• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

A.M. Best Introduces Credit Rating Services for Hospitals and Health-Care Systems

Posted on: Thursday, 9 August 2007, 09:02 CDT

A.M. Best Co. has today announced plans to expand its analytical coverage of the U.S. hospital and health-care system industry by introducing credit rating services on hospitals and health-care systems. A.M. Best's recently published methodology on rating hospitals and health-care systems titled "Evaluating Health-Care Systems" can be found at Best's Health Care Center http://www.ambest.com/ratings/methodology/RatingHealthcare.pdf. While this service will be available to any interested hospital or health-care system--including those comprised of a single hospital--A.M. Best's initial focus will be on U.S. hospitals and health-care systems with provider-owned health plans (i.e., integrated delivery systems) given A.M. Best's market-leading ratings coverage of the domestic health insurance industry.

Integrated delivery systems traditionally have not received comprehensive rating coverage at both the hospital or system and provider-owned health plan levels. This is due to the capital market's historical demand for independent, third-party opinions of a hospital or system's ability to satisfy specific municipal debt and other debt obligations, which excluded an opinion of the hospital or health-care system's ability to satisfy growing policyholder obligations. A.M. Best observes that consumers, insurance brokers, regulators, reinsurers and other market participants will continue to demand this latter opinion to understand a provider-owned health plan's ability to satisfy its policyholder obligations, coupled with the extent of financial and strategic support from and commitment by its hospital or health-care system owner(s).

To address this demand, A.M. Best will assign issuer credit ratings (ICR) to hospitals and health-care systems reflecting A.M. Best's opinion of a hospital's or system's overall creditworthiness, as well as the ability of the owner to financially and strategically support its provider-owned health plan. This interactive ICR will help client management and the market understand a key driver of the level of rating enhancement provided to the affiliated health plan's stand-alone financial strength rating (FSR) and ICR. Importantly, the hospital or health-care system's ICR is not specific to any debt issue--municipal or other forms of debt.

Some of the highlights of A.M. Best's hospital and health-care system ratings include:

Comprehensive analytical research reports on rated hospitals and health-care systems.

Ratings will utilize the traditional credit market scale, based on conventional capital market standards.

These interactive ratings will be based on meetings with a hospital or health-care system's management for a full exchange of information between A.M. Best and the rated hospital or health-care system.

Ratings will also include A.M. Best's core principles of analyzing a hospital and health-care system's operations through various stages of the industry cycle.

Finally, consideration of the impact of affiliates and parent entities within a hospital or health-care system are incorporated in A.M. Best's rating analysis.

Specific questions on analytical rating services and rating methodology can be directed to Christian Miles, Health-Care System Group at (908) 439-2200, ext. 5026, or by referencing "Evaluating Health-Care Systems."

A.M. Best Company, the long standing credit rating agency for the insurance industry, is the market leader in providing comprehensive interactive rating services to provider-owned health plans. For more information about A.M. Best's health-care system initiative, log onto Best's Health Center (http://www3.ambest.com/health/default.asp), which features industry research, news and other sources for industry participants.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.

Source: Business Wire

More News in this Category