The consulting firm Veritas of Washington had been in business just over a year when it won a lucrative contract to salvage D.C.’s only public hospital. Key members of its management team had led a New York hospital that filed for bankruptcy. The District would become its sole client.
After the administration of Mayor Muriel E. Bowser (D) — who received more than $35,000 in political donations from the firm’s founders, family and affiliated companies, campaign-finance records show — authorized a no-bid contract for consultants to stanch financial losses at United Medical Center, Veritas began work for a fee of $300,000 per month.
A year and a half later, the hospital continues to face financial uncertainty and is coping with new medical crises — including regulators’ closure of the obstetrics ward last month because of unsafe conditions. And public records reviewed by The Washington Post show Veritas has failed to meet a number of the city’s standards for managing the hospital.
A recent report on the Veritas contract by city officials states the firm, which has collected about $5 million in taxpayer dollars, has delivered about a tenth of the $9 million in extra revenue it projected it would generate for the hospital this fiscal year.
Veritas is on track to meet its overarching mandate: District officials predict the hospital will end the year with a razor-thin profit margin after years of red ink and taxpayer subsidies. But records show that is largely because of billing improvements overseen by D.C. Chief Financial Officer Jeffrey S. DeWitt.
Meanwhile, the company’s employees have billed tens of thousands of dollars in work-related expenses to the city.
The District is reimbursing two Veritas managers — hospital chief executive Luis Hernandez and quality manager Diane Kelly — an average of more than $7,400 a month to fly back and forth to D.C. from their homes in Florida and North Carolina. During the week, the District pays for them to rent apartments at National Harbor in Maryland, according to expense reports reviewed by The Post. Even their gas and electricity bills are reimbursed by taxpayers.
Such spending has continued as UMC remains in precarious financial shape and continues to generate complaints from its patients, many of whom come from the poorest and most violent neighborhoods in the nation’s capital.
Finiya Johnson, 20, gave birth at UMC in January before health regulators halted deliveries. She said only one doctor was attending to multiple women on the obstetrics ward and, as a result, nurses tried to delay her delivery. When her son was born, he was not breathing and needed to be resuscitated, she said.
“It’s just horrible,” Johnson said, standing outside the hospital on a recent morning after a pediatric appointment for her son. “I don’t know where their money going.”
Veritas officials declined to provide details about their $3.6 million annual fee and refused to disclose the salaries of the three executives who work full-time at UMC, saying they are not subject to the District’s public-information laws because they are paid by Veritas rather than the hospital. Hernandez and Kelly declined to comment through a hospital spokeswoman.
Corbett Price, the company’s executive chairman, said Veritas was doing its job: Steadying the hospital’s financial situation so the District could find a private company to build a new hospital on the east side of the city.
But Price, who is married to Veritas owner Chrystie Boucrée, cautioned against setting expectations too high for an institution that has struggled as long as UMC.
“It has a historical pattern. No company can instantaneously come in to correct that,” Price said. “There will be no miracle turnaround, so to speak.”
D.C. Health Care Finance Director Wayne Turnage, who recommended Veritas to the hospital board last year, said despite its shortcomings, the company was meeting its broad goal of stabilizing a beleaguered medical facility.
“Can they do better? Absolutely,” Turnage said. “But you also have to think about the hospital they’re working in. We’re not talking about a well-funded, state-of-the-art hospital.”
Since it opened 50 years ago, Southeast Washington’s only fullservice hospital has struggled to find an economically viable formula for providing care to the poor and mostly African American neighborhoods east of the Anacostia River.
The hospital, which sits at the District’s border with Maryland, went through bankruptcy about 20 years ago and, after a turbulent period of corporate management that included the loss of its accreditation, was taken over by the city in 2010.
The move came as many municipalities were abandoning public hospitals because of their financial challenges — including the District, which closed D.C. General Hospital in 2001.
The city agreed in 2013 to a two-year, $12.8 million contract with Huron Consulting, a national firm specializing in hospital turnarounds. The company deployed dozens of its employees to the hospital and improved UMC’s operating margins but was unable to find a long-term operator to take over the hospital when its contract expired.
