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City officials tap ‘transitional’ funds to keep

D.C. General alive as contract talks continue

(Published April 9, 2001)


Staff Writer

The city’s chief financial officer has warned city officials that he may be forced to cut off all funding for D.C. General Hospital and its associated services if current negotiations to privatize the city’s public health-care system are derailed without an alternative reform plan in place.

Meanwhile, city health director Ivan Walks on April 6 unveiled the first public outline of how officials are planning to transition the public health-care network into private hands during a three-month process. And Dr. Walks also issued his own warning that a "two-hour emergency plan" has been developed to relocate all D.C. General inpatients and close the hospital should there be insufficient staff to continue operating in a manner that maintains an acceptable level of patient care.

The transition plan calls for all inpatient care to end at D.C. General within 60 days of a contractor taking over the public health-care delivery system. Under the privatization plan, officials say they will maintain D.C. General’s emergency room for non-trauma cases and keep all specialty health-care clinics and programs functioning on D.C. General’s Capitol Hill campus.

The fragility of D.C. General’s financial lifeline since mid-March, when it exhausted its fiscal 2001 appropriated funds, has consumed much of top city officials’ time in recent weeks as they scramble to ensure that the city’s so-called "safety net" for an estimated 65,000-85,000 uninsured residents remains intact while workable reforms for the financially troubled public health-care system are being sought.

Due to congressional restrictions imposed on continued D.C. government subsidization of the Public Benefit Corp., a quasi-public company that runs the city’s only public hospital, CFO Natwar Gandhi told the mayor, city council, control board and PBC officials in a March 23 memo that tax dollars cannot be used to continue the PBC’s operations unless officials continue to actively transition the public health-care system into a more financially stable enterprise.

"Should the current Restructuring Plan to contract out services be terminated or held in abeyance for any reason, I do not believe the Office of the Chief Financial Officer will have a statutory basis for providing any additional amounts for the PBC or D.C. General Hospital unless an alternative plan has been developed and provided to the appropriate congressional committees," Gandhi said in the memo obtained by The Common Denominator.

Gandhi reminded officials that he alerted them last November that the PBC would exhaust its appropriated funding for the current fiscal year by mid-March, and he asserted that it has now done so. In order to meet the PBC’s payroll and other cash needs since the week ending March 24, the city has been tapping into $90 million from its reserve fund which Congress specifically earmarked for transitioning to a restructured public health-care system.

Meanwhile, a majority of the city council – including Chairman Linda Cropp – is drafting an alternative to the privatization plan that the control board and the mayor have so far been unable to bring to fruition. The administration and the control board have been negotiating with Greater Southeast Community Hospital since February to turn over the PBC’s hospital, clinic and school nurse operations to a network of subcontractors that would be overseen and supported by the Ward 8 hospital and its Arizona-based parent company, Doctors Community Healthcare Corp.

The fast-tracked contract apparently was slowed several weeks ago after At-Large Councilman David Catania and others began raising concerns about the financial ability of Greater Southeast and its parent company to fulfill the requirements of what would be one of the most expensive public contracts ever entered into by the D.C. government. While officials continue to closely hold financial details of the privatization plan, estimates have put the five-year contract to take over public health-care delivery at $416 million.

Doctors Community Healthcare purchased Greater Southeast Community Hospital out of bankruptcy at the end of 1999 after city officials sought to save that hospital from closing. Doctors Community also owns Hadley Memorial Hospital in Ward 8, which was recently converted to a long-term care facility. Greater Southeast is now the only D.C. hospital located east of the Anacostia River.

The control board is awaiting a final report from PriceWaterhouseCoopers, which it engaged to investigate the finances of Greater Southeast and Doctors Community Healthcare, control board spokesman Glenn Dixon said April 6.

CFO Gandhi also has asked the control board to provide his office with audited financial statements from Greater Southeast hospital and its parent company. His memo also sought "some indication from the [control board] that the terms and conditions of the contract are in compliance with federal appropriations law and the laws of the District of Columbia."

Gandhi said he is seeking this information from the control board "to gain a better understanding of the financial and legal basis of the contract under negotiation – a contract which will bind the District in the coming years."

Seven members of the 13-member city council asked Mayor Anthony A. Williams on March 23 to submit a supplemental budget to the council that would maintain the PBC’s current operations through the end of the fiscal year on Sept. 30. At press time, a council aide said the mayor had not yet responded.

"Whether or not a contract is entered into between the [control board] and Greater Southeast Community Hospital, the supplemental funds will be needed to continue operations," the letter to the mayor said. In addition to Chairman Cropp, the letter was signed by council members Kevin P. Chavous, D-Ward 7; Catania, R-At-Large; Carol Schwartz, R-At-Large; Phil Mendelson, D-At-Large; Sandra Allen, D-Ward 8; and Adrian Fenty, D-Ward 4.

The council members also told the mayor that his administration and the control board "are moving too swiftly to privatization while an alternative – public health – plan is available." Last month, all 13 council members approved a resolution calling on the control board to remove itself from the decision-making process on this issue because the city has met all requirements for the control board to go out of business as an overseer of city finances at the end of the current fiscal year.

"There is much common ground between the Council and the Executive on emphasizing primary care in the neighborhoods and the essential restructuring of the public health delivery system. … We all agree that this is a matter of great public impact, and the Executive and Legislative branches ought to be working together," the council members’ letter said.

Copyright 2001, The Common Denominator