Ramsay Health Care, a psychiatric hospital chain based in New Orleans, said last week it will be taking nearly $18 million in charges this fiscal year and relocating its headquarters to Miami.
Some $4 million of the charges are related to a dispute between the company and the state of Louisiana over Medicaid disproportionate-share payments for treating large numbers of poor people.
Bert Cibran, Ramsay's president and chief executive officer, said the state contends that some hospitals have been overpaid for their Medicaid services as a result of changes in Louisiana's funding rules.
Cibran said the company and the state are going "back and forth" in discussions on how to handle the discrepancy. To protect itself, he said the company will include the $4 million as part of a $17.5 million charge it intends to record following the completion of its annual audit in mid-September. The company will announce its results for the fiscal year ended June 30 around that time, he said.
Cibran explained that although a settlement with the state could be much less than $4 million, he wanted to give the company a sufficient cushion.
The charge also includes payments related to certain accounting rule changes, higher than expected cost report settlements, the write-off of certain accounts receivable and the buildup of reserves, he said.
In addition, the company plans to report that its bank credit facility has been amended. The expiration date of letters of credit supporting $19.4 million in industrial development bonds has been extended to August 1997, the company announced.
The bonds were issued before 1986 to finance some of Ramsay's hospital facilities. The chain operates 15 hospitals and provides outpatient and management services in 15 states.
Regarding the company's relocation to Miami, Cibran said the move will allow Ramsay to take advantage of established business connections in that city. The new location also is likely to be an easier sell with executive recruits than New Orleans. The move is expected to be completed within 90 days.