Lost revenue, not the extraordinary cost to repair damage from superstorm Sandy, could erode the A3 credit rating of NYU Langone Medical Center's hospitals, says an analyst with Moody's Investors Service.
As we reported, Moody's said it will review and may downgrade NYU hospitals' rating as a result of storm damage and disrupted operations.
Beth Wexler, a Moody's senior credit officer, said the biggest problem for the hospitals is that NYU Langone Medical Center's Tisch Hospital remains closed and without power weeks after the storm forced its emergency evacuation. She said that NYU hospitals have plenty of cash, however “it's more the revenue that is literally not coming in the door for extended periods of time.” And the longer the closure, the more opportunity for patients or referring physicians to turn elsewhere, she said.
The picture is not entirely bleak. Buildings with services that generate 60% of NYU hospitals' revenue have reopened. Wexler said outpatient services also account for a disproportionate share of the hospital margins. “They're not living in the dark ages where they're making their margin on hospital bed stays,” she said. Nonetheless, “you can't operate with one and not the other,” she said.
Tisch Hospital may begin to admit patients again in December, officials told Moody's.
Moody's analysts will typically review a credit for up to three months.
You can follow Melanie Evans on Twitter: @MHmevans.