Not-for-profit hospitals are going to be more financially dependent on delivering care based on quality rather than volume, according to a new report by Moody's Investors Service. The shift has also prompted the ratings company to add more metrics for measuring the financial health of hospitals.
The report "Not for-Profit Hospitals: The Pursuit of Value," observed that ongoing reimbursement cuts from Medicare and other payers and payment reforms under the Affordable Care Act are pushing more hospitals to embrace the value equation.
"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," Moody's Associate Managing Director Lisa Goldstein said in a statement.
Non-profit hospitals are already under a variety of cost pressures, including growing pension obligations, and a 2 percent Medicare revenue cut related to the sequester.
As a result of the perceived market changes, Moody's has added several new criteria for measuring the financial health of hospitals. They include the number of unique patients, covered lives, employed physicians, Medicare readmission rates, all payer readmission rates, and revenues that are derived from risk-based agreements.
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