Wall Street debt raters “do not like city governments owning hospitals,” said Jack Evans (D-Ward 2). “It has been a commitment on behalf of the administration that we would get out of the business of owning a hospital. So we have to move in that direction, whether we like it or not.”
Getting out of the hospital business has been easier said than done. United Medical Center’s previous two private operators both relinquished their ownership amid spiraling losses. In the most recent case, the city foreclosed on a loan to Specialty Hospitals of America in 2010 and seized the hospital as collateral.
Council member David A. Catania (I-At Large), the former health committee chairman who orchestrated Specialty’s purchase of United Medical Center in 2007 and endorsed the foreclosure, agrees with his colleagues that the hospital is an indispensable part of the District’s health system. Unlike many of his peers, however, he suggests the city can responsibly subsidize the hospital into the future as it searches for a suitable buyer.
Catania has been critical of Gandhi’s handling of the hospital’s finances, most recently accusing him of doing a “less than commendable job” of collecting patient bills. Davis — who reports to Gandhi, not the hospital’s chief executive — said that “very stringent protocols” are in place to collect money owed before it is written off.
Even $10 million a year, Catania said, is a speck in the city’s $10 billion budget — one that he believes will not cause Wall Street the heartburn Gandhi says it will.
“The city does not run its parks department for a profit, nor does it run the police department for a profit,” Catania said. “There are certain services that are incumbent upon a civilized government to provide. Health care is one of them.”
Mayor Vincent C. Gray (D) has been caught politically between the need to support the hospital and his commitment to fiscal rectitude, making it difficult for him to break with Gandhi.
His administration has ordered a “strategic review,” which was delivered in 2011 by the consulting firm McGladrey, and has now engaged the Chicago-based Huron Consulting Group under a $12.7 million two-year contract to get United Medical Center on solid footing and prepare it for sale.
Frank DeLisi, the hospital’s chief executive since 2007, will depart on March 28 and be replaced by Huron consultant David R. Small. As many as 40 other Huron employees have worked on hospital matters preparing for the transition, Williams said.
But weeks after the council approved the contract, the terms of Huron’s engagement remain fuzzy. Under its contract, the firm is to develop a strategic plan for the hospital that is “in consonance with” a particular McGladrey recommendation that would scale down the hospital from 350 beds to 60, close a 120-bed skilled-nursing facility and create a more outpatient-focused medical campus.
The suggestion that United Medical Center should downsize, however, is controversial and has been repudiated by some city leaders, including Council member Yvette M. Alexander (D-Ward 7), the new health committee chairman.
“There is no doubt they all and we all agree we want them to come in and turn around the hospital as a full-service hospital,” she said. “My expectations are not an outpatient facility, and that was agreed on across the board.”
At the contracting hearing last month, a Huron executive testified that the company would not pursue the downsizing recommendation. Yet the McGladrey language remains in the contract, and it is unclear whether Huron will be able to improve the hospital’s management — most crucially, billing and collections — to the point where it can be reliably self-sustaining under the current model.
Asked what will happen if the consultants determine that United Medical Center is not viable as a full-service hospital, Alexander demurred.
“I’m not even going to entertain that,” she said. “I’m confident that Huron is going to do the job, and their job is to make it attractive for another health-care leader to take over the hospital. And then the District will be out of the business of running hospitals.”