footsteps of Medicare and therefore begin to track all-payor readmissions within 30 days of discharge.

6. Risk-based revenues. Hospitals provide data on traditional forms of payment such as diagnosis-related groups, per diems and capitation, but Moody's will also be looking at how much a hospital receives from risk-based revenues. These include bundled payments and pay-for-performance reimbursement, or any other reimbursement that is based on the hospital's ability to delivery care at a lower cost.

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How Did Hospitals Post Positive Fiscal Years in 2012? 5 Hospital CFOs Respond

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