The District of Columbia yesterday revoked permission for financially beleaguered Doctors Hospital to transfer operations to a renovated hotel at 1143 New Hampshire Ave. NW.
The decision, disclosed in a letter to William P. Herbst III, president and chairman of the board of Doctors Hospital, casts further doubt on the ability of the hospital to survive past 1980, when its present 206-bed facility in the 1800 block of I Street NW will be torn down to make way for an office-shopping complex.
The decision by Carl Wilson, director of the city's State Health Planning and Development Agency, turned on a contract signed Aug. 30 between the hospital and American Health Services Management Inc. providing for a "sale-leaseback" arrangement for the site at 1143 New Hampshire.
Wilson's letter to Herbst cited six reasons why, under the contract, Doctors Hospital would lack "sufficient control of the New Hampshire Avenue property" to meet the requirements of District of Columbia law for granting the certificate-of-need that would allow Doctors to operate at the new location.
As a result, Wilson said, Doctors' application for another extension of the one-year certificate-of-need granted in September 1977 by D.C. Human Resources Department Director Albert P. Russo was being denied. The original certificate would have expired last month except for two interim extensions to give Wilson's staff more time to study the contract.
Under terms of the contract, the owners of Doctors Hospital would sell the New Hampshire Avenue property to American Health Services and then lease it back at an annual rent of $2,375,000. American Health Services would manage the hospital in exchange for 6 percent of the hospital's net revenue.
Wilson told Herbst that the terms of the lease agreement between Doctors and American Health Services are such that "it is evident that the degree of control retained by Doctors Hospital under the final lease agreement is insufficient to guarantee that the scope of the existing certificate-of-need will be complied with by American Health Services Management, Inc. under their lease commitment."
Among the problems cited by Wilson were:
A lease provision denying Doctors the right to change plans in the lease agreement without American Health Service's permission.
A lease restriction that the facility would be used "solely as an acute care hospital." Wilson said "an essential element of control of a hospital includes the unencumbered ability to use parts of the facility for purposes other than solely for an acute care hospital."
A lease provision barring any changes or improvements in the facility without permission of American Health Services.
A bar in the lease against any sub-leasing by Doctors.
A provision that the lease terms may be modified to meet requirements of "any" mortgage or deed of trust holder. Wilson cited the "gross uncertainty as to who will be in control at any given point because of the demands of a lender."