Steingart says that Moody's adjust its analyses and outlooks to consider the changes in the healthcare market but that those adjustments can only go so far.
"We are looking at broader measures of utilization, but at the end of the day revenue growth is still a key factor for us in part because expense growth and healthcare inflation are generally very high," he says. "So keeping up top-line revenue growth is key for us. When you look at hospitals across the country it is very unusual to have a year where revenue is flat from one year to the next and very, very rare to have actual negative revenue growth."
Admissions will continue to be a key measure for hospitals, Steingart says, even though healthcare reform designs care coordination and incentives around keeping people out of hospitals.
"We used to only list admissions and now we list observation stays and admissions as an indicator of demand for hospital services," he says.
"We're looking at the whole picture. We're looking at physician office visits and ED visits. To some extent we are moving beyond that pure in-patient view of demand. But, you have to keep in mind that market share—which there is a whole cottage industry around tracking and measuring—is still largely inpatient based. It is still very hard to get good comparable data on an outpatient basis."
It's not all bad news, however. Steingart says hospital administrators have improved operations and efficiencies in the face of weaker patient volumes and slower revenue growth. The accelerated growth of mergers, acquisitions, joint operating agreements, and other collaboratives have helped hospitals improve on economies of scale, leveraged market share, and other efficiencies.