Moody's: Value-Based Care Paramount for Hospitals' Future Credit, Finances

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For non-profit hospitals, providing quality, affordable healthcare will be instrumental in their credit ratings and financial strength in the future as the healthcare sector gradually shifts from fee-for-service and to value-based reimbursement, according to a report from Moody's Investors Service.

Moody's Investors ServiceMedicare, Medicaid and private payors are all shifting their reimbursement strategies to risk-based contracting, which creates financial incentives and/or penalizes hospitals for not meeting certain quality and cost targets.

Moody's will start measuring the evolving payment and care models through new hospital indicators in order to "publish forward-looking, anticipatory ratings and research that look beyond the near term," according to the report. For example, the indicators will focus on both demand, such as employed physicians, and reimbursement risk, such as Medicare readmission rate.

"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," said Lisa Goldstein, Moody's associate managing director and author of the report.

More Articles on Moody's Reports:

Moody's: Small Hospitals Bear Brunt of 1Q Downgrades
Moody's: Sequestration Worsens Challenging Hospital Environment
Moody's: Hospitals Getting Innovative to Cope With Reform

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