Readers share thoughts on not-for-profit ratings


Last week in this space, I said that while I understand why Wall Street ratings firms focus on traditional performance metrics when they rate not-for-profit hospitals, I felt that such ratings did little to measure other key aspects of their mission.

My comments seemed to touch a nerve, as many of your wrote in to mull over, challenge and critique my conclusion. Here's some of your thoughts on the subject:

"We are all familiar with the adage: "No margin, no mission." It clearly reflects the need to operate not-for-profit facilities as a for-profit business to the degree that those actions don't conflict with the hospital's role to provide care and services to the community in which it resides. I agree with your suggestion that there should be a more standardized and accepted way for quantifying the non-profits' non-revenue producing services. And they need to do it before it is done to them." -- Healthcare consultant

Another reader wrote in to clarify why the financial metrics themselves shouldn't be relegated to the sidelines:

"What the current bond disclosures indicate for the what I term everyone else is flat to declining volumes, increases in bad debt and a deteriorating payor mix and a for many a lower net income year over year. From my perspective what should be of concern to both owners of the debt and of course to hospital operators is the rapid pace of deterioration and the scope of net income difference, 'swing' year over year." -- Healthcare analyst

And another reader pointed out that ratings from Moody's and its brethren have value outside of Wall Street, too:

"I think your perspective is valid in terms of value creation in the community.  The Moody's ratings are critical however to inform all about the financial health of the value creators. I see benefit in the objective ratings as something that provides impetus and reasoning for internal hospital resource allocations, payer negotiations, fund raising, rate setting and mission clarification." -- Health system leader

Clearly, determining the proper metric for examining not-for-profit performance will continue to be a live issue, particularly as governments challenge their tax exemptions. I look forward to keeping up a dialog on this issue. In the mean time, thanks for your many thoughtful comments. - Anne

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