United Medical Center, the troubled Southeast Washington hospital that has struggled for decades to provide medical care to some of the city’s poorest residents, has hit a stretch of financial turbulence that puts it at risk of needing a taxpayer bailout — again.
The public hospital’s woes, which stem in large part from recently recognized errors in Medicare billing that could require extensive repayments to the federal government, threaten to derail a plan by Mayor Muriel E. Bowser (D) to stabilize and rebuild the facility with help from a private developer.
That plan calls for ensuring that the hospital — which is supposed to be financially independent but has received millions in subsidies from the city in recent years — can make it through next year without additional infusions of public money.
But Wayne Turnage, director of the D.C. Department of Health Care Finance, wrote in an email several weeks ago to the chairman of the hospital’s board that “there is little margin for error if UMC is to end the year without the need for financial assistance.”
The medical center’s precarious fiscal position, Turnage said in the email and in interviews with The Washington Post, is primarily a result of a discovery that doctors may have overbilled Medicare, which along with Medicaid covers a large number of the hospital’s patients in the poor and predominantly African American neighborhoods east of the Anacostia River.
City officials said they were not yet sure how extensive the overbilling was or how long it went on. D.C. Chief Financial Officer Jeffrey S. DeWitt said the hospital has set aside $5 million in its operating budget to pay back the federal government. City and hospital officials say they hope that in lieu of repayment, Medicare officials will require the hospital staff to undergo training in billing.
On April 5, the Centers for Medicare and Medicaid Services also fined the hospital’s nursing facility $122,000 for shortcomings in patient care that led to a skin infection and bedsores, according to the D.C. Department of Health.
After the inspection late last year that uncovered those shortcomings, the federal government briefly threatened to withhold payments for new patients at the nursing facility but relented when a follow-up inspection showed that it had remedied its problems.
Combined with financial shortcomings in other areas, Turnage said, the billing problem led to a 45.8 percent operating deficit for the month of February that, if not reversed, would translate into a year-end deficit of 8.5 percent — or about $9.5 million.
Despite the hospital’s newly disclosed troubles and the note of alarm Turnage sounded in his April 10 email, District officials said in interviews last week that the prospect of another subsidy for UMC’s operating budget was unlikely.
DeWitt said he was confident that the hospital can absorb the Medicare losses if it has to repay the federal government. City officials are regularly monitoring UMC’s financial performance, he said, unlike in past years when operating deficits piled up and could not be reversed before it was too late.
“The hospital is in probably better financial shape now than it’s been, ever,” DeWitt said. “It’s above water for the first time, because we’re monitoring it very closely.”
Turnage said that his email last month laid out a “worst-case scenario” and that “barring some unforeseen circumstance, the hospital is not likely to need a subsidy.”
“I believe much has been done to stabilize but clearly the operation remains at risk with such minimal cash reserves for what is a $128 million operation,” Turnage wrote in an email to The Post.
Like many public hospitals, UMC has a long history of financial struggles and failed reform efforts. Built in the 1960s, what was once the Greater Southeast Community Hospital entered bankruptcy almost 20 years ago and since then has endured a turbulent cycle of different operators.
Even as they have tried in recent years to find a private partner to build a new hospital in Southeast, city officials have injected regular infusions of cash to keep the hospital afloat and have paid various consultants to overhaul its operations.
In the 2015 and 2016 fiscal years, the city bailed out UMC to the tune of $7 million and $10 million, respectively. The city is also paying an outside firm, Veritas of Washington, $6.1 million for an 18-month contract to turn the hospital around.
David Boucree, a principal at Veritas and executive vice president for analysis and planning at UMC, said the Medicare billing issue began before Veritas took over and was an example of the “legacy” problems the turnaround firm is trying to fix.
“This is a restructuring effort that we’ve been going through,” he said. “As we identify legacy issues, we’re clearing them up and bringing it forward.”
City Administrator Rashad M. Young said the Bowser administration remained confident in Veritas and in the hospital’s improvement despite the recent setbacks.
“But for the Medicare billing issue, we expected the hospital this year to break even or have positive operating revenue,” Young said.