A major ratings agency on Wednesday downgraded Mount Sinai Hospital’s credit rating to near “junk bond” levels, citing problems at the Beth Israel Hospital system, a major New York health care giant.
Moody’s Investors Service cut Mount Sinai’s ratings to Baa3 from Baa1, the lowest investment-grade level but still above a so-called “junk” rating that indicates a high risk of default.
Moody’s said the downgrade, which could raise Mount Sinai’s borrowing costs, was due in part to “delays in the closure of the Beth Israel branch and significant loss reductions” amid the hospital system’s opposition to the branch’s closure.
The financial services firm also downgraded the hospital’s outlook to negative from stable.
Mount Sinai faces a massive debt burden of $1.8 billion by the end of fiscal 2023, according to Moody’s.
Mount Sinai’s ratings were hurt by a February cyberattack that took its UnitedHealth-owned payment system, Change Healthcare, offline, leaving the hospital with a mountain of unpaid bills and hurting its cash flow.
UnitedHealth later Hackers may have stolen tonnes of patient data Under attack.
Moody’s said Mount Sinai’s downgrade was also linked to a cash shortfall and the possibility of further downgrades due to operational challenges throughout the year.
A Mount Sinai spokesman said the company has developed an improvement plan to address its financial difficulties.
“The annual savings that will result from closing Beth Israel’s 16th Street Hospital are a key component of this plan,” a spokesperson told The Post.
Mount Sinai is opposed to closing Beth Israel because of financial losses. The hospital previously said the Beth Israel branch, located at First Avenue and East 16th Street, was treating fewer patients than it had in the past. It cost the group $1 billion in losses over the past decade..
Local activists have opposed the sale. File a lawsuit They argue that Mount Sinai is trying to sell Beth Israel, which has been there since the 1880s, in order to profit from expensive real estate nearby.
New York Judge The lawsuit was dismissed on Monday. Neighbors have already blocked the sale. A new lawsuit was filedAccording to reports.
Moody’s also downgraded Icahn School of Medicine at Mount Sinai to “Baa3” with a “negative” outlook.
The school had $1.4 billion in debt at the end of fiscal year 2023, according to Moody’s.
The financial services firm said the hospital system’s increased liquidity and lower debt-to-cash ratio could lead to improved ratings for Mount Sinai and Icahn.
Moody’s warned that the low ratings could continue if Mount Sinai Hospital’s system cash balance continues to decline to 70 days, the company fails to break even on operating cash flow in fiscal 2024, its debt load increases or the company faces a new data breach.
Mount Sinai Hospital has long been considered one of the best hospitals in the country, but in 2019 it experienced turmoil in its emergency department.
The emergency department was like a “war zone,” staff told The Post.
Officials blamed a lack of staff and an obsession with profits for the department’s woes.
Mount Sinai knew there were serious problems in its emergency department at least 3 1/2 years ago, when it brought in three out-of-state medical experts to review the matter, according to a 2019 report obtained by The Washington Post.
Experts wrote that the situation was “among the worst they have ever seen.”
The report warned that staffing ratios, infection control, safety, patient admissions and emergency department conditions were “not acceptable for a leading medical center” and called on Mount Sinai to restructure its emergency department.
A Mount Sinai spokesman declined to comment on whether the emergency department disruptions contributed to the hospital’s financial difficulties.
The hospital began a five-year emergency department renovation project in 2020, with the first phase, the pediatric emergency department, scheduled to be completed in 2022.
