Grady May Need Carrot-Stick Approach
Grady Memorial Hospital in Atlanta may have a way out of its financial mess, but it would come with a catch. A big one.
Top business leaders in Metro Atlanta on Friday, for the first time, promised to do all they can to save Grady Hospital by bailing it out of its financial crisis, and preventing Grady from running out of money and closing by the end of the year.
And their condition?
Grady is a public hospital, owned by the taxpayers of Fulton and DeKalb Counties. The business leaders have concluded that the politicians and their appointees who run Grady will never be able to come up with all the money Grady needs to get back on its feet. So the business leaders recommended that the Fulton County and DeKalb County Commissioners, and the members of the Grady Fulton-DeKalb Hospital Authority Board -- who are appointed by the commissioners -- give up day-to-day operations of the hospital, and lease the hospital to a private, non-profit corporation, effective immediately.
Otherwise, potential investors whose money could save Grady will walk away.
"Everyone we go to [for a donation to Grady] says we would like to help, but we're unwilling to invest under the current governance structure," said one of those business leaders, Pete Correll, on Friday.
"Literally, I believe we have got two alternatives. Restructure or close. And I find closure is a totally unacceptable alternative, as a citizen of Atlanta."
Correll was co-chair of the Metro Atlanta Chamber of Commerce "Greater Grady Task Force," which just wrapped up its work investigating Grady's operations and finances, for free, at the request of the Grady Hospital Authority Board. The Task Force delivered its final recommendations to the Hospital Board on Friday. (Click here to read the report.)
"The critical first step" to survival, Correll said, "is a major governance restructuring -- a new, 501(c)3 board [in charge of Grady] that is not politically appointed, to get the confidence of potential investors, so they will step in and support Grady."
The Task Force found that Grady Hospital is losing $8 million a month, and will be $120 million in the red by the end of the year, and may not be able to meet payroll or pay its suppliers by then.
The reasons are simple and, the Task Force found, no one person or entity is to blame: rising numbers of indigent patients, rising health care costs, and not enough income from paying patients, insurance companies and local, state and federal governments.
Grady is Metro Atlanta's largest hospital, and North Georgia's only Level One Trauma Center, and if it had to close, other hospitals in the region would be flooded with Grady's nearly one million patients a year, thousands of whom are indigent.
The Task Force recommended that Fulton and DeKalb Counties and the Hospital Authority continue to own Grady.
The private, non-profit hospital corporation that would lease Grady from the Authority would be led by a board comprised of medical and business experts who would be free of political control or the appearance of political control, and, Correll kept emphasizing, attract investors who would have "a level of trust... that simply doesn't exist in a politically-appointed Board. That doesn't say anything negative about that [Hospital Authority] Board, and that is not what I'm saying. I'm just saying having a board of people whose names you know, who have a track record, who are going to be a self-perpetuating board -- that is to say they elect their successors [and politicians do not elect them] -- raises the investors' confidence level on how their money's going to be used."
The Chair and Vice Chair of the Hospital Authority said they'll take that message and the Task Force recommendations to the other board members, and vote the recommendations up or down, fast.
Chair Pam Stephenson said she'd like a vote within two or three weeks.
"Legally, it's possible" to lease Grady to a private corporation, Stephenson said. "The ultimate question is whether or not it is the will of the counties, and the Fulton-DeKalb Hospital Authority."
"I think this is a great recommendation, from a business point of view," said the Vice Chair, Chris Edwards, MD. "Obviously, health care is very complicated. There are other issues that are involved. We do believe that this is a great foundation to build upon, and bring the entire community together to save Grady."
The survival plan depends on more money from everybody -- from county taxpayers across Metro Atlanta, from taxpayers state wide, and from private investors.
Enormous amounts of money are needed, according to the Task force -- $370 million to accomplish a two-year turn-around. Then, $50 million a year after that, to help pay for indigent care. And almost no time to get the plan started.
"I think if you're going to run out of money by the end of the year, we're already behind." Correll said.
The Task Force said Grady can look at other big, public hospitals in Georgia that have already leased their operations to private corporations, to see whether their medicine is what Grady needs to swallow.
The Georgia General Assembly has been studying ways the state can raise money to help pay for a statewide trauma care network, which would include appropriations for Grady?s Trauma Center. On Friday, the Governor and Lieutenant Governor released these statements about the Task Force recommendations on Grady:
From the office of Governor Sonny Perdue:
?Every other urban hospital authority in Georgia has become more financially stable by updating their corporate structure. Losing Grady, particularly the trauma services provided there, would be a blow to Georgia and would likely overburden other hospitals in Metro Atlanta. We will continue to evaluate the proper role for the state to play in the long-term health of Grady, including our continued efforts to find funding for a trauma care network in the state.?
From the office of Lieutenant Governor Casey Cagle:
?Cagle praised the work of the Task Force and believes the survival of Grady is critical. He urges that addressing governance issues should be the first step in reforming Grady and the state?s involvement should be combined with a statewide trauma network plan.
?The Grady task force has taken a hard look at serious threats to the survival of one of Georgia?s most critical health care institutions. Metro Atlanta, the State of Georgia and the leaders of the Grady system now have a choice: we can move to meet those threats or we can bury our heads in the sand and ignore them. In my view, it is absolutely critical that we move to meet them. Simply put, a Grady failure would be a disaster of epic proportions for our health care system.
?The first step in addressing these issues absolutely must be a significant and sustained move by Grady to reform its own governance. The simple reality is that any legislative effort to fund Grady is unlikely to succeed until the system can demonstrate an ironclad ability to be good stewards of state funds. After that issue has been resolved, the state should move forward rapidly to consider our role in funding Grady and how that funding fits within an overall imperative to build a robust statewide trauma network.?
http://www.11alive.com/news/article_news.aspx?storyid=100055
