Mississippi's Singing River Health System declined to make annual employee pension payments for years and now the county must bail out the hospital operator.
Jackson County, Mississippi has agreed to pay $150 million to settle the shortfall from the two-hospital Singing River, according to Bloomberg. It also agreed to pay the hospital system another $13.6 million over the next eight years to keep it from defaulting on $90 million worth of bonds.
“They weren’t making payments into the fund and we didn’t know it,” Barry Cumbest, a member of the Jackson County board of supervisors, told Bloomberg. “Instead of contributing the money to the pension fund they were using it to build buildings and open clinics.”
Singing River's unfunded pension liability soared after it started ignoring its payment obligations about three years ago, Bloomberg reports. It went from just around $25 million that year to around $350 million the following year.
The bail out, part of a settlement of a lawsuit brought by Singing River employees, led to Jackson County's debt being downgraded three levels by Moody's Investors Service. Moody's has indicated that the liability the county has for the hospital pensions could lead to future downgrades, according to the article.
The issues with Singing River seemed to suggest to Bloomberg the rising problem of underfunded pension plans. But hospitals have had issues with trying to avoid pension payment obligations for years. St. Mary's Hospital in New Jersey, for example, used loopholes to underfund its plan while also escaping the requirement for having insurance. A report issued by Standard & Poor's in 2013 suggested that pension obligations would be a drag on non-profit hospitals and healthcare systems for years to come.
- read the Bloomberg article