Hospital Chiefs: Watch Out

A proposal to allow the New York Department of Health to replace hospitals’ leadership would be a credit positive, Moody’s Investors Service said.

On Nov. 28, a panel appointed by Gov. Andrew Cuomo recommended that the DOH have that power. The panel would exercise it when the hospitals “present a danger to the health or safety of their patients.”

Doing so “would help more quickly stabilize struggling hospitals and provide quicker relief for bondholders by likely averting a payment default,” said Brad Spielman, vice president and senior analyst for health care at Moody’s.

New York nonprofit hospitals have a median Moody’s rating of Baa1, while U.S. nonprofit hospitals have a median rating of A3, Spielman noted in a report issued Dec. 5. There is a median of 97.4 days of cash on hand at New York hospitals versus 160.1 days on hand for all U.S. hospitals.

“Healthier New York hospitals may also benefit from these new policies, given that they will face less competition from entities that the DOH shuts down or consolidates with others,” Spielman said.

In another comment, Spielman said that the panel’s recommendation to allow for-profit investment in New York hospitals and physician practices would be a “net credit negative for most not-for-profit hospitals as it would fundamentally change the competitive environment in the state.”

Asked what would happen if both recommendations were adopted, Spielman declined to speculate on whether it would be a overall credit positive or negative.

The New York Legislature and Cuomo would have to approve legislation with those two proposals before they would take effect. 

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Healthcare industry New York
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