Greater Southeast Community Hospital and its creditors persuaded a federal bankruptcy judge yesterday to give them another week to prevent the hospital's liquidation and find a new private business partner.
U.S. Bankruptcy Judge S. Martin Teel Jr. agreed to permit the hospital to hire a firm to solicit and evaluate proposals for a sale, merger, acquisition or partnership that would keep the ailing hospital alive. He set a hearing for Oct. 13 to review any proposals.
Late Monday night, Greater Southeast's board of directors declared its willingness to yield control of the 280-bed facility under the "right circumstances," said hospital general counsel Terri Thompson Mallett.
There is one proposal, a $24 million purchase offer from Doctors Community Healthcare Corp., a Scottsdale, Ariz., firm that owns 85-bed Hadley Memorial Hospital in Southwest Washington.
The firm has been interested in a deal all year but has been rebuffed by Greater Southeast officials, who say they're concerned that Doctors Community Healthcare's finances are too weak. A January proposal from the firm was rejected after two months of evaluation, Mallett said.
Doctors Community Healthcare CEO Paul R. Tuft renewed the offer last week, prompting city officials to kill any possibility of extending a bailout that has funneled $8.5 million in loans, advances and grants to the hospital since May.
"It's incumbent on the board to immediately and seriously consider this offer," D.C. Mayor Anthony A. Williams (D) said yesterday.
D.C. Health Director Ivan C.A. Walks praised yesterday's court action.
"It sounds to me like finally the focus [of Greater Southeast's board] is going where it needs to go--to the citizens who depend on that hospital," Walks said. "I honestly don't know where it's been."
At a community meeting Monday night, Walks and Williams announced that no more taxpayer money would be used to prop up the hospital and that the market, not the city government, should determine its future.
Mallett said the board was taken aback by the tone of the meeting and the fact that the city administration never informed the hospital of the meeting.
"It wasn't just the words, but the atmosphere," she said. "Though we are a large part of this community, Greater Southeast was not informed of or invited to a community forum held down the street from our hospital. There was a coldness about it that was just surprising."
The court is expected to approve today the hiring of Intensive Resource Group to search for more proposals. The same firm is the consultant running Greater Southeast under a crisis management contract.
Any deals must be submitted to the hospital by Monday.
Staff writer Michael H. Cottman contributed to this report.