CHICAGO – Threats to St. Louis University's medical accreditation adds some remote credit risks to the school's rating, Moody's investors Service said.
The university is rated A1 with a stable outlook.
The Liaison Committee on Medical Education, the accrediting body for medical schools, on March 14 placed the university's School of Medicine degree program on probation. The committee found deficiencies in documentation, curricular management issues and a lack of central oversight.
The university's faculty practice plan known as SLUCare was not impacted and the medical school remains fully accredited during the probation period.
While Moody's said it expects the university to successfully resolve probation and manage any potential reputational damage with limited credit impact, the "failure to do so would have a long-range impact on patient care revenue." Patient revenues represented the university's largest and fastest-growing revenue source at 41% in fiscal year 2016.
Senior leadership has begun work on a remediation plan to correct the committee's finding during the two-year probationary period, Moody's said in its weekly outlook.
Near-term the potential financial and reputational impacts of the probation to SLU's medical school are manageable. Net tuition revenue for the MD program represents just $34 million of SLU's total operating revenue of $786 million.
"The most severe, but also remote, credit risk to SLU would result from a failed remediation of the accreditation probation, which we do not expect," Moody's wrote.
Should the medical school's accreditation be revoked, the university could lose its recently executed affiliation agreement with SSM Health for the management of its academic medical center, SSM Health St. Louis University Hospital.
The relationship is considered a key credit strength for the university "adding long-term financial stability to SLU's growing patient care revenue, and expanded clinical opportunities for SLU's faculty practice plan and medical students," wrote analyst Eva Bogaty.
