New Owner Vows Healthier Hospital
Optimism Is Felt at Greater Southeast

By Susan Levine
Washington Post Staff Writer
Thursday, November 8, 2007

After seven years of decline that left it teetering on collapse, Greater Southeast Community Hospital was sold yesterday to a private company that vows to rehabilitate the D.C. facility in appearance, services and reputation.

The transaction saves the District's only hospital east of the Anacostia River and shores up the city's hospital system, especially its emergency care network, which would have been battered if Greater Southeast had closed.

The new owner, Specialty Hospitals of America, has been given $79 million in public loans and grants to make good on its promises. The investment was approved late last month by an ambivalent D.C. Council, whose members said they thought they had no other option, given the absence of realistic buyers over the past year and the serious health issues that affect Southeast Washington residents.

The 140,000 people in Wards 7 and 8 suffer disproportionately from chronic disease and poor access to care. Mayor Adrian M. Fenty said that their needs were of paramount consideration during the complex discussions that led to yesterday's settlement.

"Our guiding principle in the negotiation of this deal was to ensure that the quality of a person's health care would not be determined by where they live in the District," Fenty said yesterday.

Improvements, both substantive and cosmetic, should begin quickly, Specialty officials said. About $6 million worth of equipment will be ordered, including a CAT scanner, respirators, lab equipment and ice machines. The roof and windows will be replaced starting next month. The bushes will be cut, the grounds landscaped and fences mended.

The papers for the sale were finalized yesterday afternoon in the downtown law offices of Nixon Peabody. Specialty, based in New England, paid $26.4 million to acquire the facility from Envision Hospital Corp. of Arizona, which had bought Greater Southeast out of bankruptcy in 1999 and 2002. Council members had repeatedly accused Envision of grossly negligent management.

Now, there is a sense of opportunity and hope.

"This was done to give this important institution a fresh start," said David A. Catania (I-At large), who leads the council's Health Committee. "The people served by this hospital deserved better."

Perhaps no one is looking ahead more than the doctors, nurses and other employees who remained at the hospital as conditions deteriorated. "It's almost like being in a desert," said Greater Southeast chief executive Cyril Allen, "and this fountain of water shows up."

Immense challenges lie ahead. Although the hospital is licensed for 494 beds, only about a quarter are filled, and several floors have been essentially mothballed. Elective surgeries are done only part time, and ambulances are routinely redirected to emergency departments elsewhere in the city.

The new owner will triage the hospital's problems, "fixing the really tremendously serious issues that exist here today and then very quickly working to expand the range of services," said Specialty's chairman, James Rappaport.

That effort is not expected to stave off the national Joint Commission, which is threatening Greater Southeast with its second loss of accreditation in four years. Without extensive improvements, the hospital has little chance of regaining full status or of surviving.

Specialty intends to increase the number of short-term acute-care beds to 150 and restore several hundred beds for adolescent and adult psychiatric treatment and patients who need long-term care.

Despite the city's chief financial officer's concerns over the company's financial viability, the D.C. Council voted to provide Specialty with $30 million for renovations and equipment in addition to $49 million in loans for working capital, the hospital's debts and acquisition costs.

Catania stressed the importance of the financing partnership, saying, "We've worked very hard to protect the city's interest and preserve the future of the hospital."

The company came to Washington in 2005 when it bought the MedLINK Hospital and Nursing Center on Capitol Hill. The next year, it bought Hadley Memorial Hospital in Southeast. It renamed both facilities and continues to run them as long-term-care facilities.

Specialty's arrival at Greater Southeast was heralded by Pedro Alfonso, chairman of the facility's board of trustees. "I think it will make all the difference," he said. "The new owners . . . hopefully will understand the local aspects of running the hospital and be more hands-on."

At Washington Hospital Center, which has borne the brunt of Greater Southeast's protracted decline, president James Caldas also voiced optimism. "It clearly is an extremely positive step for maintaining a hospital east of the river," he said.

But, he added, it's only a first step: To rebuild the medical staff and win back the community, Specialty must show it has made a long-term commitment, he said.

Only then can there be stability, Caldas said, "and a renaissance at Greater Southeast."