Blog: Accretive Health posts loss

How much does a swing cost? For Accretive Health, the price it paid was $9.2 million.

Accretive Health may have swiftly settled a lawsuit with Minnesota's attorney general, but it cost the company, a new securities filing shows.

“Due to lost operating margin and stranded personnel costs arising from the Minnesota litigation and resulting contract terminations and associated legal defense and crisis management costs which together aggregated $14.6 million, the company had a net loss of $0.6 million as compared with a net income of $8.6 million in the second quarter of 2011,” the filing said.

Here's a recap, for those not familiar Accretive Health: The company faced allegations by Minnesota's attorney general that its billing and collection practices, including aggressive collections inside hospital emergency rooms, violated the law. Minnesota hospitals and health systems canceled their Accretive contracts. The lawsuit again focused national attention on how hospitals collect money from patients and raised questions from members of Congress about how those tactics may affect patient access. Accretive last week settled the lawsuit with a promise to exit Minnesota for two years.

Mary Tolan, founder and chief executive officer of Accretive, dismissed the litigation as a “costly distraction” in a statement that announced the company's second quarter performance.

“We reluctantly settled the costly distraction of the Minnesota lawsuit,” Tolan said. “Although we strongly believe we would have prevailed in court, the reality of the litigation and political process today unfortunately makes settling this dispute the wiser course.”

The company also touted its contract renewal with Ascension Health, which the filing said is projected to net the company $1.6 billion to $1.7 billion over five years. You can read more on Ascension's contract in a prior blog post.

You can follow Melanie Evans on Twitter: @MHmevans.