The parent company of Greater Southeast Community Hospital reached an agreement with dozens of creditors in bankruptcy court yesterday that will allow the only acute care hospital east of the Anacostia River to continue operating at least through Jan. 24.
U.S. Bankruptcy Judge S. Martin Teel Jr. approved a series of deals negotiated during the day in the hallways, the lobby and the lunchroom of the federal courthouse in Washington by attorneys for creditors and for the hospital's parent company, Doctors Community HealthCare Corp. of Scottsdale, Ariz.
The court approved the use of an estimated $39 million by Greater Southeast; nearby Hadley Memorial Hospital, a long-term care facility; and three other Doctors Community hospitals, in Chicago and Southern California. The company, which is under bankruptcy court protection, promised to repay the money so creditors have a chance to collect on their debts.
The money, paid by health care plans for care provided to their members, is being fought over by Doctors Community and the lender that had been keeping Doctors Community afloat. That lender, National Century Financial Enterprises of Dublin, Ohio, contends that it owns the hospitals' revenue and that Doctors Community should not have access to it.
National Century is under the protection of a bankruptcy court in Ohio, and the Ohio court is scheduled to determine ownership of the revenue in the near future. A loss in that court could end payments to Doctors Community.
For now, Greater Southeast and the other Doctors Community hospitals will be able to continue to care for patients. The judge also approved a plan to allow the company's 3,800 employees to use limited amounts of vacation, sick leave and personal days, which had been restricted by the bankruptcy filing.
Doctors Community attorney Peter Isakoff offered an upbeat report, saying four of the five hospitals were treating more patients than projected when the $39 million budget request was prepared.
Yesterday, Greater Southeast had 162 inpatients, up from a low of 118 last week.
Teel focused mostly on payment demands from electric, gas and other utility companies. All have threatened to shut off service if Doctors Community fails to pay its bills in strict accordance with a negotiated weekly schedule.
Pepco attorney William Douglas White persuaded the judge not to interfere with the firm's right to cut off electricity to Greater Southeast and Hadley on five days notice if payments are not made on time. Those rules apply to Pepco's 770,000 customers across the Washington region, he said.
Doctors Community argued that Teel should require a hearing before a utility could stop service, an argument endorsed by Jonathan L. Gold, an attorney for dozens of creditors. Gold argued that Pepco, Washington Gas Light Co., Commonwealth Edison in Illinois and other utilities were protected by a schedule of weekly payments of $25,000 and more that would be sent to them electronically each Wednesday.
"We're talking about patients and life and blood issues," Gold said. "It goes further than just protecting the monetary interests of the utilities."
But Teel declared that the law did not require him to restrict Pepco's authority to cut off power to a delinquent customer.
After hearing that Pepco's standard operating procedure would be allowed by the court, White offered to notify Doctors Community's attorneys by fax in addition to mailing a routine five-day termination notice if a payment were late.
"People need to understand that Pepco has no interest in seeing people's lifesaving equipment go off," White said.
In a related development, Ana Raley, a senior executive of Doctors Community, said she would resign to help the firm save money. "I feel that I have given it my all," she said. "By leaving I can probably save other people's livelihoods."
Raley attended yesterday's bankruptcy hearing with Doctors Community chief executive Paul Tuft, who declined to comment on her decision.
Tuft has been pursuing an $80 million line of credit that would allow the company to start reorganizing. He said yesterday that he had not closed on a deal but hoped to soon.