May 14 (The following statement was released by the rating agency)
Transitioning to a predominately 'fee for value' based
reimbursement system from fee for service is one of the most significant
challenges facing U.S. nonprofit hospitals today, according to a new Fitch
'Organizations are cautiously entering into new payment arrangements so the
shift will be gradual, with expected dollars at risk initially comprising a
small percentage of overall revenue,' said Senior Director Emily Wong. 'As
providers enter into more risk based contracts, financial uncertainty is likely
Fitch will assess the total risk exposure on the organization's financial
profile and management's ability to manage the risk.
In anticipation of this pressure, hospitals are investing in infrastructure
including physician alignment strategies and information technology to enable
improved quality of care while simultaneously lowering costs.
Population health management is an emerging trend. Many providers are focused on
partnering with other providers to coordinate care and lower costs. Various
initiatives include accountable care organizations, bundled payments, risk based
contracting, and provider sponsored health plans.
Additional information is available in Fitch's special report, 'The Journey to
Value Based Reimbursement', available at 'www.fitchratings.com' or by clicking
on the above link.
Link to Fitch Ratings' Report: The Journey to Value Based Reimbursement