The Relationship Between Hospital Value-Based Purchasing Program Scores and Hospital Bond Ratings.

Area of Science:

• Healthcare Finance
• Health Services Research
• Credit Rating Analysis

Background:

• Tax-exempt hospitals utilize long-term debt for capital investments, with bond ratings being crucial for lenders.
• Credit rating agencies traditionally assess hospitals based on financial performance and debt service capacity.
• Evolving reimbursement models, such as pay-for-performance, are prompting rating agencies to consider utilization and value-based purchasing (VBP) metrics.

Purpose of the Study:

• To evaluate the association between Hospital Value-Based Purchasing (VBP) domains and hospital bond ratings.
• To test the hypothesis that hospital bond ratings are not associated with VBP domains, given the historical financial focus.

Main Methods:

• Retrospective, cross-sectional study design.
• Analysis of 285 hospitals rated by Moody's in fiscal year 2012 and participating in the CMS VBP program.
• Binary logistic regression to assess the relationship between VBP domains (Clinical Process of Care, Patient Experience of Care, Outcome, Medicare Spending per Beneficiary) and bond ratings, controlling for financial performance.

Main Results:

• A statistically significant association was found between Medicare Spending per Beneficiary (MSPB) and hospital bond ratings.
• MSPB did not improve the overall predictive accuracy of the bond rating model.
• The majority of hospitals received 'Aa' (15%) or 'A' (46%) ratings.

Conclusions:

• The inclusion of VBP scores in bond rating methodologies is likely to influence future hospital bond ratings.
• While MSPB shows a link, the overall impact of VBP domains on current bond ratings appears limited.
• Further research may be needed to fully understand the evolving relationship between VBP and hospital creditworthiness.