Moody’s Testing New Value-Based Indicators for Hospitals

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In the new era of value-based healthcare, what indicators are going to be used to evaluate hospitals, especially since value is less quantifiable than volume?

According to John Commins at HealthLeaders Media, Moody’s Investor Service is experimenting with 20 new indicators for rating hospitals. Moody’s believes these indicators will “focus on value and measuring demand in ways other than admissions.”

“For example, one of the new metrics is called unique patients,” Lisa Goldstein, Moody’s associate managing director, explained. “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. 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.”

Goldstein said that hospitals will still be measured by current metrics for the foreseeable future, with much of the analysis still guided by audited financial statements, revenues, expenses, operating margins, and profitability. At the same time, however, Moody’s will also be looking at new indicators like “covered lives, employed physicians, Medicare readmission rates, all payer readmission rates, and risk-based revenues.”

The next few years will be confusing as this transition divides organizations between volume-based and value-based payments, she said. “It will be two orbits at the same time. It is not as if there is a magical date and everything switches on that date to all value-based no more volume. Hospitals are going to be operating in two different worlds concomitantly. They are going to go through a big transition. We have introduced new ways of measuring this new world.”

On top of these indicators, Commins reports, “Moody’s is pressing four objectives for hospital managers responding to the shifting business model: Achieving break-even performance with Medicare rates; building scale through non-traditional methods; improved patient experience; and cultivating informed leadership.”

Goldstein emphasized that these indicators and objectives are largely experimental. Some could be discontinued, while others could be expanded.

“This is very organic,” she stated. “We aren’t done yet. There is more to come.”

-by Pete Fernbaugh

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