Fitch downgraded New York City-based Mount Sinai's rating to "BBB" from "A-" and assigned the health system a negative outlook at its new rating.
Four things to know:
1. The downgrade reflects a "material weakening of earnings" over the past 18 months and Fitch's expectation that the system's operating EBITDA margins will "remain pressured over the next two to three years due to ongoing support of nonobligated entities and underlying operational pressures, primarily challenges with staffing and reimbursement," the ratings agency said in an Oct. 8 report.
2. Fitch said the negative outlook reflects uncertainty related to management strategy to stabilize operating performance and the future of its Beth Israel campus.
3. The health system first announced its decision to close Beth Israel in September 2023. In July, the New York Department of Health gave the system conditional approval to close the hospital, but community groups filed a lawsuit challenging that approval. In August, a judge granted a temporary restraining order preventing the campus from closing. The system has a court date later this month to dismiss the lawsuit, but the date has been pushed back several times, "contributing to heightened uncertainty," Fitch said.
4. In August, Moody's downgraded Mount Sinai's rating to "Baa3" from "Baa1" and revised its outlook to negative. Moody's said Mount Sinai's rating is "constrained by multiple issues developing over the past year." These include delays in the closing of Beth Israel hospital, a prolonged disruption in collections due to the Change Healthcare cyberattack, and worse than expected financial performance across the system.