$26 Million 'Transition' Deal Aims to Stabilize Hospital

Maryland and Prince George's County leaders yesterday announced a one-year "transition" plan designed to pump $26 million into Prince George's Hospital Center while officials seek new management for the financially strapped facility.

Sitting side by side in the governor's reception room in the State House, Gov. Robert L. Ehrlich Jr. (R) and County Executive Jack B. Johnson (D) called the deal a step toward the long-term stability of the hospital.

"A few months ago, people were questioning us on whether the hospital will continue. Well, we answered that today, and it will continue," Johnson said.

The plan must clear several hurdles before the deal is complete: The Health Services Cost Review Committee, a state regulatory agency, must approve a $5 million increase in hospital reimbursement rates. The Prince George's County Council would have to sign off on $15 million in local money. And the General Assembly would have to agree to divert at least $6 million from an insurance fund meant to help low-income, uninsured patients.

"Today is a milestone; it is not a resolution," Ehrlich said.

Two years ago, the council delayed county funding to the hospital until Ehrlich and Johnson agreed to make changes to a memorandum of understanding between the state and county that the two elected officials agreed to without its involvement. Among other things, the council wanted a greater role in an oversight committee that was established to provide recommendations for the hospital's future.

Prince George's council member Samuel H. Dean (D-Mitchellville) said the council is waiting to be briefed on the deal "so [council members] can feel a level of confidence that we will accomplish what we want to accomplish."

The 2004 agreement included a five-year, $45 million aid package for the hospital.

Despite that help, the system has continued to struggle.

Dimensions Healthcare System, the nonprofit company that operates the hospital, has lost $50 million over the past seven years and typically has about a week's worth of cash on hand.

State regulators, who use cash reserves as an indicator of a hospital's financial health, recommend at least 100 days of ready funds.

The plan "is a work in progress. But everyone seems to be very committed to making it happen," said Dunlop Ecker, president of Dimensions. "There's a real sense of optimism, and that is well placed."

To recoup its large losses, it has sought, and received, rate increases from the state. But the relatively high rates also make it difficult to compete for managed-care contracts.

Officials have sought to partner the county facility with a teaching hospital that would provide a source of young, relatively low-paid medical residents to give care and bolster an aging physician network. But those efforts have been unsuccessful.

The financial shape Prince George's Hospital Center finds itself in is not unlike that of many public hospitals across the country.

Last year, the oversight committee recommended that the county sever its ties with Dimensions, saying the company had a history of poor management. It suggested negotiating with a large hospital system to take it over, arranging a sale to a third party or retaining a management entity to take over the system's operation.

The county began accepting bids from academic, nonprofit and for-profit medical systems interested in running the system and transforming it into a state-of-the-art complex. The deadline for bids is Friday.

Officials said yesterday that they expect the infusion of cash to make the hospital more attractive to potential suitors.