- The Washington Times - Wednesday, January 15, 2003

Two months after filing for bankruptcy, Greater Southeast Community Hospital and its parent, Doctors Community Healthcare Corp., are still searching for the financial help they need to stay afloat.
That is what they are expected to tell a D.C. bankruptcy-court judge today, when they are scheduled to return to court.
But Greater Southeast and the Scottsdale, Ariz.-based Doctors are not likely to receive additional financing on the favorable terms they need, city sources and financial experts say.
"They will not survive bankruptcy," said one city source close to the situation. "The financing is very tough and very expensive and not much better than what they had with New Century, except that this time, the money will be limited; this time they won't be able to try to buy themselves into healthiness."
In November New Century Financial Enterprises, financiers of Doctors, filed for bankruptcy protection. Two days later, Doctors and Greater Southeast followed suit. Since then, Doctors has been in negotiations with four potential financiers.
But last month two reputable financiers, one of which was Goldman Sachs & Co., withdrew after initial interest. Two more companies, General Electric Co. and Foothill Financial Group Inc., are in negotiations with the hospital company, but city sources say the terms being offered are prohibitive and wouldn't allow the hospital company to restructure and improve its operations.
Financiers want 17 percent to 22 percent interest per transaction. With debt at more than $600 million and receivables valued at less than $100 million, Doctors does not have sufficient funds to cover expenses and dig its way out of such tremendous debt. The hospital company already owes about $70 million annually in debt service.
"The terms show the inherent risks in the deal better than anything else could," a city source said. "You can get better rates with credit cards."
But for D.C. officials the problem is this: The city needs a financially healthy Greater Southeast, what it was after Doctors bought the ailing hospital out of bankruptcy in 1999 and turned it around.
"Given the overcrowding in all the city's hospital emergency rooms, it is imperative that Greater Southeast remain open and be healthy to serve the community," said Robert Malson, president of the D.C. Hospital Association. "The city needs to take steps to ensure that it remains."
But these days Greater Southeast has been using up its portion of funds from the D.C. Healthcare Alliance, which it led until last month, at a rate of about 30 percent of its budget in the first two months of fiscal 2003, to city officials say. At this rate, the Alliance will run out of money in July.
The city contract for the 18-month-old Alliance is about $80 million annually.
And the hospital, which had budgeted based on serving an average of 200 in-patients daily, has consistently served fewer, 108 to 170, in the past few months.
City officials say the only way for Greater Southeast to survive is for the debt burden to be forgiven, something Doctors' creditors will fight. An alternative, they say, is for Greater Southeast to be cut loose from its parent.
"It is something we have to look at," one D.C. Council member said. "Either we work with something already here or we create something new and say goodbye to the money we have already invested. It isn't a great choice."


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