Multicentre methodological study to create a publicly available score of hospital financial standing in the USA

Abstract

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 Methodological study. Setting Multicentre study. Participants All hospitals and health systems reporting the required financial metrics in the USA in 2017 were included for a total of 1075 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) cross-validating it with previously excluded data; (2) comparing it to existing models and (3) replicating known associations with non-fiscal data. Ten per cent 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.