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http://www.ajc.com/search/content/metro/atlanta/stories/2007/06/24/0625grady.html
Grady on verge of collapse, report says
Chamber of Commerce task force calls for immediate governing overhaul and new funding
By GAYLE WHITE
The Atlanta-Journal Constitution
Published on: 06/25/07 Grady Health System will shut its doors, flooding other Atlanta hospitals with a "patient tsunami" of the indigent unless it overhauls its governing system and lines up new funding sources, a Metro Atlanta Chamber of Commerce task force said in a report to be released today.
[Post a comment on this story below.]
"The situation is far worse than we thought," said Pete Correll, chairman emeritus of Georgia-Pacific Corp. and co-chairman of the chamber's 17-member Greater Grady Task Force. "If Grady were a business, it would have been bankrupt a year or two ago."
Without a short-term fix, the hospital system will be unable to meet payroll by the end of the year, Correll said, echoing the recent warning of a consulting firm hired by the hospital's board to come up with a turnaround plan.
Unless Grady goes to a nonpolitical form of governance, the task force warned, it cannot attract the financial help it needs from banks, the state or other sources.
"The situation gets worse by the day and will soon be beyond repair," the report said.
The consequences of Grady's failure would be dire, Correll said. Other profitable hospitals in metro Atlanta would start losing money as they absorbed the thousands of patients many of them uninsured who depend on Grady for care, Correll said.
The assessment comes just days after Grady CEO Otis Story said the hospital faces elimination of up to 100 positions, even after an early retirement offer was recently accepted by more than 400 of its 5,000 employees.
Grady, which has lost money every year since 2000, is expected to end 2007 about $120 million in the red, according to the preliminary task force report. That figure includes $65 million owed to Emory and Morehouse medical schools to pay for the hospital's physicians.
"Current vendor relations are strained," the report said, and suppliers demand that the hospital pay cash on delivery for "key supplies."
The task force, formed this spring at the request of the Fulton-DeKalb Hospital Authority, which governs Grady, recommends creating a private, not-for-profit corporation to run the hospital, leaving the hospital authority in place as owner of the real estate. Unlike the 10-member hospital authority, whose members are appointed by the Fulton and DeKalb county commissions, board members of the new corporation would not be political appointees, Correll said.
A private nonprofit corporation could engage in revenue-producing ventures not legally permitted for the hospital authority such as leasing medical equipment, offering for-fee transportation to and from appointments, and entering joint ventures with physicians for medical specialities.
A new, more business-oriented board, which could have representatives from the state or from surrounding counties, could open the door for a critical short-term infusion of about $120 million needed just to keep the hospital going while longer-term reforms are enacted, the task force report suggests.
"Restructuring will not save Grady," Correll said, "but it's the only way to start a process to save Grady. . . . Additional funding sources are not going to come forth under the current governing structure."
For the long term, the task force suggests that the hospital system hire a firm with experience in managing the financial recovery of large institutions so that the staff can concentrate on running the hospital and offering quality patient care.
But even with improvements in purchasing contracts, debt collection and other financial operations, Grady will still face an annual funding shortfall of $40 million to $55 million, the task force projects.
The most logical sources of funds to cover the potential red ink are larger contributions from Fulton and DeKalb counties, a per-patient charge back to surrounding counties for indigent and charity patients treated at Grady, and increased funds from state programs.
Once financial reforms and other sources of funding are in the works, Grady needs a big boost in "catch-up capital," to bring its facilities and equipment up to modern standards, the task force said.
"With a new charter and nonprofit status, Grady could seek innovative funding and partnering arrangements," the report said. "After the new governance system is in place for a year, Grady should develop scope and funds for major capital expenditures," it said.
In July, Correll said, the task force will bring more specific suggestions for restructuring to the table.
Every other urban hospital authority in Georgia already operates under the private, not-for-profit model, said Jack Schroder, a lawyer with Alston & Bird who has helped shift more than a dozen Georgia public hospitals to that form of government.
No state legislation would be needed for the shift, Schroder said. "The law already allows hospital authorities to lease their hospitals to this kind of corporation."
