Moody's downgraded New York City-based Mount Sinai's rating to "Baa3" from "Baa1" and revised its outlook to negative from positive.
The downgrade reflects materially weaker cash on hand and the potential for a further decline driven by a "confluence of unexpected events and significant ongoing operating challenges," Moody's said in an Aug. 14 report.
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.
The ratings agency said the downward revision to Mount Sinai's outlook reflects the risk that the health system's cash will continue to decline to below 70 days over the next year, "depending on the timing and magnitude of FEMA grants, the ability to recover from billing interruptions, the cost to support [Beth Israel] until its closure" and the degree to which its turnaround initiatives address operational challenges.
Mount Sinai pushed back its planned July 12 closure of Beth Israel because of the New York Department of Health's review of a revised closure plan. The department gave the system conditional approval on July 25 to close the hospital.
The health system first announced its decision to close Beth Israel in September. Mount Sinai has cited escalating losses and chronic underutilization for its decision to close the hospital.