Catholic Health's credit downgraded amid nurses strike

Moody's Investors Service reported Oct. 12 that it downgraded Buffalo, N.Y.-based Catholic Health's rating to "Ba2" from "Baa2" because of its financial problems from the pandemic, labor costs and its ongoing nurses strike, giving them a negative outlook.

The health system had $312 million of debt by the end of fiscal year 2020.

The strike began Oct. 1 because of concerns with staffing and patient care. Those on strike will be paid $300 weekly by the union representing them.

According to the report, these problems will create a huge operating loss in fiscal year 2021, after two years of minimal operating cash flow and a risk of a covenant breach. Liquidity will most likely continue to decline.

Favorable factors include Catholic Health's essential market position and benefits from the expansion of surgery centers. Last year's installation of a comprehensive electronic medical record will also provide the system with efficiencies. Lower operating losses from these efforts lessen the chance of a covenant breach, the report said.

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