Value-Based Investments Pay Off for NFP Hospitals

Christopher Cheney, May 27, 2014

Investments in outpatient facilities and health information technology systems are helping not-for-profit hospitals overcome revenue setbacks, says a Moody's report.

Not-for-profit hospitals that are investing in ways to deliver value to their patients are shoring up revenues and staving off competitors, according to a Moody Investors Service report released last week.

Value-oriented investments such as in outpatient facilities and fully integrated electronic health record systems are helping not-for-profit providers overcome recent revenue setbacks, including payment rate cuts, reduced inpatient service volume and competition from new entrants in the healthcare market, an author of the Moody's report says.

"A lot of it is about trying to minimize the losses and trying to capture where those volumes are going," says Brad Spielman, vice president and senior credit officer at Moody's. "A lot of this is by necessity… Hospitals are competing with each other and with new competitors."

Addressing the long-term trend of rising numbers of medical procedures being conducted on an outpatient basis, Spielman described explosive growth in hospital-affiliated outpatient facilities. "These outpatient facilities are looking a lot more sophisticated. They're looking a lot more like hospitals," he said. "We're seeing facilities in the hundreds of millions of dollars."

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.

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