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Tue Nov 27 12:52:13 GMT 2007

Atlanta Hospital Moves to Unburden Itself of Debt 

By KEVIN SACK
<http://topics.nytimes.com/top/reference/timestopics/people/s/kevin_sack/ind
ex.html?inline=nyt-per>  and SHAILA DEWAN
<http://topics.nytimes.com/top/reference/timestopics/people/d/shaila_dewan/i
ndex.html?inline=nyt-per> 

ATLANTA, Nov. 26 - The politically appointed board of Atlanta's troubled
charity hospital effectively voted itself out of business Monday, the first
step in at least a short-term escape from the insolvency that had threatened
the region's only top-level trauma center.

Without the financial bailout made possible by the vote, the hospital, Grady
Memorial, was at risk of not meeting its payroll, perhaps by the end of the
year, hospital officials had warned. Though Grady, like most public
hospitals
<http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics
/hospitals/index.html?inline=nyt-classifier> , has faced intermittent
financial crises in the past, this one has generated real anxiety
<http://health.nytimes.com/health/guides/symptoms/stress-and-anxiety/overvie
w.html?inline=nyt-classifier>  because of its roots in a collision of
national forces, including the unchecked growth of uncompensated care and
deep cuts in government reimbursements. 

Political leaders and medical officials have worried that Grady, woven into
Atlanta's social fabric since 1892, might follow Martin Luther King
Jr.-Harbor Hospital in Los Angeles County as a casualty in 2007. If so, the
consequence would be a "patient tsunami" at other area hospitals, the
Metropolitan Atlanta Chamber of Commerce said in a report earlier this year.

Grady - which supplies the region with its only 24-hour trauma center as
well as poison control and burn units and large clinics for AIDS
<http://health.nytimes.com/health/guides/disease/aids/overview.html?inline=n
yt-classifier>  and sickle
<http://health.nytimes.com/health/guides/disease/sickle-cell-anemia/overview
.html?inline=nyt-classifier>  cell anemia - has operated in the red for 10
of the last 11 years. It is expected to run a deficit of $50 million to $55
million in this year's $730 million budget. 

The hospital owes an accumulated $63 million to its biggest creditors, the
medical school at Emory University
<http://topics.nytimes.com/top/reference/timestopics/organizations/e/emory_u
niversity/index.html?inline=nyt-org>  and the Morehouse School of Medicine,
which provide its doctors and have threatened to train residents elsewhere.
Republican state legislators had threatened a state takeover if local
officials did not reconstitute the hospital's governance structure.

Following a raucous meeting marked by chants and protest, the 10-member
Fulton-DeKalb Hospital Authority voted unanimously to hand daily control of
Grady and its affiliated clinics and services to a nonprofit corporation to
be formed for that purpose.

A Chamber of Commerce task force had advised earlier this year that a
governance change was needed to remove the hospital from the control of the
elected commissioners of Fulton and DeKalb Counties and to restore the
confidence of lenders, foundations and Georgia's Republican leaders. 

Advocates for patients have warned that the hospital would become less
responsive to community needs if it was operated by a less political board.
But with few other options and Grady's fiscal condition worsening, the
authority felt it had little choice.

"In three weeks, our cash position would have been zero," the authority's
vice chairman, Dr. Chris Edwards, said at the meeting Monday.

In its resolution, the hospital authority, which would continue to own
Grady's buildings and land, made explicit that its willingness to hand over
control depended on substantial financial commitments from both the public
and private sectors.

Before the lease, to be executed by Dec. 31, becomes effective, the hospital
must receive written commitments for a capital infusion of $200 million from
businesses and philanthropies.

In addition, the resolution demands that state leaders provide written
support for $30 million in new state aid.

A. D. Correll, a former chairman of the Georgia-Pacific Corporation and the
co-chairman of the task force, said he considered the vote a critical first
step, though with provisos attached. "They were a surprise, a lot of them,"
Mr. Correll said of the conditions, "and they require action on a whole lot
of people's parts." 

Mr. Correll said a single anonymous donor had agreed to give the hospital
$200 million if the donor approved of the governance system changes. He said
he was confident that the private sector could raise an additional $100
million in two or three years.

The fate of the hospital has become a keenly watched civic drama, overlaid
with issues of race and class. 

Some black activists and elected officials had warned that the governance
change would shift control of the hospital from black political leaders to
white business leaders. The hospital's problems, they said, are financial
and not political.

Chamber of Commerce officials, white and black, have responded that the only
color that matters in the campaign to save Grady is green. And justifiably
or not, they say, business leaders and state officials were willing to
participate in a rescue only if they saw a real departure from past
practice, when the hospital's board was perceived to lack technical
expertise and the will to block corruption and cronyism.

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