Six-hospital North Mississippi Health Services, Tupelo, saw its AA rating on $181 million in bonds affirmed by Standards & Poor's, which cited the system's dominant market position and strong finances but also noted the minimal financial impact of its recent agreement over billing the uninsured. North Mississippi last week became the first not-for-profit hospital group to negotiate an agreement with a coalition of plaintiffs' attorneys that has filed class-action lawsuits against scores of not-for-profit hospitals nationwide over billing of the uninsured. North Mississippi settled before being sued. Among other steps, the system agreed to provide free care to uninsured patients earning up to 200% of the federal poverty level and to establish a sliding scale of discounts for patients earning 200% to 400% of the poverty level. The policy will cost the system less than $1 million annually, S&P said. "The total financial effect is not greater because (North Mississippi) already provides significant charity care and currently collects very little from uninsured patients," S&P said.
In announcing the agreement, plaintiffs' attorney Richard Scruggs of Oxford, Miss., estimated the settlement value at $150 million in refunds, discounts, charity care and write-offs, but he said the system had already paid much of the costs. S&P analyst Martin Arrick said that profit margins are peaking in the not-for-profit hospital industry, and the class-action lawsuits should get hospitals to focus on providing more charity care. "To that extent, it will depress margins somewhat," Arrick said. "But any lawsuit is a potential threat that people need to look at and take seriously." -- by Mark Taylor