Moody’s: Med school handover fail deepens YU financial woes

NEW YORK (JTA) — Yeshiva University’s failure to hand over the operations of its medical school to the Montefiore Medical Center has extended the school’s financial woes, Moody’s reported.

According to a report released Tuesday by the investor service, YU’s failure to reach an agreement with the Bronx hospital over financial and operational control of the Albert Einstein Medical School could sap all of the university’s unrestricted liquidity over the next one to two years.

Negotiations between the Manhattan university and Montefiore on the handover of Albert Einstein ended around Thanksgiving because “the talks were not progressing,” the Forward reported. Montefiore is Albert Einstein’s teaching hospital.

In March, Moody’s downgraded YU’s credit rating to B3, which indicates a high credit risk, and warned that the school could run out of money before it has time to address its deep deficits. Tuesday’s report affirmed the B3 rating and the broader negative financial outlook.

The costs associated with operating the medical school account for two-thirds of YU’s deficit, Moody’s reported. Operating deficits have exceeded $100 million in two of the past three years.

Moody’s said the university also incurred “acute” financial losses during the six months of negotiations over the medical school because YU “delayed implementing significant expense reductions” over that period.

Yeshiva University and Montefiore had announced the takeover plan in May that would have allowed the university to remain as the degree-granting institution for the medical school.

In September, the university refinanced the mortgages of five of its buildings for $175 million. Moody’s reported that YU’s valuable real estate holdings in Manhattan and the Bronx are a financial bright spot.

The relationship between YU and Montefiore has not changed, the Forward reported.