- The Washington Times - Thursday, December 9, 2004

A new report shows the District’s hospital industry has lost money for five straight years and the closing of D.C. General Hospital in 2001 has contributed to the problem.

“We are not making progress in terms of our ongoing financial health,” said Dr. M. Joy Drass, chief executive officer for Georgetown University Hospital and chairman of the board of the D.C. Hospital Association.

Dr. Drass said one problem is that the city’s eight remaining hospitals have had to absorb the 27,000 patients treated at D.C. General’s emergency room during its final year in operation. The hospital closed in 2001.

Two other problems are that insurance companies pay less for services and the cost of malpractice insurance for doctors and hospitals continues to increase, Dr. Drass said.

The report shows that hospitals in the city last year posted an overall 2.12 percent deficit, slightly worse than the 2.10 percent deficit the hospitals had in 2002.

However, officials say last year’s number was significantly affected by the nearly 25 percent deficit Greater Southeast Community Hospital posted during bankruptcy proceedings.

Greater Southeast’s loss was about three times more than any other at a city hospital, according to the survey. The overall financial condition of the other hospitals looked better when the Greater Southeast loss was left out of the calculations.

The eight remaining hospitals had a 0.5 percent deficit, or just below breaking even, according to an analysis of the survey’s finding. The bottom-line number is important, administrators say, because hospitals cannot invest enough for capital improvements and technology without a profit margin of at least 4 percent.

Even the most profitable hospitals in the city last year fell short of that number. The National Rehabilitation Hospital had a 2.91 percent profit; Sibley Memorial Hospital, a 2.79 percent profit; and George Washington University Hospital, a 1.73 percent profit.

Despite the deficit at Greater Southeast last year, hospital industry officials say some encouraging signs lately suggest a turnaround for the hospital.

Great Southeast regained its full license and accreditation amid a sweeping management overhaul last year, though it has come under scrutiny again following the death in September of patient Jonathan Magbie, a quadriplegic D.C. Jail inmate.

In addition, the hospital’s parent company, the Arizona-based Doctors Community Healthcare Corp., emerged from bankruptcy in April and last week filed a plan in bankruptcy court to pay off creditors ahead of schedule.

“Last year, we were emerging from bankruptcy and the financial picture was tainted by creditor issues,” said Doug Shepherd, executive vice president at Greater Southeast. “From a regulatory perspective, we’re in good shape now.”

Mr. Shepherd said the hospital is also trying to establish a network of primary care clinics in Ward 8, one of the city’s poorest communities, so that sick people have a place other than the emergency room to seek treatment.

“We get a lot of patients through our emergency room who show up because they don’t have a doctor,” he said. “That’s the most expensive place they can be treated.”

Hospitals are also treating an increasing number of patients who cannot pay for services, said Robert Malson, executive director of the hospital association.

According to an association survey, city hospitals spent $167.4 million last year on care for patients who could not pay for services, a $17.4 million increase from 2002. The hardest hit last year was Greater Southeast, where 20.5 percent of patients could not pay for services.

Howard University Hospital had the second-highest rate, with 15.3 percent of patients not paying for services, but still showed a profit. “It took a lot of work and effort to make that happen,” said Debra Carey, the hospital’s chief operating officer.

Hospital officials hope a plan by Howard University to build a new hospital on the site of D.C. General will improve their financial situation.

Under the plan proposed last year by Mayor Anthony A. Williams, a Democrat, and council members Kevin P. Chavous, Ward 7 Democrat, and David A. Catania, at-large independent, the city would help Howard build the new hospital.

Howard officials say they have completed most of their financial studies and are waiting to hear back from City Administrator Robert Bobb.

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