Academic medical centers will face tougher competition, Moody's says

Academic medical centers have many strengths that make them stand out, including medical school affiliations and high-end clinical service offerings. But, these strengths will also create challenges as healthcare shifts to value and increasingly focuses on cost-effective care delivery, according to a report from Moody's Investors Service.

Four takeaways from the report:

1. Academic medical centers will continue to benefit from affiliation with a medical school and university, research capabilities, capabilities to offer high-end clinical services, and other factors that contribute to credit quality, according to Moody's.

2. The ratings agency said: "Medians that measure acuity and scale will reflect AMCs' more complex case load and broader reach."

3. Moody's said it also expects  factors that benefit academic medical centers to make it more challenging for these organizations as hospital providers consolidate. These nonacademic systems can be more cost-effective and will become larger competitors.

4. As academic health systems implement initiatives to offset these challenges — including community hospital partnerships, solidifying medical school affiliations and diversifying revenue streams — they will likely see strategic benefits but also additional credit risk, according to Moody's. The ratings agency said it expects some organizations to achieve more success than others, "depending on how well they can retain their essential role in the market."

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