Multicentre methodological study to create a publicly available score of hospital financial standing in the USA

Abstract

ObjectivesTo create a straightforward scoring procedure based on widely available, inexpensive financial data that provides an assessment of the financial health of a hospital.DesignMethodological study.SettingMulticentre study.ParticipantsAll hospitals and health systems reporting the required financial metrics in the USA in 2017 were included for a total of 1075 participants.InterventionsWe examined a list of 232 hospital financial indicators and used existing models and financial literature to select 30 metrics that sufficiently describe hospital operations. In a set of hospital financial data from 2017, we used principal coordinate analysis to assess collinearity among variables and eliminated redundant variables. We isolated 10 unique variables, each assigned a weight equal to the share of its coefficient in a regression onto Moody’s Credit Rating, our predefined gold standard. The sum of weighted variables is a single composite score named the Yale Hospital Financial Score (YHFS).Primary outcome measuresAbility to reproduce both financial trends from a ‘gold-standard’ metric and known associations with non-fiscal data.ResultsThe validity of the YHFS was evaluated by: (1) cross-validating it with previously excluded data; (2) comparing it to existing models and (3) replicating known associations with non-fiscal data. Ten per cent of the initial dataset had been reserved for validation and was not used in creating the model; the YHFS predicts 96.7% of the variation in this reserved sample, demonstrating reproducibility. The YHFS predicts 90.5% and 88.8% of the variation in Moody’s and Standard and Poor’s bond ratings, respectively, supporting its validity. As expected, larger hospitals had higher YHFS scores whereas a greater share of Medicare discharges correlated with lower YHFS scores.ConclusionsWe created a reliable and publicly available composite score of hospital financial stability.

The Association Between Hospital Financial Performance and the Quality of Care – A Scoping Literature Review

“…Similarly, results might be different if FP was measured using more comprehensive indicators that better reflect the multidimensional nature of a hospital’s financial standing. 101 For example the value of total profit in a given year, can be easily influenced by ad hoc financial transfers/accounting decision. Our results confirm that the association between hospital FP and the Q is complex and multidimensional.…”

Hospitals’ financial performance across European countries: a scoping review protocol

“…Similarly, for the financial performance measures, the standard ratio analysis divides the indicators into four main categories: profitability, liquidity, debt management and asset management. 24 Also, composite measures 8 category will be used if needed. Regarding the main focus of the included publications, an inductive thematic analysis will be used.…”

“…The issue of hospitals’ financial sustainability constitutes a complex concept, both in terms of measurement techniques and determining factors. Hospital financial performance can be measured by diverse indicators, such as those related to profitability, liquidity, or composite measures (combining multiple indicators) 7 8. In terms of the factors influencing hospitals’ financial performance, there are several literature reviews,9–11 with the vast majority of studies focusing on the US market (where hospitals function in substantially different governance model than in Europe).…”