Funding Plan to Help Lure Buyer for Hospital Network

Prince George's County and the state of Maryland agreed in principle to each spend $75 million to lure a health-care company interested in taking over the county's troubled hospital network.

Under the agreement, announced yesterday, Prince George's and the state would spend a total of $150 million over five years, beginning in fiscal 2011, to help fund hospital operations. The state would also spend an additional $24 million to improve equipment and facilities, bringing the total package to $174 million.

A newly appointed seven-member hospital authority will seek bids from hospital companies willing to buy the system, which is owned by the county and operated by the nonprofit Dimensions Health. The governments' financial commitment is expected to be a key component in attracting potential bidders.

County and state officials said they are in final negotiations on the funding plan, and expect to have it completed by Aug. 20 as required by a law passed this year by the General Assembly.

The law also requires that Prince George's and the state each spend $12 million this year and next to prop up the system under its current management during the bidding.

The state and county have struggled to come up with a plan for the system, which has been losing money for years. Deals have been scuttled by disagreements between the two governments over how much public money each is willing to contribute.

"This has been tried before but it's never reached this point," said Shaun Adamec, a spokesman for Gov. Martin O'Malley (D). "The hospital authority is working diligently. The state and county are doing their part, as evidenced by today's agreement."

The agreement was signed by O'Malley, Prince George's Executive Jack B. Johnson (D) and County Council Chairman Samuel H. Dean (D-Mitchellville). James Keary, a spokesman for Johnson, declined to comment, noting that details of the plan are still under negotiation.

The system, which includes Prince George's Hospital Center, Laurel Regional Hospital, Bowie Health Campus and two nursing homes, serves 180,000 patients a year, many of them poor and uninsured. Its reputation as a system in distress has driven away many privately insured patients who could help stem financial losses. Experts have long said a turnaround would require several hundred million dollars to help modernize hospital facilities and equipment.

Johnson has indicated that long-term stability for the system could cost at least $400 million. In 2007, the state and county came close to agreeing to spend $329 million over eight years to entice new owners. The deal collapsed on the last day of the legislative session.

Since then, the economy has slowed and it is unclear how Prince George's or the state will pay for the smaller funding package now the on table. Johnson recently told county employees they must forgo part of their pay raises to help close a $48 million budget gap.

Ebs Burnough, political director for SEIU 1199, which represents hospital workers, said the funding would provide comfort to longtime employees that government is committed to keeping the hospitals open.

"Would we really love it if it were more money? Yes," he said. "But $174 million is no small sum. For anyone who was considering taking over the system, it would definitely be an advantage."