Hopes of quickly selling the hospital to a private company have fizzled, and unpaid bills have mounted to the point where officials say they will need another cash infusion from the city in the coming weeks, adding to the roughly $100 million the city has spent on the hospital since 2007. Meanwhile, turnaround consultants will attempt to transform the hospital into a self-sustaining and salable enterprise.
The ongoing saga of the hospital, formerly known as Greater Southeast Community Hospital, underscores the disconnect between city officials’ commitments to keeping the facility open and their general reticence to either commit to subsidizing its operations or significantly change how it operates.
“The city speaks with many voices, and those voices have not been harmonious,” said Robert Malson, president of the D.C. Hospital Association. “Not every piece is in sync. They are all not in the same place, by a long shot.”
By nonfinancial measures, the hospital is thriving. The bulk of the city funds spent thus far have gone to capital improvements, which have helped drive patient numbers to record highs, up 13 percent in the past year. But with about 90 percent of those patients on government health coverage or uninsured, the hospital’s bottom line is tenuous.
“We’re busier than ever,” said Michael E. Davis, the hospital’s chief financial officer. “Unfortunately, we’re busier than ever with a demographic that doesn’t pay full costs. So any way you slice that, if it costs you a dollar to run the hospital and you’re getting 75 cents, there’s a disconnect.”
A year ago, United Medical Center appeared at least mildly profitable, recording about $2.5 million in net income on revenue of $97.6 million. But that surplus was largely due to a special type of federal funding for hospitals that treat a high proportion of low-income patients who are underinsured or uninsured.
Those funds — known as “disproportionate share” — are split among the District’s hospitals based on the amount of uncompensated care they provide. In June, city health-care finance authorities recalculated the split and determined United Medical Center was getting too much. Under the new formula, it received $10.7 million less, contributing to a $322,000 loss in fiscal 2012 — even after the District infused $7.7 million in cash and forgave a $6 million loan — and city health-care finance director Wayne Turnage said the calculation is unlikely to change soon. The District recently dealt another financial blow to the hospital when it cut reimbursement rates for some Medicaid patients.
Today, Davis said, the hospital has four days’ cash on hand. Significant bills to several creditors, including Pepco and medical suppliers, remain unpaid. “A huge part of management’s time is figuring out which vendors to pay each week,” he said. “It’s a real juggling act.”