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Congress should investigate

(Published December 2, 2002)

"Where will the giveaway of the public’s assets end?

How much more must taxpayers give up before the financial control board, the mayor, the council and our forever-ignorant Congress wake up and realize the extent to which D.C. taxpayers are being taken to the cleaners by a company that we have just been assured is financially healthy enough to take on the task of meeting the health care needs of possibly as many as 85,000 poor and uninsured city residents?

Taxpayers are owed the truth from their government – whether appointed or elected.

If officials intend to prop up Greater Southeast Community Hospital with a continuous flow of taxpayer assets, the public deserves to see the corporate books."

–From an editorial in The Common Denominator

July 2, 2001

It’s hardly ever a good idea for Congress to butt into local affairs in the District of Columbia, but the current crisis in the District’s public health care system transcends local concerns and calls for some serious investigation of possibly criminal actions that are beginning to be alleged in the D.C. government’s financial relationship with the parent company of Greater Southeast Community Hospital and Hadley Memorial Hospital.

That company – Doctors Community Healthcare Corp. of Scottsdale, Ariz. – filed for Chapter 11 bankruptcy protection on Nov. 20, along with its two D.C. hospitals and three others it owns in Chicago and southern California. The Chapter 11 filings came two days after Ohio-based National Century Financial Enterprises, which provided most of the day-to-day operating cash for Doctors Community Healthcare’s hospitals, also sought Chapter 11 protection from its creditors.

Among those creditors is the D.C. government, which says it is preparing to file a claim for delinquent taxes owed by Greater Southeast and Hadley hospitals. The total tax bill was undisclosed at press time but is believed to be primarily employee income taxes that the hospitals have failed to pay. Last year the D.C. Council, at the request of Mayor Anthony A. Williams (who had recently received about $100,000 in publicly disclosed campaign contributions from persons and entities associated with Doctors Community Healthcare), gave the two for-profit hospitals a 20-year exemption from paying real estate taxes to the District – amounting to an estimated $10 million gift. Presumably, the corporate tax bill is negligible for these financially ailing entities.

Greater Southeast is the hub of a new for-profit public healthcare system – the D.C. Healthcare Alliance – that was enacted in May 2001 by Mayor Williams and the now-dormant, congressionally created control board to replace publicly owned and operated D.C. General Hospital and its network of public clinics. The city council unanimously objected to the plan, which also was strongly opposed as unworkable by all quarters of the local health care industry – except for then-D.C. Health Director Ivan Walks, who left city employment earlier this year to do consulting work. The control board’s former executive director, Francis Smith, is now a vice president at Doctors Community Healthcare.

As the financial details unfold of this largely secret deal made by the mayor and the control board, Health Department auditors are reportedly trying to find justification for $6 million of the $37.2 million in tax dollars that Greater Southeast received during the first year of the contract. In addition, former city workers say that much of the $11 million worth of publicly owned equipment and supplies on the D.C. General campus has been removed by Greater Southeast without proper paperwork to account for its disposition. Allegations also are beginning to surface that D.C. taxpayers may have underwritten as much as $70 million of Greater Southeast’s expenses during the past year, possibly by using "free money" from Medicare and Medicaid reimbursements still owed to D.C. General Hospital when its campus was turned over to Greater Southeast’s management.

The $45 million annual taxpayer subsidy to operate D.C. General Hospital, which Congress ultimately forbade, is beginning to look like it was a good deal for D.C. taxpayers.

Copyright 2002, The Common Denominator