Schroder said he would expect the board of a private not-for-profit corporation running Grady to include some members of the present hospital authority, along with physicians from Emory University and Morehouse schools of medicine, which furnish the hospital's doctors. Other members, he said, would be community representatives with the expertise needed to run an operation the size of Grady.
Unlike the hospital authority, whose members are named by the commissions of Fulton and DeKalb counties, board members of the new entity would not be political appointees. After the initial board is formed, possibly by the hospital authority, the board could be self-perpetuating.
The commissions of Fulton and DeKalb counties, along with the Fulton-DeKalb Hospital Authority whom they appoint, could authorize the new governing system.
"We just believe the commissions will have to recognize that something has to be done," said Michael Russell, CEO of H.J. Russell & Co. and Correll's co-chair on the task force. "The paradigm will have to change. Is it going to be easy? No. Is there going to be resistance? Yes."
Fulton Chairman John Eaves, whose commission appoints seven of the 10 hospital authority members, said the proposal is "certainly something to consider."
"I think we have to be open-minded," Eaves said. "I think it's clear everything can't remain the same."
DeKalb CEO Vernon Jones said he will look at the task force proposal but that he is concerned about having Grady run as a private non-profit institution.
"Elected officials cannot walk away from their fiduciary responsibility," he said.
Jones said only money from the state and other counties can save Grady.
"You can study, you can restructure, you can change the board, you can change this and that, but until the money is there, nothing's going to change," Jones said.
He said he is "starting discussion" with Emory University Hospital about the possibility of paying DeKalb tax money to Emory to take the county's indigent patients.
Eaves said commissions of the two counties are planning to meet together to discuss Grady.
"Despite the challenge that's in front of us," he said, "I'm very optimistic that something can be worked out. . . . It's in the best interest of everybody that Grady survive."
A good editorial on the matter:
http://www.ajc.com/opinion/content/opinion/bookman/stories/2007/06/25/0625edbookman.html
Man, this sucks.....I WAS BORN THERE!
btw mods, you can move this thread accordingly...I have no idea where to put it.....
Grady on verge of collapse, report says
Chamber of Commerce task force calls for immediate governing overhaul and new funding
By GAYLE WHITE
The Atlanta-Journal Constitution
Published on: 06/25/07 Grady Health System will shut its doors, flooding other Atlanta hospitals with a "patient tsunami" of the indigent unless it overhauls its governing system and lines up new funding sources, a Metro Atlanta Chamber of Commerce task force said in a report to be released today.
[Post a comment on this story below.]
"The situation is far worse than we thought," said Pete Correll, chairman emeritus of Georgia-Pacific Corp. and co-chairman of the chamber's 17-member Greater Grady Task Force. "If Grady were a business, it would have been bankrupt a year or two ago."
Without a short-term fix, the hospital system will be unable to meet payroll by the end of the year, Correll said, echoing the recent warning of a consulting firm hired by the hospital's board to come up with a turnaround plan.
Unless Grady goes to a nonpolitical form of governance, the task force warned, it cannot attract the financial help it needs from banks, the state or other sources.
"The situation gets worse by the day and will soon be beyond repair," the report said.
The consequences of Grady's failure would be dire, Correll said. Other profitable hospitals in metro Atlanta would start losing money as they absorbed the thousands of patients many of them uninsured who depend on Grady for care, Correll said.
The assessment comes just days after Grady CEO Otis Story said the hospital faces elimination of up to 100 positions, even after an early retirement offer was recently accepted by more than 400 of its 5,000 employees.
Grady, which has lost money every year since 2000, is expected to end 2007 about $120 million in the red, according to the preliminary task force report. That figure includes $65 million owed to Emory and Morehouse medical schools to pay for the hospital's physicians.
"Current vendor relations are strained," the report said, and suppliers demand that the hospital pay cash on delivery for "key supplies."
The task force, formed this spring at the request of the Fulton-DeKalb Hospital Authority, which governs Grady, recommends creating a private, not-for-profit corporation to run the hospital, leaving the hospital authority in place as owner of the real estate. Unlike the 10-member hospital authority, whose members are appointed by the Fulton and DeKalb county commissions, board members of the new corporation would not be political appointees, Correll said.
