A federal bankruptcy judge cleared the way last night for Greater Southeast Community Hospital to pay its 1,200 workers and continue to provide the city's only hospital services east of the Anacostia River until Tuesday while its parent company seeks new financing.
U.S. Bankruptcy Judge S. Martin Teel Jr. granted the request of Arizona-based Doctors Community HealthCare Corp. for access to money paid by health insurance plans, keeping Greater Southeast and the network's four other hospitals open -- at least until a Tuesday hearing. The hospitals include Hadley Memorial in the District, one in Chicago and two in Southern California. Altogether, they employ 3,800 people.
Today, D.C. health officials will present a contingency plan to Mayor Anthony A. Williams (D) in case Greater Southeast closes.
Yesterday, all kinds of plans were bruited about by politicians, city officials and health care executives, including one in which the city would buy Greater Southeast at a bargain and rename it D.C. General Hospital. Another idea would convert the city's privatized indigent health care plan to a nonprofit corporation with a local governing board.
The immediate effects on health care delivery have not been great, officials said. Since Wednesday's news that the company filed for protection in U.S. Bankruptcy Court, a few nurses have left Greater Southeast and some patients opted to go elsewhere, said Karen Dale, the hospital's chief executive. The emergency room has alerted ambulances not to deliver patients in need of intensive or intermediate care because nurses for those units are most scarce, she said.
As a result, she said, the inpatient census declined from 155 Wednesday to about 135 last night. For much of the year, the head count had been about 220. Yesterday, the hospital was caring for five members of the D.C. Healthcare Alliance, the city's privatized health program for the uninsured, and for one jail inmate, she said.
Before Doctors Community entered bankruptcy proceedings, Greater Southeast had closed its pediatric unit and had combined three medical-surgical nursing units into one.
Teel's ruling came after nearly six hours of bankruptcy hearings here and in Columbus, Ohio -- some of which were conducted using a teleconference link. Teel did not start his hearing until U.S. Bankruptcy Judge Donald E. Calhoun in Ohio lifted an order that had frozen the money.
The release of the funds was opposed in Columbus by creditors of National Century Financial Enterprises, the firm that had lent Doctors Community money for more than a decade. National Century entered bankruptcy proceedings Monday, and Doctors Community, already deeply in debt, sought Chapter 11 protection on Wednesday. National Century maintained that Doctors Community had no right to the money, but then suggested that Doctors Community get enough money for three days, not seven as it had requested.
Yesterday, attorneys for Doctors Community argued that the group had an urgent need for operating funds to keep its hospitals open and treat patients. But bankruptcy attorneys for National Century insisted that the money was pledged to the lending company and was needed to pay its creditors.
"It's not theirs," National Century attorney Robert Hamilton said from the Ohio courtroom. "Just because it's a hospital doesn't give them the right to come in and steal our money."
According to a document filed in that court yesterday by BankOne, which was one of National Century's bond trustees, National Century allowed Doctors Community to borrow at least $279 million more than it had collateral for. The excess funds were classified by National Century as "advances."
In Doctors Community's bankruptcy petition, it reported $227 million in assets and $675 million in liabilities -- a negative net worth of $448 million.
After Calhoun rejected the creditors' arguments, Teel granted the five Doctors Community hospitals access to nearly $5.4 million over the next three business days in the form of a loan that would be repaid if Doctors Community ever is able.
The amount included $3.9 million for payroll and benefits, $803,000 for pharmaceuticals and other supplies, $152,000 for physician fees and $355,000 for outside billing and collection services.
Greater Southeast's portion of that money, combined with $1.4 million in expedited fees from the District that were earned for treating alliance members, would help the hospital meet its $2.1 million payroll today, Dale said.
"It's very significant," said Peter D. Isakoff, an attorney for Doctors Community. "It establishes that until the issue of what money belongs to whom is resolved, probably in Ohio, we can continue to come to Judge Teel to ask him to approve necessary expenditures so long as the hospitals can demonstrate they are continuing to generate new receivables."
Greater Southeast is the flagship of the D.C Healthcare Alliance's network of six hospitals, about 30 clinics and hundreds of participating physicians. About 28,000 uninsured District residents are alliance members.
The fierce political reaction in the District was focused on a D.C. Council meeting yesterday at which members bitterly criticized the mayor for hiring Doctors Community. It was part of his plan to end inpatient care at D.C. General Hospital and shift responsibility for the health care of uninsured people to the alliance. They also criticized the city for not having a contingency plan.
District health officials were racing to put one together.
"We don't have a plan in place, but we can make a recommendation," James A. Buford, the D.C. Health Department's acting director, told the council in an angry four-hour session. A draft plan could not be released without the approval of Williams, who was out of town yesterday, he said.
Buford said he learned about the financial problems of National Century in late October. "They said they had some investors interested in them. We were kind of believing things were going to work out," Buford said.
Eugene Kinlow, the D.C. financial control board member who helped engineer the alliance contract in May 2001, said he has been assured for months that things were going well. Kinlow is chairman of the D.C. Health Systems Reform Commission and is the city's independent watchdog over the new system, although many have complained that the commission has done little.
"I've always been assured that the hospital was in okay shape, not great, but okay," he said. "Maybe I wasn't sophisticated enough to ask the right questions about Doctors and National Century. This whole thing is a web."
Staff writer Sylvia Moreno contributed to this report.