In an attempt to demonstrate value, managed-care organizations are using credit ratings in more innovative ways, according to Standard & Poor's Corp.
While credit ratings traditionally have served as indicators of ability to repay principal and interest, Standard & Poor's said more HMOs are seeking ratings to demonstrate their financial strength to providers and payers.
The ratings are being used to help assure network doctors and hospitals that the HMO has the financial strength to succeed in today's competitive marketplace, said Michael J. Kaplan, an analyst for the rating agency.
For example, of the six public HMOs rated by Standard & Poor's, just two-FHP International Corp. and Foundation Health Corp.-have obtained debt ratings for the traditional purpose of demonstrating ability to repay debt, Kaplan said.
Standard & Poor's recent special report on managed care discusses the trend, elaborates on its ratings process and provides profiles of three public HMOs, eight not-for-profit HMOs and healthcare systems with HMOs, and 10 Blue Cross and Blue Shield plans rated by the agency.
Humana is the latest for-profit HMO to be rated by Standard & Poor's. The agency recently assigned an A- credit rating to the Louisville, Ky.-based plan, reflecting the company's position as a leading operator in the growing managed-care field.