The association between provider-Sponsored health plans and nonprofit hospital bond ratings

Brett Caplan*, Tricia Johnson, Richard Bajner, Peter W Butler, Melissa Coverdale, Patricia O'Neil, Alex Wiggins

*Corresponding author for this work

    Research output: Contribution to journalReview articlepeer-review


    Objective: To test the association between provider-sponsored health plans (PSHPs) and nonprofit hospital bond ratings. Background: The passage of the Patient Protection and Affordable Care Act in 2010 has led to changes in both the delivery of care and how and which services are reimbursed. As a result, there has been widespread exploration of new models of care and a redesign of assessing hospital credit-worthiness. All stakeholders in the healthcare environment have been asked to redefine how they operate, including hospitals and health systems, the government, insurance companies, and consumers. Some hospitals and health systems are evaluating whether a PSHP is a tactic that could improve population health by aligning payer and provider financial incentives. Methods: This retrospective, cross sectional study included 390 nonprofit hospitals and health systems rated by Moody's Investors Services that were categorized as either owning or not owning a PSHP. Hospital bond ratings were categorized into high or low based on high investment grade, medium investment grade, or speculative grade, respectively. A binary logistic regression model was fit to test the association between PSHP ownership and bond rating, controlling for hospital geographic region, organization type and liquidity, leverage and operating performance measures. Results: Of the 70 hospitals with PSHPs, 55 (79%) had high bond ratings while 168 (53%) of those without PSHPs had high bond ratings (p<0.001). After controlling for region, organization type and financial measures, hospitals that owned a PSHP were 3.1 times as likely to have a high bond rating as those without a PSHP (OR = 3.1, p = 0.004) with predictive accuracy of 0.87. Conclusion: Given the strong association between PSHPs and nonprofit hospital bond ratings, hospital senior leadership may consider PSHPs when assessing tactics of payer and provider incentive alignment.

    Original languageEnglish (US)
    JournalJournal of Health Care Finance
    Issue number1
    StatePublished - Dec 1 2016

    ASJC Scopus subject areas

    • Health Policy


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