A federal bankruptcy judge told District officials yesterday that they should be prepared to put up more money to keep Greater Southeast Community Hospital afloat or see the financially struggling facility's assets sold off to satisfy creditors.
Judge S. Martin Teel Jr. gave the District until Tuesday to come up with a plan to put the hospital on a path to financial stability--and the cash to carry it out.
The city already has lent the Greater Southeast Healthcare System--the nonprofit foundation that runs the 286-bed facility--$8.5 million since spring to keep the hospital running. But creditors, seeking more than $70 million in debts, said yesterday that Greater Southeast continues to hemorrhage money, and they asked Teel to take steps that would lead to the liquidation of the hospital's assets.
That drew objections from D.C. Mayor Anthony A. Williams (D) and hospital officials, who urged a delay in any liquidation plans so that a D.C. health panel, consultants and officials would have time to decide how to reorganize Greater Southeast.
"We can't just shut down the hospital before we've had the opportunity to explore what can be done," said David E. Rice, an attorney for the hospital. "We're already in the boat. [Creditors are] saying rather than figure out how to repair the boat, we should just sink it."
Sam J. Alberts, attorney for the creditors, said the demand for liquidation was the result of slow movement on the Greater Southeast issue by the D.C. government.
"Everybody knew this day was coming, and we heard nothing," Alberts said. "The [hospital] cannot continue to operate this way on the backs of the . . . creditors."
The city's attorney, Julia Sayles, countered that "it's unfair that the District is attacked," adding that "we have lived up to our end of the bargain" in keeping Greater Southeast alive for much of this year.
Williams has not endorsed a hospital consultant's proposal that the District kick in an additional $8 million to $10 million to keep Greater Southeast running for several more months, but he has indicated that he is willing to direct more city money to help preserve Greater Southeast.
Teel indicated yesterday that another city bailout is the hospital's only hope, saying that "there is evidence that the [hospital] can turn around if the District of Columbia advances the $8 million to $10 million."
The D.C. government, which is among Greater Southeast's creditors because of the $8.5 million loan it gave the hospital, fears that closing the facility on Southern Avenue SE would create an economic and health care crisis east of the Anacostia River.
Greater Southeast is the largest employer in that part of the District, with 1,100 employees at the hospital alone and 2,300 overall in a system that also includes a nursing home on its D.C. campus and a hospital and nursing home in southern Prince George's County. The Prince George's hospital, Fort Washington, has been profitable and is not part of the bankruptcy proceedings.
The larger hospital is the main source of medical care not only for thousands of Southeast Washington residents but also for many people in Prince George's County. Thirty percent of the hospital's patients come from Maryland.
"It's really a lifeline for many people east of the [Anacostia] river and particularly those who live in far Southeast," said Vincent Gray, a former director of the D.C. Department of Human Services and the executive director of Covenant House Washington, which provides services to low-income residents.
Nathaniel Howard, the parent representative on the D.C. schools system's emergency board of trustees, said that "the hospital is an extremely valuable institution that has played a crucial role in the community," and he noted that hospital personnel have conducted scores of health workshops in the area. The closure of Greater Southeast "would be a great loss for this community," he added.
Like many hospitals--including publicly owned D.C. General--Greater Southeast has struggled financially in an era when insurers have aggressively sought to cut costs by limiting the time their clients spend in hospitals. That's partly why hospitals across the city have thousands of empty beds.
At the same time, the District has about 80,000 low-income residents who are uninsured, many of them lacking even basic, preventive medical care.
Williams has appointed a panel to recommend ways to insure those residents and address such imbalances in the city's health care network. In some cases, the challenge will be to reshape the mission of certain facilities; the mayor and other D.C. officials are trying to decide what role Greater Southeast should play in that effort.
Meanwhile, the plan offered by the hospital's consultants--who were brought in by the city--would require millions more city dollars to keep Greater Southeast running until a reorganization plan is set. Under the stopgap plan, the hospital's payroll--not counting temporary contract employees--would be cut by 125 to 875 people. The consultants also recommended creating two new departments to try to generate new business--an outpatient psychiatric unit and a "partial hospitalization" unit for Medicaid patients.
David Speltz, senior vice president of the crisis management firm Intensive Resource Group, said the Greater Southeast situation isn't the worst he has seen. He predicted that the support from the city makes it virtually certain that the hospital can be saved.
"Of all the facilities we have worked with, none have needed to survive more than this one," he said. "It's a good hospital with a good staff, and its patients really need it."
Staff writer Michael H. Cottman contributed to this report.