A major debt-rating agency dropped Mount Sinai Hospital’s credit rating close to “junk” status on Wednesday, citing troubles at the New York healthcare giant’s Beth Israel hospital system.

Moody’s Investor Service cut its Mount Sinai rating from Baa1 to Baa3 – the lowest investment-grade level that’s still above so-called “junk” status that signals major risk of default. 

Moody’s said the downgrade, which could increase Mount Sinai’s borrowing costs, was due in part to “delays in closing and reducing large losses at Beth Israel” as the hospital system has been fighting to shut the branch down. 

The financial services company also cut its outlook for the hospital from stable to negative.

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Mount Sinai racked up a whopping $1.8 billion in debt at the end of the fiscal year 2023, according to Moody’s. 

Mount Sinai’s ratings were hurt by a cyber attack in February that took Change Healthcare – a payment system owned by UnitedHealth – offline. The attack caused unpaid claims to pile up at hospitals, damaging their cashflow. 

UnitedHealth later said hackers may have stolen large amounts of patient data during the attack.

Mount Sinai’s rating drop was also linked to weak cash and the likelihood of further decline due to operational challenges through the year, Moody’s said.

A Mount Sinai spokesperson said the company has created an improvement plan to address its financial challenges.

“The annual savings from closing Beth Israel’s 16th Street Hospital is a key element of the plan,”  the spokesperson told The Post.

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Mount Sinai has been fighting to shut its Beth Israel branch due to financial losses. The hospital previously said Beth Israel – located at First Avenue and East 16th Street – has been treating fewer patients than ever and has cost the group $1 billion over the past decade.

Community advocates have fought against the sale, filing lawsuits that argue Mount Sinai wants to sell Beth Israel – which has been around since the 1880s – to make a buck off the neighborhood’s pricey real estate.

A New York judge threw out a lawsuit on Monday blocking the sale, though neighbors have already filed a new suit, according to reports.

Moody’s also pushed the Icahn School of Medicine at Mount Sinai’s rating down to Baa3 with a negative outlook. 

The school had $1.4 billion in debt at the end of fiscal year 2023, Moody’s said.

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The financial services company said Mount Sinai’s and Icahn’s ratings could be improved by a growth in the hospital system’s liquidity and a reduction in its debt-to-cash ratio.

Moody’s warned the poor ratings could be here to stay if Mount Sinai continues a decline in system cash on hand to 70 days, is unable to break even on operating cash flow for fiscal year 2024, increases its debt or faces another data breach.

Mount Sinai has long been considered one of the best hospitals in the country, though its emergency department hit turbulence in 2019.

The emergency department was a “war zone,” staffers then told The Post.

Sources blamed the downtrodden department on staffing shortages and an obsession with profits. 

A report obtained by The Post in 2019 showed that Mount Sinai knew its emergency department had serious issues at least three and a half years earlier, when it gathered three out-of-state medical experts to review it.

The experts wrote that the conditions were “among the worst we have ever seen.”

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The report warned that staffing ratios, infection control, safety, patient boarding and conditions in the emergency department were “unacceptable in a first-class medical center” and implored Mount Sinai to rebuild the department.

A Mount Sinai spokesperson declined to comment on whether the emergency department chaos contributed to its financial challenges.

The hospital launched a five-year emergency department renovation project in 2020, completing its first phase – the children’s emergency department – in 2022.