Question-and-Answer Session
Operator
Absolutely, Mr. Carpenter. (Operator Instructions) Your first question comes from Shelley Gnall – Goldman Sachs.
Shelley Gnall – Goldman Sachs
I guess my question will be on how we think about bad debt for next year given the unemployment scenario, but I'd like to start with just one clarification question on the lowering the discount rate for the med mal reserves. Am I correct in understanding that that was a $0.03 charge to the quarter and absent that charge you would have reported $0.66 for the quarter?
David M. Dill
That's right.
Shelley Gnall - Goldman Sachs
And then just on the unemployment situation, I think we're all pretty comfortable with where LifePoint was as of December with unemployment. I guess first of all can you tell us anecdotally are you seeing any deterioration in some of those key markets from December levels? And secondarily, have you looked at some of your key markets that have really gotten hit with unemployment, maybe historically done sort of a case study and seen what bad debt expenses has done per a 1% increase in unemployment in some specific markets?
William F. Carpenter III
We have been seeing more companies in our markets reduce staff, either through cuts in hours or through actual layoffs, in some communities more than others. This has had a direct impact on unemployment rates as we have seen those steadily increase in many of our markets, really consistent with the national average increase of a little over 2% over prior year. In some of our markets - specifically, Virginia, Alabama, some of the others, Tennessee even we're seeing unemployment rates rise a little bit faster than in others.
David, why don't you address the second half of Shelley's question? I know you and the operators have stayed very, very close to the unemployment situation in specific key markets.
David M. Dill
Okay. This may be a little longwinded answer, but I think it's extremely, extremely important in a couple of contexts.
One is you think about our guidance. We have assumed in our guidance bad debt creeping up. We ended 2008 with bad debt at 11.6% of revenue. The high end of our EBITDA range assumes that bad debt creeps up about 60 basis points, which is about a 100 to 125 basis point increase in unemployment going up in our communities from call it right at 7% to 8% or slightly more than 8%. It also includes the impact of chargemaster increases that just will have about a 20 or 30 basis point effect on provision for doubtful accounts.
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