D.C. Mayor Warms to Offer to Sell Hospital
Fenty Says Proposal For Greater Southeast Could Be 'Win-Win-Win'

By David Nakamura and Susan Levine
Washington Post Staff Writers
Friday, August 24, 2007

D.C. Mayor Adrian M. Fenty expressed growing confidence yesterday about a deal that would bring new ownership to the financially strapped Greater Southeast Community Hospital, saying that his administration would be open to investing up to $27.5 million in public money to make it happen.

Fenty (D) met for 45 minutes with D.C. Council member David A. Catania (I-At Large), chairman of the health committee, who helped orchestrate the agreement under which Envision Hospital Corp. would sell the hospital to New England-based Specialty Hospitals of America for $31.5 million.

Under the proposed terms of the sale, agreed to in principle Wednesday night, the city would contribute money to help pay off debt owed to Greater Southeast's vendors and physicians as well as what is owed to creditors from its 2002 bankruptcy. Specialty has promised to transform the hospital in size and services.

"I was informed about a lot of details I didn't know," Fenty said. "The administration needs to do its due diligence. But I think we have the framework for a proposal that could be a win-win-win" for the hospital, city government and residents.

Announcement of the pending purchase by the company, which owns two D.C. health-care facilities, came more than a year after Greater Southeast went on the market. The once well-regarded institution -- the city's only hospital east of the Anacostia River and one that serves a large poor population -- has suffered a decline that made it unmarketable.

Catania's proposal has backers on the council, including Chairman Vincent C. Gray (D), Marion Barry (D-Ward 8) and Phil Mendelson (D-At Large). Mendelson said he thinks that supporting the sale is critical not just for residents in wards 7 and 8 but also for the District's other facilities and emergency response crews. Were Greater Southeast to close, emergency rooms would become more crowded and ambulance transports even longer.

But Jack Evans (D-Ward 2), chairman of the council's finance and revenue committee, said he is skeptical about the sale and the city's proposed financial role. He said that Washington had granted tax breaks to Greater Southeast several years ago in an effort to keep it financially solvent, yet "the hospital is worse than ever." Evans said he would have preferred that a larger ownership group be the buyer, such as MedStar Health, even if it required a greater investment from the city.

His criticism brought a rebuke from Catania, who said that neither MedStar nor any local hospital was a serious suitor for the hospital in the past year. "The truth of the matter is, no one stepped up but Specialty," Catania said.

Evans was among a minority of detractors to speak out yesterday. Representatives of the hospital's medical staff and service workers were guardedly positive. Several community activists said they were cautiously optimistic.

Although Greater Southeast is licensed for almost 500 beds, it has filled as few as 80 in recent months. Wings of the eight-story building are empty, and patient rooms are closed or are being used for storage. Elective surgeries are scheduled only three days a week, and the hospital lacks doctors in several specialties.

Specialty's chairman, Jim Rappaport, said yesterday that no operator could make the decades-old hospital financially viable now, given the number of short-term acute-care beds needed in that part of the city. "The overhead of that facility will kill them," he said.

Rappaport and company officials plan to turn Greater Southeast into a facility that will provide a continuum of care, adding several hundred beds for adult and adolescent psychiatric care, long-term acute care and skilled-nursing care. The 120 to 150 traditional beds that Specialty projects would be part of a full-service community hospital with greatly strengthened departments, including a reopened cardiac catheterization lab, he said.

Rappaport said that part of the transformation will begin before the sale is completed in the fall. And during the next year to 18 months, Specialty will bring in a "nationally known management company" to run the short-term acute-care operation. When asked whether the improvements being described would take place by September 2008, he said, "The simple answer is yes."

Asghar Shaigany, a gastroenterologist and head of the hospital's medical executive committee, said he is looking forward to a future under new ownership, remembering the pledges made when Envision bought Greater Southeast out of bankruptcy in 1999. Few promises were kept, and, in the intervening years, many doctors left and patients lost faith in the hospital as conditions worsened.

"The medical staff wants a full-service acute hospital east of the Anacostia," Shaigany said. If Specialty does what it has announced with 150 beds, "I think the medical staff will be very happy."

A spokeswoman for 1199 SEIU, which represents about 300 service workers and nurse aides at Greater Southeast, said that union officials want to see what the deal looks like in its totality. But Stacey Mink called it "a step forward in the long history of Greater Southeast."

Community activists said they are hopeful even as they wait for more information about Specialty's track record and plans.

"I'm very optimistic," said Cleve Mesidor, a Ward 7 activist. "But before we break out the parade, we need to find out more terms of the deal and their vision for expanding the hospital. Their plans sound ambitious. What we need is to make sure the strategy is sustainable."

Arrington Dixon, a former chairman of the D.C. Council who lives in Ward 8, said: "Anything that would help us maintain quality health care east of the river is important. . . . We want to have it. I would say almost at any cost, but we have to do due diligence."

The $27 million that the city would pay under the deal must be formally proposed by the mayor and approved by the council. Catania said that he expects the city to invest more than the initial payment to help Specialty acquire technology such as a magnetic resonance imaging machine. Its price tag: about $2 million.