Atlanta Hospital Takes First Step Toward Nonprofit Board Control

Grady Memorial Hospital will get a second chance. The Fulton-DeKalb Hospital Authority voted unanimously Monday to turn over the day-to-day operations of running Grady Health System, including financially troubled Grady Memorial, to a new 501(c)(3) nonprofit management board — but the authority set forth a list of conditions it wants addressed before moving forward with the lease agreement.The vote caps months of debate in the Atlanta area concerning the future of Grady Memorial, which faces a $55 million funding shortfall this year. Business leaders, politicians, and community leaders have called for a change in management at the beleaguered hospital which may need as much as $370 million — $120 million in short term, and $250 million in long term, funding — in the next two years to reverse its course. Community members hope new management can steer the hospital through its financial troubles and keep it open.“This vote is a critical first step, and we appreciate the Fulton-DeKalb Hospital Authority’s courageous action and hope that it will lead to a successful reorganization,” said Pete Correll, in a statement Monday evening. Correll is co-chair of the Metro Atlanta Chamber of Commerce’s Greater Grady Task Force, which issued a report earlier this year posing solutions to Grady’s problems.Among the stipulations, the Grady board’s resolution seeks to pin down various financial promises made in recent months by business leaders, state and local governments, nearby medical schools, and other community leaders. Chief among those conditions, the board asked business leaders, represented by the Atlanta chamber, to stand behind an earlier promise to provide $200 million in emergency funding. Those same leaders had made the funding conditional to a restructuring at the hospital. The board demanded the promise in writing and, on top of that, said $50 million must arrive before the board signs the lease with the corporation to hand over control.The board also said Fulton and DeKalb counties, which give direct funding to Grady through municipal bond proceeds, should consider issuing another $200 million in bonds for the hospital. The two counties have already been approached about an additional $100 million bond package, but neither has taken any action. The counties have about $240 million of debt still outstanding for the hospital, and are wary about taking on any more debt without appropriate assurances. “DeKalb County has to make sure that we maintain the financial stability of the county as well as the credit rating,” said Vernon Jones, chief executive officer of the triple-A rated county. “That is not to say that DeKalb would not entertain a small portion of [the funding], but if it is going to be anything that threatens the financial stability or our current bond rating, you can be assured that we won’t go in that direction.”According to the resolution, the authority would lease the real estate and transfer all debts and liabilities to the new corporation. The nonprofit management, under the name Grady Memorial Hospital Corp., will consist of not more than 17 members appointed by the authority’s chairperson, and report periodically to the board. The lease agreement will be signed, if all conditions are met and the requisite public hearings are held, on Dec. 27 of this year. As part of the resolution the board asked for written confirmation from Gov. Sonny Perdue, Lieut. Gov. Casey Cagle, and the speaker of the Georgia House to provide state funding of at least $30 million a year for Grady. However, Perdue has so far refrained from committing any additional state funds.“I have no intention of signing an unenforceable document that seeks to bind the state to a specific, annual appropriation,” Perdue said in a statement yesterday. In laying out the conditions of the restructuring, the 10-member board looked to keep some control in a situation that has become politically charged in recent months. As the vote neared, it became apparent that moving to a nonprofit management structure was the only option on the table, put forth by both the Greater Grady Task Force report and the board’s own exploratory committee and ad hoc advisory group joint report. In addition, much of the emergency funding and potential state aid was contingent on a new management structure.The board also demanded commitments from the as yet unnamed nonprofit board members to keep intact the hospital’s mission to treat the poor and indigent. Grady hospital is the primary hospital for indigent and uninsured patients in the Atlanta metro area, and is recognized as one of the top trauma facilities in the region. Critics of a reorganization worry that the hospital’s public service mission will be compromised.

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