United Medical Center seeks $15 million from the D.C. government

February 16, 2012

United Medical Center is requesting an additional $15 million from D.C. taxpayers to help finance a turnaround, likely renewing debate about whether the city should own a cash-starved hospital.

After its previous owners defaulted on its obligations to the city, the District took over the Ward 8 hospital in December 2010 until a new operator could be found. But the city government is divided over whether the city should try to quickly unload the hospital to a private buyer or keep it to try to bolster its quality — and its price tag.

With the latter camp prevailing so far, the hospital’s board of directors wrote Mayor Vincent C. Gray (D), requesting additional funds to help United Medical rebrand its mission by shifting to “ambulatory and physician-centric care.’’ The hospital, formerly known as Greater Southeast Medical Center, specializes in traditional acute care.

The board is asking the District for an additional $9 million in direct funding, as well as to forgive a $6 million loan. The board will also seek $5 million in federal funds.

“The Board, hospital management, and [the Office of the Chief Financial Officer] leadership met to collaboratively determine the financial support needed to maintain hospital operations and fund the restructuring effort,” wrote Bishop C. Matthews Hudson, chairman of the board. “We came to a consensus that $15 million will be required.”

Gray said in a statement that he would “carefully review” the request “to determine the best response for the benefit of UMC, the District residents it services, and the city as a whole.”

Serving a limited number of clients with private insurance, the hospital has been plagued by financial problems for years. But as the only hospital east of the Anacostia River, D.C. Council member David A. Catania (I-At Large) and other city leaders have repeatedly stepped in to prevent it from closing.

The District invested $79 million in the hospital in 2007 as part of a deal to keep it from closing by selling it to Specialty Hospitals of America, a for-profit company. Specialty struggled to make it payments, citing low Medicare reimbursement rates. In 2010, the District took over the hospital after Specialty defaulted.

Catania, chairman of the health committee, has become a chief advocate for keeping the hospital under public control.

Chief Financial Officer Natwar M. Gandhi has suggested a quick sale. Although Gray agrees broadly with Gandhi’s concerns, he has signaled that he is willing to give the hospital time to stabilize its finances.

In October, a report by the Department of Health Care Finance recommended that the hospital readjust its mission so it can compete better. Citing the report, Gray then requested that the hospital focus more on ambulatory care before it is put up for sale.

Hudson said in his letter that additional money is needed to work toward Gray’s suggestion, including the hiring of a “turnaround consultant.”

“We are not just asking for money,” Hudson said in a brief interview. “There is a purpose to move the hospital forward.”

Hospital officials note that the facility’s finances have improved since the city takeover, including an estimated $2.5 million profit in the fiscal year that ended Sept. 30.

“If you want to make improvements, you have to invest in capital and . . . this proposal appears to do that,” Catania said through a spokesman, Brendan Williams-Kief.

But the hospital’s request could spark a fierce debate on the D.C. Council.

On Tuesday, Catania got into a profanity-laced shouting match with council member Marion Barry (D-Ward 8) when Barry tried to question Gandhi on the hospital’s finances.

Barry, however, endorsed the turnaround plan on Thursday. “We are not going to let the hospital fail,” he said.

Tim Craig is The Post’s bureau chief in Pakistan. He has also covered conflicts in Iraq, Afghanistan and within the District of Columbia government.
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