State stops bailout of hospital in PG

The Maryland State Health Services Review Commission has discontinued its bailout payments to Prince George’s Hospital Center, a state health official said yesterday.

The commission, which sets Medicare and Medicaid payments for state hospitals, has provided at least $10 million since February 2004 to help the cash-strapped hospital in Cheverly, officials said.

“The thought was that this was a one-time rate adjustment and, through [hospital officials’] own fiduciary efforts, they’d be cutting costs and reducing inefficiencies,” Robert B. Murray, executive director of the commission, said yesterday. “With this additional funding, it was going to get them over the hump.”

Whether the hospital has reached that point yet is not clear.

According to recent earnings statements, the hospital’s parent company, Dimensions Healthcare System, recorded a $2 million profit in February. But it also lost more than $2.6 million in January. Yesterday, the company reported losing $389,000 in net income for March.

The commission first pledged a $10 million bailout last year. But the payments stopped this month, and the commission is unlikely to further extend the subsidies, officials said.

Mr. Murray said that hospital officials approached the commission to keep the funding in place but “kind of saw the handwriting on the wall.”

The commission agreed to the one-time funding because the hospital was faced with the prospect of an unfavorable audit last year and was in jeopardy of not meeting its pension obligations, Mr. Murray said.

“It’s going to create a big challenge for them,” Mr. Murray said of the discontinued funding. “Our hope is that they’re grabbing whatever low hanging fruit that’s out there.”

The loss of funding comes on the heels of an announcement last month in which state officials — responding to a request from Prince George’s County Executive Jack B. Johnson — authorized $6.4 million for the hospital, most of which was earmarked for capital improvements.

Mr. Johnson has been a critic of the company that is managing the hospital, Dimensions, which also runs Laurel Regional Hospital, the Bowie Health Center and several nursing homes under a lease deal with the county government.

A panel appointed by county and state officials to investigate Dimensions has recommended that the company be fired, citing lax management controls and mounting losses.

John Erzen, a spokesman for Mr. Johnson, said county officials are studying the panel’s recommendations, but no decisions have been made concerning Dimensions’ future.

Dimensions, which has more than 2,000 employees, has defended itself against the oversight panel. In a statement earlier this year, it said it has been severely underfunded over the years and that it recently slashed personnel costs and overtime.

“The Board [of Directors] has embraced information regarding its shortcomings and has taken steps to remedy such matters,” the company said in written response to the oversight panel.

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