In 2015, the hospital required a $7 million subsidy from the District to meet its payroll; the next year, that rose to $10 million. In early 2016 the mayor decided the hospital board should invoke its emergency authority to select a new consultant. Turnage recommended Veritas.
At the center of the company is Price, who has built a lucrative career in the halls of struggling hospitals throughout the I-95 corridor. His constellation of consulting firms has thrived along the border between public and private health care, a field where business models collide with the reality of caring for society’s sickest and poorest and success often means postponing failure.
He began his career at the for-profit Hospital Corporation of America in the 1980s. After that company’s contract to run Prince George’s Hospital Center ended, he stayed on as hospital chief executive. But the hospital’s board soon replaced him as it sought a speedier turnaround, said former Prince George’s County executive and longtime board member Winfield M. Kelly Jr.
“It didn’t work real well for us,” Kelly recalled. “He tried real hard, he tried to get it done, he didn’t get it done. Competent guy, it just didn’t work out.”
In 1990, Price founded Kurron Shares of America, a consulting firm that soon took over the management of Interfaith Medical Center in Brooklyn. Two decades later, the company’s stewardship ended after the hospital filed for bankruptcy.
An ombudsman appointed by the bankruptcy court found lapses in care at the facility — particularly the emergency room, which he described in a report as “more chaotic and disorganized” than others he had seen. The ombudsman asserted Price, the chief restructuring officer, visited the hospital infrequently and “should be more actively engaged in the day-to-day, on-site responsibilities of the hospital.”
In a response to the report, lawyers for the hospital said the criticism stemmed from a misunderstanding of Price’s role, which was not “running the hospital on a day-to-day basis.”
In the spring of 2013, the New York State Department of Health barred Kurron from continuing to manage the hospital. Spokeswoman Jill Montag said in a statement to The Post that regulators had concerns about the pay provisions in Kurron’s contract, including those for open-ended reimbursement of expenses and bonuses to the company’s executives.
Price blamed the hospital’s financial failure on New York state cuts to Medicaid rates in 2011. He said Interfaith would have run aground much sooner without his firm. “Kurron did an outstanding job, if I may say so myself, based on our longevity there. People forget that,” he said.
For two decades, Price’s family and companies had contributed to New York politicians but written only a handful of checks to campaigns in the District, none of them to Bowser. That changed a little over a year after Kurron had been forced out of Interfaith Medical Center.
In 2014, Price, his relatives and his companies made $35,191 in political contributions to Bowser, records show, including $20,000 in contributions to Bowser’s inaugural committee from Price and Mantium, a Bethesda-based corporation registered in his name.
Price said he met Bowser while she was campaigning and had no anticipation of future business dealings with the city.
“I live in Washington. I believe in your responsibility as a citizen there,” he said. “Just because I give to someone’s campaign, I don’t expect anything in return.”
In 2015, Bowser appointed Price to the board of the region’s public-transit system. She said in a recent interview she met Price through his in-laws, whom she had represented as a Ward 4 council member.
Price’s financial support for her political career had nothing to do with his Metro board appointment or with the selection of Veritas to run UMC, the mayor said.
“Everybody involved in our administration made decisions based on the best interests of the District of Columbia and UMC,” she said. “We had a situation where we could not make payroll at a hospital that serves a key part of the city, and we had no confidence that the people in place would be able to turn that around.”
Turnage said it had been his idea to bring Veritas on at the hospital. He said he and Price met in 2015 and bonded over their shared alma mater, Ohio State University. Informal discussions about how to shore up UMC followed, Turnage said, and he ultimately recommended Price’s company to the UMC board because he believed their fees were lower than better-known competitors’.
He said an emergency contract was necessary because the normal competitive bidding process would have taken too long.
“I can assure you that I had no discussions with anybody in the mayor’s office about these contracts,” Turnage said.
Craig Holman of the nonprofit Public Citizen said the placement of campaign donors at the helm of a struggling public hospital could nevertheless raise questions about the Bowser administration’s oversight of the facility.
“Whether or not her actions were appropriate, it’s going to raise questions and red flags anytime someone who is a government contractor gets involved in making campaign contributions,” Holman said.
