Bonds funding Mount Sinai get better rating outlook

Bonds issued by the City of Miami Beach Health Facilities Authority on behalf of Mount Sinai Medical Center have received a revised rating outlook that rose to positive from stable from Fitch Ratings.

At the same time, Fitch affirmed an A- issuer default rating on the bonds, series 2021B and 2014.

The report last month said “the ratings reflect Fitch’s expectation that performance will be maintained” over the next five years.

The 2021 bonds totaling $150 million were used to help fund the construction of a $300 million cancer center on the medical center’s Miami Beach campus. After construction of a new patient tower and an emergency center on the campus, Fitch reported in 2019 that the hospital had told the rating service that it had no major capital projects on the horizon.

At that time, Fitch also affirmed an A- rating on bonds issued on behalf of Mount Sinai.

Fitch said then that the rating reflected Mount Sinai’s “solid operating performance,” which Fitch said it expects to continue into future years supported by “strong volumes with the opening of a new patient tower in February 2019 and standalone emergency room in late 2018.”

The cancer center project, Fitch wrote in July, was expected to break ground this summer and had a December 2025 completion date. In addition to the $150 million bond funding, the center was to include $100 million in fundraising and an equity contribution.

The center has been named the Irma and Norman Braman Comprehensive Cancer Center in honor of the principal donors. “Management reports there is some flexibility in size and timing and will modify if needed,” Fitch noted. “Fitch believes [Mount Sinai] can absorb the project while continuing to build its liquidity given solid operating performance and strong support from its foundation. Moreover, Fitch believes the cancer center will further strengthen [Mount Sinai’s] market position.”

Fitch reported that Mount Sinai has a leading and growing market share of 67.1% and that about 15% of gross revenues come from a combination of Medicaid and self-pay patients. “Medicare Advantage and commercial enrollees have increased recently and management expects a continued shift to its payor mix due to the expansion of its network in Hialeah and Key West,” the ratings agency wrote. “Fitch views this favorably as it has contributed to decline in Medicaid enrollees.”

Fitch points to limited population growth in Miami Beach and “somewhat weak socioeconomic indicators with a high uninsured population relative to the state.”

Fitch said Mount Sinai’s operating performance “has historically been strong” with an average 10.9% EBITDA [earnings before interest, taxes and depreciation] margin over the last five years despite various pressures and a reduction in stimulus funding.” Through the first quarter of this year, Fitch reported that margin at 13.2%.