Four District hospitals yesterday dropped their objections to converting the D.C. General emergency room into an urgent care center as a money-saving move in the Greater Southeast Community Hospital bankruptcy case, paving the way for new leadership in the city's privatized indigent health care system.

Greater Southeast has run the satellite emergency room and the adjoining multi-specialty outpatient facility since 2001, when D.C. General Hospital inpatient units were closed and Greater Southeast was awarded a $70 million annual contract to run the city's indigent health care system.

But after its parent company filed for bankruptcy in November, executives of Greater Southeast and District officials said they would discontinue the D.C. General emergency room and other services because the hospital was losing $8 million a year on them.

Last month, four major hospitals said that converting that emergency room into an urgent care facility would inflict irreparable harm on them and destabilize the entire District health care system by forcing thousands of patients at the D.C. General emergency room to switch to theirs, which they described as already stretched thin.

In a brief, the hospitals told U.S. Bankruptcy Judge S. Martin Teel Jr. that all patients -- insured or not -- would suffer from crowded emergency rooms and hospitals drained financially by an influx of uninsured patients.

Greater Southeast had estimated that more than 10,000 "true emergency" cases at D.C. General each year would have to be handled by other hospital ERs.

But the hospitals backed away from their warnings yesterday after City Administrator John A. Koskinen, D.C. Health Department Director James A. Buford and representatives of the four hospitals emerged from a conference room and told Teel that they had reached an agreement.

Representatives of the four hospitals, Children's Hospital, Washington Hospital Center, Providence Hospital and George Washington University Hospital, suggested they could accommodate the added emergency care if the city kept its promise not to end a payment policy called presumptive eligibility.

Under it, the city pays for up to 30 days of emergency care for uninsured patients under the assumption that they might qualify later for insurance. Under the city's initial proposal, a hospital would be stuck with the bill if it turned out later that the patient was ineligible.

The D.C. Council must adopt the urgent care plan, including another key provision that Teel approved today -- substituting the D.C. Health Department for Greater Southeast as general contractor of the indigent program, known to its 28,000 enrollees as the D.C. Healthcare Alliance.

Daniel McLean, chief executive at George Washington and chairman of the D.C. Hospital Association, said he hoped the council would approve the plan and preserve presumptive eligibility rules while the city improves alliance screening and enrollment at hospitals and consults more with them.

"We have real confidence that we'll work with the city to make it happen," McLean said after the hearing. He said uninsured patients needed to be efficiently enrolled in the alliance or in Medicaid so presumptive eligibility payments would not be needed.

"We're delighted," Koskinen said. He agreed with McLean that residents need to be educated by the city about differences between urgent care and emergency care and encouraged to select the appropriate kind of health facility.

McLean said a successful program would direct non-emergency cases away from hospitals and to the urgent care center instead.

"Mr. Koskinen and Mr. Buford really did extend themselves to find a way to work with us," McLean said.

City Administrator John Koskinen said residents must not overrun the ERs with non-emergency cases.