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Value-Based Healthcare Needs New Bond Rating Metrics

John Commins, for HealthLeaders Media, May 13, 2013

Hospitals and bond rating agencies will likely spend the next decade adjusting to the transition from volume-based to value-based payments. Moody's Investors Service is trialing 20 new value-focused indicators to evaluate hospitals.

As hospitals move away from volume-based reimbursement models to less-tangible value-based reimbursements bond rating agencies are trying to figure out the best way to measure it.

Moody's Investors Service this year issued a report that outlined 20 new indicators that the rating agency will use to evaluate hospitals. Lisa Goldstein, associate managing director at Moody's, says the new indicators focus on value and measuring demand in ways other than admissions.

"For example, one of the new metrics is called unique patients. In addition to measuring your admissions every year, let's say Mrs. Jones comes to the hospital five times in one year. She would count as one unique patient, not five visits to the hospital," Goldstein says.

"It is a way of measuring market capture and under this new world of population health management, what is the population that comes into your hospital."

The push for value under the Affordable Care Act, Medicare reimbursement cuts, and the resulting tighter margins all are pressuring providers to reduce cost growth. Even though the major provisions of the ACA take effect in 2014, healthcare systems across the nation are in wildly varying states of readiness, says Standard & Poor's Managing Director Martin Arrick.

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