Prince George's County Executive Lawrence J. Hogan signed a contract yesterday that would lease the county's three hospitals to a private corporation and declared that the local government is incapable of running them efficiently. He said the move would earn the county $8 million a year.
The contract, which must be approved by the County Council, would give the Hospital Corp. of America a 21-year lease on Prince George's General Hospital in Cheverly, Greater Laurel Hospital and the Bowie Ambulatory Care facility.
Some council members expressed fear that the quality of patient care might deteriorate if the hospitals are privately run. "I don't know how they plan to address growing community needs," said council member Ann Landry Lombardi. "Everything is supposed to be status quo, but status quo doesn't mean anything if I need more facilities for 50 kids who overdose on drugs."
If the council agrees, the lease agreement would go into effect July 1, but several council members said they did not think they could reach a decision by that date.
Hogan has been trying to rid the county of its hospitals since he took office more than two years ago. "The hospitals have been chaotic," he said at a press conference yesterday. "Not only have they been a financial burden on the county, but they also have been a problem in delivering health care."
Hogan could not cite specific problems in health care delivery, but said the county hospitals have a "cumbersome purchasing system" and an inefficient computer.
For the last two fiscal years, the hospitals have shown a slight profit after several years of incurring deficits, according to County Finance Director Bill Brown. But Brown said he believes leasing the facilities to a private firm would still be a good move because of cutbacks in federal Medicaid spending and because he thinks the county's contribution toward care of indigent patients -- which would continue -- would go down. The hospital commission has requested $3 million from the county for the next fiscal year.
Hogan terms of the lease he signed yesterday, the hospital Corp. of America would give the county a down payment of nearly $9 million, and the county would receive annual revenues of about $8 million. In addition, the corporation would give the county 60 percent of the profits in excess of the corporation's normal profit margin of 5 percent. The county's revenue from the arrangement would still be offset by its contribution for indigent care -- set at a maximum of $500,000 a year by terms of the lease.
The lease provides that care of the indigent and all other services created by public policy, such as the rape crisis center, must be continued. In addition, it mandates that the corporation will keep all current hospital employes and given them benefits "at least equal overall to those presently available."
The Hospital Corp. of America, based in Nashville, manages or owns about 200 hospitals throughout the United States. David G. William, executive vice president of the corporation, said the company intends to "use economies of scale" such as large-volume purchasing to run the hospitals more efficiently.
William said the cost of patient care would not increase because rates are regulated in Maryland by a state agency.