A taxpayer bailout of at least $17 million will be needed if the District's only public hospital is to stay afloat, the hospital's finance committee has concluded, in the latest setback to afflict United Medical Center.
Hospital board members plan to discuss the recommended subsidy request when they meet Wednesday. If approved by Mayor Muriel E. Bowser (D) and the D.C. Council, it would be the largest investment of District tax dollars to prop up the hospital's operating budget since 2010, when the city took over the facility.
UMC's dire financial situation comes after the D.C. government has spent more than $5 million on a consulting firm, Veritas of Washington, whose job was to financially stabilize the hospital.
The firm, which was recommended to the hospital board by Bowser's health-care finance director, has been managing UMC since 2016. But last month, the D.C. Council voted not to extend the company's contract, citing concerns about mismanagement and patient safety. Veritas is running the facility under a month-to-month extension while the hospital board seeks a new operator.
Veritas said in a statement that of the $17.1 million recommended subsidy request, $15.1 million was needed for new expenses — including about $2 million in repayments to Medicare, $5.6 million to settle an outstanding contract dispute with the hospital's nurses and $7.5 million for a new contract with GW Medical Faculty Associates, a group associated with George Washington University.
The remaining $2 million is needed to cover revenue shortfalls resulting from declining admissions driven by "recent media stories" about UMC and regulators' shutdown of the hospital's obstetrics ward, the statement said.
"This new subsidy request reflects the work of Veritas to address long-outstanding issues predating Veritas, including medical documentation and disputes with the nurses' union, as well as our efforts to enhance and improve the quality of medical staff, equipment and patient care of UMC," said David Boucree, a Veritas employee who is serving as the hospital's interim chief executive.
Council member Elissa Silverman (I-At Large), who voted against extending the Veritas contract, said the probable subsidy request "makes me wonder what Veritas did" during its 18-month stint at the hospital. "They were sold as financial experts," she said.
Wayne Turnage, director of the city's Health Care Finance Department, said Veritas was not responsible for the hospital's financial woes. He attributed the problems to media attention that he said had damaged UMC's reputation beginning in August, when the District's Health Department shut down the facility's nursery and delivery rooms because of dangerous medical errors in the care of pregnant women and newborns.
"I don't think they're responsible for it at all," Turnage said. "They did what we asked them to do — stabilize the hospital, put a system in place that allows physicians to do their jobs."
Turnage, who sits on the hospital's board, said the $17 million subsidy does not include money to reopen the obstetrics ward. Should the hospital board decide to reopen the nursery and delivery rooms, the subsidy request will be larger, he said.
LaToya Foster, a spokeswoman for the mayor, declined to say whether Bowser would support a subsidy. "We look forward to seeing what action the board takes, and we will work with them to ensure the hospital is available to those who use it," Foster said.
UMC has long struggled with the grim financial reality of serving its poor and heavily Medicaid-reliant patient base in Southeast Washington and Prince George's County, Md. The District has subsidized the hospital, which is supposed to be financially independent, every year since it assumed ownership of the facility in 2010.
In 2016, after the hospital needed an extra $10 million from the District to cover its payroll, Bowser directed Turnage to identify a turnaround firm that could contract with the city and prevent the need for future cash infusions.
Turnage recommended that the hospital board hire Veritas, a company whose executive chairman was Corbett Price. Price's wife, Chrystie Boucree, owns the firm. She and David Boucree are cousins. Turnage has said he made the recommendation independently based on Price's track record and that the mayor had no role in the selection process.
A longtime health-care executive who had previously overseen hospitals in Prince George's County and New York City, Price — along with his relatives and companies — donated more than $35,000 to Bowser's mayoral campaign and inaugural committee. In 2015, Bowser also appointed Price to the board of the Metro transportation system.
The UMC board, which voted to hire Veritas, is an independent body, although under District law the mayor appoints six of its 11 voting members and picks its chair.