Since 2014, Price’s family and related companies have also given $6,000 to the campaign of council member Brandon T. Todd, Bowser’s hand-picked successor for her Ward 4 D.C. Council seat, and $3,000 to former council member LaRuby May, a Bowser ally whom the mayor appointed chairwoman of the UMC board this year, according to campaign-finance records.
May declined to comment on her ability to oversee the Veritas contract in light of those donations. She said in a brief interview that the hospital “has not provided the highest level of patient quality services” but is “headed in the right direction.”
Even by the standards of struggling public hospitals, UMC has been buffeted this year by an extraordinary succession of bad news.
Medicare billing errors led to a 45 percent operating deficit in February that had city officials briefly worried about another taxpayer subsidy. That was followed by a $122,000 fine by the D.C. Department of Health in April for poor patient care at the hospital’s nursing home.
City officials say they are now girding for legal claims over the problems that led regulators to shutter the nursery and delivery rooms, including what District health regulators said was a failure to take routine steps to prevent a newborn from contracting HIV. Just last week, a family came forward to complain they had not been notified of a loved one’s death at the hospital until a week had passed.
UMC executive David Boucrée, the third Veritas employee who works full-time at the hospital, said it would take time to reverse the hospital’s history of dysfunction.
Boucrée, who is the cousin of Price’s wife, said his professional background was in information technology — including work with health insurance companies — and outsourcing.
He said Veritas had made improvements to the hospital that included hiring additional urology and gastroenterology doctors and refurbishing the behavioral-health unit and surgical suite.
“We’re advancing the ball,” Boucrée said. “There’s still a lot of work that’s left to be done. I don’t think anyone expected it all to be done in six months, nine months, a year or two years.”
Since December, Turnage and DeWitt have conducted monthly assessments of Veritas’ performance in categories such as patient admissions, baby deliveries and lab visits.
At the time of the most recent review, in July, the firm’s year-to-date record showed it falling short in 41 percent of its metrics, according to a report reviewed by The Post. DeWitt and Turnage noted Veritas had realized $1.07 million of the $9 million in revenue its executives had said they could generate by reforming hospital operations.
“All agree that the performance — for a myriad of reasons — has lagged,” Turnage wrote in August to city officials. (In an interview, Turnage said he was referring specifically to the consultants’ failure to generate new revenue, rather than their overall performance.) Still, the hospital is on course to end the year in the black, thanks to several million dollars generated by improvements to the billing process made by the city’s chief financial officer, he said.
“Without this surprise,” Turnage wrote, “the hospital would be underwater.”
Although city officials said the firm was chosen in part because of its familiarity with the District, two of the three managers Veritas put in charge of the hospital live hundreds of miles away.
Hernandez, the chief executive — who held the same role at Interfaith Medical Center under Price’s contract in New York — flies to D.C. for work from his home in Vero Beach, Fla. Kelly, the quality manager, commutes from Chapel Hill, N.C. During the week. they rent apartments in National Harbor at the Esplanade, a complex with a pool and bocce court where, according to the building’s website, “Luxury flows to you.” Veritas can bill the city for up to $700,000 over three years for work-related expenses under the terms of its contract.
D.C. Council member and health committee chairman Vincent Gray (D-Ward 7), who is widely believed to be considering a challenge to Bowser next year, said such spending is unacceptable.
“For a hospital that is financially strapped, that is being supported by the District of Columbia taxpayers, this seems like an incredible waste of money,” said Gray, who was mayor until 2015 and oversaw the city’s previous hospital-management contract with the national firm Huron Consulting. “It’s shocking that money would be spent in these ways.”
Turnage said the expenses are reasonable because qualified hospital-turnaround experts are rare and can’t be expected to move to a new part of the country for a short-term contract.
He said Huron’s incidental expenses were included in their base fee and so could not be directly compared to those of Veritas.
It is common for turnaround firms to bring in out-of-state consultants whose travel and lodging costs are billed to a client — particularly if those experts have special skills, health-care industry analyst Paul Keckley said. The ultimate measure of whether their costs are justified, Keckley said, are their results.
“Every one of them is going to kind of have their own approach,” he said. “Sometimes it’s smoke. That’s the thing: Consulting is often in the eye of the beholder.”
Julie Tate contributed to this report.