A.M. Best Special Report: Evaluating Health-Care Systems.OLDWICK, N.J. -- A.M. Best Co. evaluates the ability of not-for-profit U.S. hospitals and health-care systems to support their health maintenance organizations and captive insurance Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, they sometimes also insure risks of the parent company's customers. company subsidiaries. These evaluations generally are performed in the course of assigning a Best's Financial Strength Rating to a hospital's subsidiaries. The financial strength of a hospital is a key indicator of the level of support available to its subsidiaries. As such, A.M. Best analyzes the entire hospital system--including hospital providers, physician networks and health insurers--for overall financial performance and strength. However, information about each hospital in the system is reviewed to determine its local market strength and financial performance. A.M. Best uses three broad analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. categories to assess the financial strength and flexibility of a not-for-profit hospital: market profile, balance sheet strength and operating performance. A.M. Best evaluates the advantages and constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. of the not-for-profit hospital's operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. , such as the demographic profile A demographic or demographic profile is a term used in marketing and broadcasting, to describe a demographic grouping or a market segment. This typically involves age bands (as teenagers do not wish to purchase denture fixant), social class bands (as the rich may want of the service area, competition, payer mix payer mix Medical practice The type–eg, Medicaid, Medicare, indeminity insurance, managed care–of monies received by a medical practice. Cf Patient mix, Service mix. , patient volume and physician profile. The hospital's presence within a local market is important, as this influences the hospital's negotiating power with commercial insurers. The negotiating power of a hospital is critical to obtaining adequate reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. levels for services, especially since commercial payments often cover the revenue deficiencies from government payers. A.M. Best evaluates the structure of the hospital's balance sheet to determine whether it is appropriately leveraged, with sufficient liquidity and debt-service coverage. A.M. Best also examines the hospital's capital investments in its infrastructure to determine whether the facility is able to provide state-of-the-art care and services and generate additional revenue from investment in core service lines. A.M. Best evaluates a hospital's operating performance based on revenue generation, expense management and the stability of margins. As nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. hospitals rely heavily on government reimbursement, A.M. Best looks for adequate collection programs in place to receive appropriate payments from all payer sources. In addition, the rising costs of health care and technology make strict expense-control measures necessary. A.M. Best recognizes that a combination of expense management and strong cash collections is necessary to operate profitably. For more information on A.M. Best's rating Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. methodology or to download a copy of this methodology, visit www.ambest.com/ratings/methodology.asp. BestWeek subscribers can download a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at http://www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (4 pages) for $25 or a combination of the PDF copy plus the spreadsheet file of the report data for $50 from our Web site at http://www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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