D.C. Mayor Anthony A. Williams said last night that the District will not bail out financially troubled Greater Southeast Community Hospital for the second time this year and bluntly told hospital officials that they should sell the hospital to a private company that has offered to buy it.

On the eve of a decision by a federal bankruptcy judge on whether to liquidate the facility to pay creditors, the mayor told hospital leaders that the marketplace, not taxpayers, will have to fix Greater Southeast.

"The taxpayers should not be expected to foot the bill for a private hospital's management run awry," Williams said.

The mayor told about 150 people gathered at Allen Chapel A.M.E. Church in Southeast Washington that the city should spend its limited health-care dollars to improve basic medical services in Ward 8 to keep people well enough to avoid hospitals in the first place.

Last week, U.S. Bankruptcy Judge S. Martin Teel Jr. urged city officials to "come to their senses" and bail out the hospital again because no private money was available. But Teel apparently was unaware of a Sept. 28 proposal by Doctors Community Healthcare Corp., of Scottsdale, Ariz., to invest up to $24 million in return for control of the hospital.

Over the weekend, Williams and other city officials said that offer makes it unreasonable for the District to commit more money to a bailout of the hospital, which is the largest employer and only major health provider east of the Anacostia River.

But hospital officials said the would-be purchaser, which owns 85-bed Hadley Memorial Hospital in Southwest Washington and four other hospitals in Chicago and Southern California, does not have the financial wherewithal to complete the deal.

Teel could rule today on the liquidation request, which was made by some of Greater Southeast's creditors.

Last night, city officials said their job is to improve primary care services in the city's poorest neighborhoods--not to continue propping up a failing hospital at a time when changes in the nation's health care system have left most hospitals struggling for financial stability.

Since May, the city has pumped $8.5 million in advances, grants and loans into the 280-bed hospital.

But Williams last night castigated Greater Southeast's governing board for failing to cut overhead and gambling that it could refuse to negotiate with Doctors Community Healthcare, believing that the city would keep the hospital afloat.

Greater Southeast President George E. Gilbert told the mayor that after racking up $70 million in debt, the hospital has a new recovery plan that would cost "the paltry sum of $10 million." Hospital Chairman Virgil C. McDonald told Williams he is making a mistake if he slams the door.

"To see a hospital go by the wayside for the small sum of a loan of $10 million is unconscionable," he said. "We are not asking the city to give us anything. We are asking for a bridge loan that we will pay back."

Hospital officials said that a shutdown wouldn't be a cheap alternative. Steven Nathan, Greater Southeast's acting chief executive, said it could cost more than $15 million to go out of business because of various laws, including one that requires employees to be paid for 60 days.

D.C. Health Director Ivan C.A. Walks also announced that the District had prepared an extensive shutdown plan in the event the hospital closes.

"If the hospital is liquidated, we have a very well thought-through closure plan that will ensure an orderly evacuation of patients from the facility," Walks said. "We're going to make sure nobody gets hurt."

Williams's comments came after several city officials decided over the weekend not to direct more money to Greater Southeast. Besides Williams, those discussions included D.C. Council Chairman Linda W. Cropp (D); council member Sandy Allen (D-Ward 8), who represents the area where the hospital is located; and Eugene Kinlow, a member of the presidentially appointed D.C. financial control board.

"The city could use that money to improve and increase our health care delivery in that area of the city," Cropp said. "The number one goal of the city must be to increase and improve the quality of health care delivery and not to pay off the debt of a private institution--especially when there is another entity prepared to buy it.

"If owners of Hadley purchase Greater Southeast, that would obviously be wonderful," she added. "If they don't and it closes, the city has other plans to improve the health care delivery and ability in that part of the city."

Among the moves being considered are expanding several clinics in the area and extending their hours, enhancing Hadley Memorial Hospital and strengthening D.C. General Hospital so it can deal with emergency care needs that had been handled by Greater Southeast.

Staff writers Stephen C. Fehr and Eric Lipton contributed to this report.

CAPTION: George Gilbert, right, president of Greater Southeast, said the hospital has a new recovery plan that would cost "the paltry sum of $10 million."