Southeast Hospital to Be Sold for $31 Million

The owner of Greater Southeast Community Hospital agreed in principle last night to sell the troubled facility to a New England company that plans to quadruple the number of beds and expand services to create a "medical mall" of care.

The $31.5 million deal with Specialty Hospitals of America, which both sides hope to finalize by Nov. 1, could hinge on a contribution of as much as $27.5 million from the District to cover Greater Southeast's considerable debts from its most recent bankruptcy and years of unpaid vendors' bills.

The city also will be asked to expedite some regulatory reviews, Specialty executives said. They would not confirm the amount of money the company would put toward the purchase from Envision Hospital Corp.

The chairman of the D.C. Council's Committee on Health characterized such government involvement as a worthwhile investment in a part of the city that has long been underserved medically. Council member David A. Catania (I-At Large) said the money would be repaid in kind many times over through the hospital's provision of care to uninsured residents.

"This isn't the typical deal where the city lays out money and gets nothing in return," Catania said.

Catania's position has the support of council Chairman Vincent C. Gray (D) and council member Marion Barry (D-Ward 8), who represents the community most affected by Greater Southeast's tortuous deterioration since its first bankruptcy in 1999.

"It was a long and rocky road, and the people . . . have suffered," Barry said last night. "It was time to bring it to an end."

Although the three council members expressed enthusiasm for Specialty's plans for the facility, they acknowledged it is a damaged hospital -- in reputation and services -- that drew few bidders and only qualified bids during the year it has been for sale. No other hospital in the District stepped forward to take over its operation, though many of them worried out loud about the impact were Greater Southeast to close.

Given that reality, the agreement reached last night "is the best deal under the circumstances we could get," Catania said. "A couple months ago, we were looking at this place devolving into a clinic."

Gray said he did not anticipate problems in winning the support of the council, which he said has shared "great anxiety" over Greater Southeast's future.

"Under other circumstances, we might have looked at this differently," Gray said. "But again, we've got an extraordinary set of circumstances with Greater Southeast."

City Administrator Dan Tangherlini said the Fenty administration was unaware of the terms of the proposed deal and would need to know more before committing public funds.