The Greater Southeast Community Hospital Foundation announced last week that it will acquire a small hospital in Prince George's County, which it said would become the linchpin of a community for the elderly it plans to build with a Maryland developer.
Coupled with a contract won this month to manage a nursing home in Mount Pleasant, the deal to buy Parkwood Hospital in Clinton accelerates the nonprofit foundation's expansion into the geriatric market in Prince George's County and Southeast Washington, officials said.
The purchase, while relatively small in value, also highlights the kind of regional consolidation that is reshaping the Washington health-care map, as the government and employers seek to hold down their hospital costs.
Under pressures to find new revenue, hospitals are increasingly branching into related health areas -- such as insurance or nursing homes. Meanwhile, small free-standing hospitals such as Parkwood are finding it more difficult to compete without linking up with larger facilities.
The Greater Southeast Foundation is the umbrella for a range of groups providing health services in Anacostia and southern Maryland. The centerpiece of this network is a 450-bed hospital on Southern Avenue in the District, but foundation affiliates also operate, among other services, a nursing home, an ambulatory-care facility and an insurance group that offers prepaid health benefits to area employes.
"We perceive ourselves as the system of health care that runs through southern Maryland and southern D.C.," said Barry A. Passett, president of the foundation. "A person in this broad geographic area can do one-stop shopping" for services, he added.
Passett said the foundation paid $6 million to acquire Parkwood, a 33-bed facility previously known as Clinton Community Hospital, from a group of physician owners. Greater Southeast has started to upgrade the facilities, and the hospital will be converted to serve primarily elderly patients, he said.
As part of the deal, the foundation also acquired part-ownership of 34 acres of land adjoining the hospital. Together with Attman Properties Co., a developer based in Glen Burnie, Greater Southeast plans to build a medical office complex and more than 1,000 units of residential housing for the elderly.
In addition, a 180-bed nursing home built by Attman Properties is scheduled to open in September on 10 acres of land adjacent to Parkwood.
Passett and Gary L. Attman, vice president of the development company, said the whole campus would become a community for the elderly, and recreational and other social-service facilities would be established to supplement the nursing home and residential complex.
Attman said he couldn't predict the final cost of the development, but he said preliminary estimates showed it could exceed $50 million and possibly approach $100 million.
The acquisition of the hospital and real estate is one of several recent moves by the foundation to expand its geriatric services and economic development activities in the Southeast Washington area. A foundation affiliate, for instance, this month acquired a management contract to run the Stoddard Baptist Nursing Home in the Mount Pleasant area.
Foundation officials also noted that they are negotiating to develop a number of real estate projects, including a $50 million mixed-use development between Mississippi and Alabama avenues in Southeast Washington.
"Sometimes you have to look to some degree of diversification to offset the pressures of skyrocketing health-care costs," said James S. Featherstone Jr., assistant athletic director of the University of the District of Columbia, who serves as chairman of the foundation's board.
Featherstone said the foundation would continue to seek new sources of revenue "that might be a little different, but don't compromise our mission."
For Parkwood Hospital, the sale to Greater Southeast represents the end of its era of independence. Founded in the 1950s, the hospital has been one of the last of the physician-owned, for-profit facilities in southern Maryland -- a type of hospital that Passett said is increasingly becoming obsolete as hospitals require sophisticated modern management techniques.
Another physician-owned facility in the region, Prince George's Doctors' Hospital, was sold last year to American Medical International, a national hospital-management chain. The nearby Southern Maryland Hospital Center, a 308-bed facility, remains the only doctor-owned facility in that area.
Dr. Elie Sayan, the head of the doctors' group that previously owned Parkwood, could not be reached for comment last week.
But Richard Wade, a spokesman for the Maryland Hospital Association, indicated that Parkwood was caught in the throes of the hotly competitive hospital environment that has afflicted comparable facilities. "As Medicare, Medicaid and private payers bear down on the payment system, it will really be hard for the smaller institutions to survive," he said.
Parkwood's occupancy rates had been running below 50 percent, and state planners had targeted the hospital for a reduction of 12 beds, according to Passett. But as a result of the affiliation with Greater Southeast and the plans to refocus the facility to concentrate on geriatric care, Passett said he expected the cutback would be unnecessary.
"We have a 450-bed facility a few miles away from the 33-bed facility. Any day we want to fill it, we can fill it," he said.