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Prince George's, Md., health-care system remains unsold

By Lena H. Sun and Jonathan Mummolo
Washington Post Staff Writer
Wednesday, May 19, 2010; B01

A special panel in charge of finding a company to take over Prince George's County's ailing health-care system has been unable to complete a sale of the system after a two-year search, according to sources familiar with the deliberations.

The panel chairman, Ken Glover, declined to comment on specific findings of a report to be presented at the panel's final meeting Friday. But he said in an interview Tuesday that he is optimistic that county and state officials would move quickly on a plan. "There are several interested parties who have submitted their credentials to go forward in the process of transferring the assets," he said.

Failure to find a speedy resolution would mean one of the state's most intractable and expensive problems will likely become more pressing. It could complicate matters for Gov. Martin O'Malley (D) in a must-win area of the state, as he enters the heart of his reelection campaign.

A source familiar with the deliberations said the panel "is not going to select anybody specifically, no." Instead, the source said, the report will recommend steps that the county, state and hospital system managers need to take "to improve the level of care and service and to stabilize the system."

One of those recommendations would call for a new hospital to replace the flagship Prince George's Hospital Center in Cheverly, a process that could take several years, said the sources, who spoke under the condition of anonymity as not to preempt Friday's report.

Bidders have been interested in separate parts of the system. But the panel's mandate is to ensure the facilities are sold at the same time to prevent buyers from cherry-picking the system's Laurel and Bowie hospitals, which have more paying patients and are more profitable than Prince George's Hospital Center.

The long-troubled system, which includes the three hospitals and two nursing homes, serves as many as 180,000 patients a year, many of them poor and uninsured. The system has been losing millions for years, industry analysts said, and has survived only through repeated infusions of public cash.

The hospital system, owned by the county and managed by the nonprofit Dimensions Healthcare System, has long been a source of friction between the state and the county -- and specifically between O'Malley and the current Prince George's leadership. State and local leaders have wrangled over how best to stabilize the system, particularly the hospital center. It is Maryland's second-busiest trauma facility and has been responsible for much of Dimensions' annual losses.

Amid much fanfare two years ago, O'Malley and County Executive Jack B. Johnson (D) signed a deal that created the independent panel -- formally known as the Prince George's County Hospital Authority -- to find a health-care company to take over the system. The state and county each agreed to pay $12 million annually for two years to keep the hospital system afloat while the appointed seven-member board searched for potential buyers.

However, Johnson announced in October that state budget cuts would lead the county to trim its fiscal 2010 payment to the system by $3 million, a move that drew protests from hospital workers.

The county and state funding is supposed to run out June 30, raising alarms among some officials.

"The issue is: Is the governor going to step up and solve this issue to ensure that the hospital remains viable into the future, or is he going to walk away?" said Del. Doyle L. Niemann (D-Prince George's), who sponsored a bill to create the panel.

If a deal is not closed soon, he said, the state and county may not be obligated to provide an additional $174 million in promised long-term funding to whatever entities take over the system. "We're at risk of putting it all back in the political arena," Niemann said. "And we're right back where we were."

Spokesmen for Maryland Health Secretary John M. Colmers and Johnson declined to comment because the panel's report is not yet public.

Politicians have promised to come up with a long-term solution that would phase out county ownership, improve the system's reputation and attract more privately insured patients. About 30 percent of Prince George's residents seek health care outside the county.

To entice buyers, the panel agreed this year to allow the state and county to assume Dimensions' long-term debt of about $130 million.

According to the sources, there has been little bidder interest in the hospital center, which has one of the state's highest rates of uncompensated care. Although the state reimburses hospitals for much of that cost, the state does not reimburse hospitals for subsidies they pay physicians to guarantee a certain level of income for treating the uninsured.

The subsidy costs Dimensions about $15 million a year, according to Paul Blackwood, vice president of planning.

"We have a larger one given the disproportionately large share of uninsured patients," said Blackwood, who added that he did not know whether new buyers have been found. "It's difficult for physicians to make a living off the uninsured and those covered by Medicaid," he said.

For the fiscal year that ended June 2008, the most recent year for which state data was available, the Prince George's Hospital Center reported losing more than $15 million in physician-related and other operating services after losing nearly $14 million in each of the previous years, according to financial data reported to the state.

Last fall, a Dimensions official said the system was running on three days of operating reserves; standard practice is to have about 70 days. "We continue to rely on county and state support for both operating and capital needs of the organization," Blackwood said.

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