Academic medical centers may have difficulty adapting to managed care, thus diminishing their ability to maintain high-quality credit ratings, a new analysis concludes.
The predominance of specialists trained by academic medical centers and eroding reimbursement for graduate medical education and research may be obstacles to adapting to the new era of managed care, according to the new analysis by Standard & Poor's Corp. To compete, academic medical centers will have to justify their higher cost structures, it said.
The New York-based credit-rating agency's analysis appears in the Aug. 15 issue of its publication CreditWeek Municipal.
"Academic medical centers face a difficult balancing act between lower costs and greater efficiency and their mission to provide innovative, high-quality care, education and research," Standard & Poor's said.
To enhance their attractiveness to managed-care plans, academic medical centers will have to join or form alliances with healthcare delivery systems. The Aug. 22 issue of CreditWeek Municipal lays out some of the strategies the academic medical centers are pursuing.
An academic medical center typically includes a university with a medical school, one or more tertiary-care hospitals and related clinical facilities. Standard & Poor's rates independent components as well as entire institutions.
Most teaching hospitals affiliated with academic medical centers are rated AA or A. AA is the highest rating that can be achieved without bond insurance or some other credit enhancement. A sample of 30 academic medical center teaching hospitals Standard & Poor's analyzed showed that 90% have ratings of AA or A, compared with 54.9% of all rated hospitals.
The high ratings have been supported by their size, prestige, endowments, state support, research funding and strength of their various components, the rating agency said.
However, credits could be weakened by strong competition, an urban location with excess capacity and an aged physical plant, Standard & Poor's said. In addition, the credits of academic medical centers overly dependent on government payers could come under increased pressure, it said. The agency noted that academic medical centers, because of their location and mission, typically serve a high number of Medicaid and uninsured patients.