WASHINGTON -- Under normal circumstances, closing a hospital could spell bad news for bondholders.

But in Maryland, the shutdown of Homewood Hospital Center's south campus has actually triggered a bond-rating upgrade, the Maryland Health and Higher Education Facilities Authority announced Tuesday.

Moody's Investors Service has upgraded $7.9 million of North Charles General Hospital project and refunding revenue bonds to Aaa from Baal. The authority issued the bonds in 1984 for what became Homewood's facility in Baltimore.

Standard & Poor's Corp., which rates the bonds BBB-plus, has been provided with details of the closing but has not yet indicated whether it will upgrade its rating.

The authority's executive director, Donald P. Carter, said the hospital closing is the first opportunity officials have had to test a 1985 Maryland statute that guarantees repayment of obligations owed by closed hospitals.

"I think it's playing out the way it was envisioned when the General Assembly passed the law in 1985," Mr. Carter said, cautioning that "it may not always be the case" that outstanding bonds are upgraded.

Maryland law calls for assessments on state-supervised hospitals in an amount sufficient to pay off the outstanding bonds of a closed hospital. The fees are levied by the Health Resources Planning Commission in three qual annual installments.

The authority has stated that Homewood bonds due on or before July 1, 1994, will be paid when due, and bonds maturing after that date will be redeemed. The redemption price will be 102% of the principal amount of the bonds, plus any accrued interest.

Additional security for the bonds is provided by a collateral security agreement with the Johns Hopkins Health System Corp., which acquired the hospital in 1986.

Under the agreement, the Hopkins health system is pleding U.S. government securities held by Maryland National Bank as trustee. In addition, the Johns Hopkins Hospital Endowment Fund Inc., will continue to guarantee repayment of the bonds.

"It's like a triple guarantee," said Elizabeth A. McKennon, bond counsel with Piper & Marbury. Edward O. Clarke Jr., also bound counsel with Piper & Marbury, added, "The system has worked."

The authority issued the bonds on July 11, 1984, and then loaned the proceeds to North Charles General Hospital Inc. In 1986, North Charles became affiliated with the Hopkins health system. Then in 1988, North Charles merged into Wyman Park Health System Inc., another Hopkins health system affiliate, to form Homewood Hospital.

The 1985 law guaranteeing bond repayment is part of Maryland's unique regulatory system. For example, Maryland is the only state in the nation exempt from the Medicare program's prospective payment system. Under this system, hospitals are reimbursed for services based on what is known as diagnosis-related group schedules.

Instead, Medicare and all other third-party payers reimburse Maryland hospitals for up to 94% of the cost of patient care as set by the state's Health Services Cost Review Commission.

Under provisions of the Omnibus Budget Reconciliation Act of 1987, Maryland will be able to keep the Medicare waiver as long as its aggregate rate of increase in medical payments per hospital admission, measured from Oct. 1, 1983, is lower than the national rate.

The Medicare system rewards low-cost health care providers because the difference between costs and reimbursements result in either a profit or loss per patient, depending upon how efficiently a hospital is run.

Consequently, loss of the waiver could change the financial profiles of some state hospitals, though the impact would be left differently by each hospital.

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