Pr. George's hospital panel report offers no firm solution

By Jonathan Mummolo and Lena H. Sun
Washington Post Staff Writer
Saturday, May 22, 2010

The panel tasked with finding a buyer to take over the beleaguered Prince George's County hospital system convened for a final meeting Friday after two years of study, recommending measures to prop up the existing hospital operator but ultimately passing the ball to state and county officials to find a more permanent solution.

Members of the Prince George's County Hospital Authority, formed in 2008, said that although nine interested bidders had come forward, most only wanted to buy select pieces of the system -- a strategy that would have resulted in a "garage sale" of hospital assets that would not have improved care. They said that the process was hindered by the economic downturn and that bidders wanted to see the system -- which serves as many as 180,000 patients a year, many of them uninsured -- stabilized before taking the risk of acquiring it.

"The whole system sale at this time was not feasible," authority Chairman Ken Glover told a packed conference room at Laurel Regional Hospital. "If any of you tried to sell or refinance your house over the last few years . . . you remember the pain and angst of it. Imagine selling six very big houses. . . . [Bidders] said, 'You know what? Whatever is wrong now in terms of the debt structure and operations, you have to fix that before we take over.' "

The panel recommended that the county -- which owns the hospital network -- temporarily transfer by Oct. 1 some or all hospital assets to the nonprofit Dimensions Healthcare System, the network's financially strapped operator. This would boost the operator's creditworthiness, allowing it to make upgrades and easing a permanent transfer or sale, with creating a new hospital as an end goal, authority members said.

Even in the best-case scenario, the timeline in the authority's report suggests county residents won't have a new hospital until about 2014. The authority asked county and state leaders to immediately extend or redraft a memorandum of understanding like an old one that promised a combined $174 million in long-term funding to a new buyer. The original memo, Glover said, expired with the authority Friday.

The report also suggests officials come up with a "cost containment plan" to stem the huge losses the system has suffered for more than a decade. That goal has proved intractable for years, with the system staying afloat only via frequent infusions of public cash.

For the fiscal year that ended June 2008, the most recent year for which state data are available, the system's flagship, 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 two previous years.

Whether officials will follow the panel's lead remains to be seen. County Executive Jack B. Johnson (D) and Maryland Health Secretary John M. Colmers spoke briefly at the meeting, thanking authority members for their efforts, but neither committed to specific proposals.

"I haven't read the report; I'm going to do that this weekend," Johnson said in an interview. "We knew it was a very, very difficult process. . . . I'm not surprised we didn't get an offer."

In a statement, Gov. Martin O'Malley (D) said, "There is still work ahead. . . . The Authority's report and recommendations provide a pathway for the state and county to work together."

The panel of seven members -- six of whom were present -- was not unanimous in its views. One member, lawyer Stan Brown, gave a fire-tongued denouncement of the main recommendations before voting against adopting the report. Brown criticized the unnamed "strategic partner" that the report recommends "guide" the development of a new system and possibly take it over after the transitional phase.

"The problem is that during the entire two-year term of this authority, that strategic alliance partner has not appeared," Brown said. "Clearly, the authority's mandate has not been satisfied. We were not able to sell the assets of the Prince George's County health system."

The report highlights the three of the nine bidders that had the strongest proposals: Anne Arundel Medical Center, the Chiaramonte Group and a new company Dimensions plans to form. Dimensions recently announced the retirement of chief executive Dunlop Ecker.

© 2010 The Washington Post Company