Lenox Hill Hospital, New York, saw its debt rating downgraded several notches to Baa2 from A3 by Moody's Investors Service, which cited a deterioration in the hospital's balance sheet that began in 2003. The outlook is negative. Moody's said it was concerned about ongoing losses at 28-bed Manhattan Eye, Ear and Throat Hospital and a rapid decline in the year-to-date performance at 626-bed Lenox Hill.
Lenox Hill "was a positive anomaly in the New York City market" in 2001, with healthy operating profits for four preceding years, Moody's said. But since the acquisition of the eye, ear and throat hospital, management has faced declining volumes and inadequate revenue, as have other New York providers. Through the first nine months of 2004, Lenox Hill lost $19.1 million on operations, up from an operating loss of $1.2 million in the year-ago period. The 2004 loss was caused in part by a $25 million reduction in outlier revenue, Moody's said. A turnaround will take at least a year, the ratings agency said. -- by Cinda Becker