A private nonprofit corporation could engage in revenue-producing ventures not legally permitted for the hospital authority such as leasing medical equipment, offering for-fee transportation to and from appointments, and entering joint ventures with physicians for medical specialities.
A new, more business-oriented board, which could have representatives from the state or from surrounding counties, could open the door for a critical short-term infusion of about $120 million needed just to keep the hospital going while longer-term reforms are enacted, the task force report suggests.
"Restructuring will not save Grady," Correll said, "but it's the only way to start a process to save Grady. . . . Additional funding sources are not going to come forth under the current governing structure."
For the long term, the task force suggests that the hospital system hire a firm with experience in managing the financial recovery of large institutions so that the staff can concentrate on running the hospital and offering quality patient care.
But even with improvements in purchasing contracts, debt collection and other financial operations, Grady will still face an annual funding shortfall of $40 million to $55 million, the task force projects.
The most logical sources of funds to cover the potential red ink are larger contributions from Fulton and DeKalb counties, a per-patient charge back to surrounding counties for indigent and charity patients treated at Grady, and increased funds from state programs.
Once financial reforms and other sources of funding are in the works, Grady needs a big boost in "catch-up capital," to bring its facilities and equipment up to modern standards, the task force said.
"With a new charter and nonprofit status, Grady could seek innovative funding and partnering arrangements," the report said. "After the new governance system is in place for a year, Grady should develop scope and funds for major capital expenditures," it said.
In July, Correll said, the task force will bring more specific suggestions for restructuring to the table.
Every other urban hospital authority in Georgia already operates under the private, not-for-profit model, said Jack Schroder, a lawyer with Alston & Bird who has helped shift more than a dozen Georgia public hospitals to that form of government.
No state legislation would be needed for the shift, Schroder said. "The law already allows hospital authorities to lease their hospitals to this kind of corporation."
Schroder said he would expect the board of a private not-for-profit corporation running Grady to include some members of the present hospital authority, along with physicians from Emory University and Morehouse schools of medicine, which furnish the hospital's doctors. Other members, he said, would be community representatives with the expertise needed to run an operation the size of Grady.
Unlike the hospital authority, whose members are named by the commissions of Fulton and DeKalb counties, board members of the new entity would not be political appointees. After the initial board is formed, possibly by the hospital authority, the board could be self-perpetuating.
The commissions of Fulton and DeKalb counties, along with the Fulton-DeKalb Hospital Authority whom they appoint, could authorize the new governing system.
"We just believe the commissions will have to recognize that something has to be done," said Michael Russell, CEO of H.J. Russell & Co. and Correll's co-chair on the task force. "The paradigm will have to change. Is it going to be easy? No. Is there going to be resistance? Yes."
Fulton Chairman John Eaves, whose commission appoints seven of the 10 hospital authority members, said the proposal is "certainly something to consider."
"I think we have to be open-minded," Eaves said. "I think it's clear everything can't remain the same."
DeKalb CEO Vernon Jones said he will look at the task force proposal but that he is concerned about having Grady run as a private non-profit institution.
"Elected officials cannot walk away from their fiduciary responsibility," he said.
Jones said only money from the state and other counties can save Grady.
"You can study, you can restructure, you can change the board, you can change this and that, but until the money is there, nothing's going to change," Jones said.
He said he is "starting discussion" with Emory University Hospital about the possibility of paying DeKalb tax money to Emory to take the county's indigent patients.
Eaves said commissions of the two counties are planning to meet together to discuss Grady.
"Despite the challenge that's in front of us," he said, "I'm very optimistic that something can be worked out. . . . It's in the best interest of everybody that Grady survive."
A good editorial on the matter:
http://www.ajc.com/opinion/content/opinion/bookman/stories/2007/06/25/0625edbookman.html
Man, this sucks.....I WAS BORN THERE!
btw mods, you can move this thread accordingly...I have no idea where to put it.....
