A publicly available score for evaluating hospital financial standing

A. Objectives To create a straightforward scoring procedure based on widely available, inexpensive financial data that provides an assessment of the financial health of a hospital. Design Method: ological study. Setting Multicenter study. Participants All hospitals and health systems reporting the required financial metrics in 2017 were included for a total of 1,075 participants. Interventions We examined a list of 232 hospital financial indicators and used existing models and financial literature to select 30 metrics that sufficiently describe hospital operations. In a set of hospital financial data from 2017, we used Principal Coordinate Analysis to assess collinearity among variables and eliminated redundant variables. We isolated 10 unique variables, each assigned a weight equal to the share of its coefficient in a regression onto Moody’s Credit Rating, our predefined gold standard. The sum of weighted variables is a single composite score named the Yale Hospital Financial Score (YHFS). Primary Outcome Measures Ability to reproduce both financial trends from a “gold standard” metric and known associations with non-fiscal data. Results The validity of the YHFS was evaluated by: (1) assessing its reproducibility with previously excluded data; (2) comparing it to existing models; and, (3) replicating known associations with non-fiscal data. Ten percent of the initial dataset had been reserved for validation and was not used in creating the model; the YHFS predicts 96.7% of the variation in this reserved sample, demonstrating reproducibility. The YHFS predicts 90.5% and 88.8% of the variation in Moody’s and Standard and Poor’s bond ratings, respectively, supporting its validity. As expected, larger hospitals had higher YHFS scores whereas a greater share of Medicare discharges correlated with lower YHFS scores. Conclusions We created a reliable and publicly available composite score of hospital financial stability. B. Article Summary Strengths and Limitations of This Study There is a lack of models for assessing the financial state of hospitals in a robust and systematic way using publicly available data. We created the Yale Hospital Financial Score, a compound financial ranking of hospitals using a diverse collection of hospital financial metrics. The score ranks hospitals from 0 to 100 and was validated by showing reproducibility on a pre-excluded sample and strong correlation with “gold standard” metrics This score has been developed to aid health policy researchers and has not yet been validated in studies of longitudinal financial outcomes