- The Washington Times - Sunday, November 23, 2003

D.C. political insiders who helped broker a plan to provide health care for low-income residents later profited from the arrangement with an Arizona-based company that was paid millions of dollars through a taxpayer-funded deal.

The D.C. government hired Elaine Crider in February 2001 on a $167,500 contract to help negotiate the D.C. Healthcare Alliance — a public-private pact that provides medical services for the poor. After her four-month contract ended, Miss Crider found work with a major beneficiary of the plan she helped negotiate, the now-bankrupt Arizona-based Doctors Community Healthcare Corp. (DCHC).

Federal bankruptcy-court and D.C. government records show that such consulting arrangements were common.

Although the deals are legal, critics say, Greater Southeast Community Hospital and its parent company spent too much money on consultants and not enough on staffing and capital improvements.

DCHC, which owns the hospital, declared bankruptcy last year despite tens of millions of dollars in D.C. government financing since 2001. Company executives continued to spend millions of dollars on salary advances, bonuses and travel expenses.

Greater Southeast is now in talks with city officials, seeking help to cover a $2.5 million monthly operating deficit. The hospital declared bankruptcy in November 2002.

Some officials question whether the city should bail out Greater Southeast.

“It looks like blatant self-dealing,” said D.C. Council member David Catania, at-large Republican. “I will not support giving another nickel to Paul Tuft and his associates,” he said, referring to the DCHC chief executive officer.

The D.C. Department of Health uncovered staffing shortages and fire-code violations at Greater Southeast during the summer. Health inspectors restored the hospital’s license last week but prohibited the facility from holding more than 150 patients.

Company financial reports indicated that DCHC paid Miss Crider more than $220,000 from Sept. 17 to Nov. 1, 2002.

Miss Crider defended her decision to work for DCHC when her contract with the city expired.

“I didn’t see where it would be a conflict of interest because I wasn’t involved in making any decisions for the city,” Miss Crider said. “My work for the city was over.”

Miss Crider, did, however, serve on an independent committee appointed by city officials to review proposals for the Alliance contract. The committee chose Greater Southeast instead of D.C. General Hospital as the primary contractor for the Alliance.

“You read and score the proposals and you make recommendations,” Miss Crider said of her service on the committee. “I was not a government official. I had to do what the government officials told me to do.”

Miss Crider said a clause in her contract with DCHC, which began in August 2001, stipulated that she would not do any work involving city government or D.C. health care issues.

“Doctors [Community] approached me,” Miss Crider said. “There was specific language in my contract with [DCHC] that I would not do anything in regard to the Alliance programs in the District.”

Others with close ties to City Hall also have landed on DCHC’s payroll, company records show.

Last fall, DCHC paid political fund-raiser and lobbyist Kerry Pearson $150,000. Lobbying reports filed at the D.C. Office of Campaign Finance indicate Mr. Pearson had earned more than $600,000 from DCHC since 2000.

Mr. Pearson lobbied for Greater Southeast to become the primary contractor in the Alliance. The five-year, $80 million plan was created after D.C. General was closed in June 2000.

Once Greater Southeast won the contract, sources say, Mr. Pearson also lobbied the D.C. Council to grant a tax-abatement package to Greater Southeast and Hadley Memorial hospitals, both owned by DCHC. The 20-year abatement deal will save DCHC about $900,000 in property taxes, according to city-council records. No other locality where DCHC owns hospitals has granted the company a tax break, court records show.

DCHC also employed former D.C. Council member John Ray and, according to company payroll records, paid the Manatt, Phelps & Phillips law firm where he works at least $94,000 in the two months prior to declaring bankruptcy. The company still owes Mr. Ray $238,403.

Records in the Office of Campaign Finance indicate that Mr. Ray also works as a lobbyist for Chartered Health Plan Inc., which holds a contract to administer claims for the Alliance. Chartered Health Plan is owned by Jeffrey Thompson, a major contributor to the campaign of Mayor Anthony A. Williams.

Also listed in DCHC’s financial records is Francis Smith, former executive director of the D.C. Control Board, the public agency that awarded the Alliance contract to Greater Southeast. Mr. Smith played a major role in the negotiations that led to the creation of the Alliance.

Records do not indicate how much Mr. Smith later earned as a consultant for DCHC.

DCHC also contracted with Colene Daniel, former chief executive of the Alliance.

DCHC no longer has contracts with any consultants with ties to City Hall, according to the mandatory monthly operating reports the firm files in bankruptcy court.

Day-to-day operations at Greater Southeast remain under the control of Boston-based Cambio Health Solutions, which a judge appointed to run the hospital during bankruptcy proceedings.

DCHC executives will attempt to regain control of the hospital next month when the bankruptcy court auctions off the company’s assets.

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