Grady Hospital Board Votes To Transfer Governance To New, Not-for-Profit Board

Main Category: Public Health
Article Date: 28 Nov 2007 - 11:00 PDT

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The hospital board of Atlanta-based Grady Memorial Hospital on Monday unanimously voted to transfer most of its authority to a new, private, not-for-profit management board, hoping that the change will allow the hospital to address "its financial crisis and remain open," the Atlanta Journal-Constitution reports. The current board is politically appointed by Fulton and Dekalb counties, while the private board would be structured as a not-for-profit and made up of members from the community. The hospital authority will continue to operate even after the new board is created and will receive periodic reports from the new board (Schneider/White, Atlanta Journal-Constitution, 11/26). The hospital authority also will continue to own Grady buildings and land (Sack/Dewan, New York Times, 11/27).

Some officials and community members had said that privatizing the hospital's governing board would "compromise Grady's historic commitment to the poor -- and shift control from a predominantly African-American board to one that would probably be predominantly white," according to the Los Angeles Times.

Georgia Sen. Vincent Fort (D) said, "This is a hospital takeover by a Chamber of Commerce, by the city's white power structure. Frankly, I don't trust the people who are pushing for Grady to privatize to do the right things for poor folk." He added, "No one is saying this change is necessary because of mismanagement, corruption or malfeasance. And no one is really explaining why a change in leadership will lead to more money."

Financial Problems
The hospital, which opened in 1892, is one of the largest public health systems in the U.S., treating 900,000 patients annually, 90% of whom are uninsured, according to the Los Angeles Times. Grady expects its budget deficit for 2007 to reach $50 million. It also needs about $250 million to update equipment, laboratories and operating rooms. Like many urban hospitals, Grady has been affected by rising health costs, uninsured patients, and decreases in state and federal funding, the Los Angeles Times reports. If the hospital closed, metropolitan Atlanta would lose its only Level 1 trauma unit.

A.D. "Pete" Correll, co-chair of the Metro Atlanta Chamber of Commerce's Grady Task Force, said that changing the hospital's governing board from being politically appointed to a not-for-profit 501(c)3 model would allow for the appointment of members with financial expertise, as well as give members more flexibility to create profit-making enterprises. In addition, a private board could focus on increasing the number of patients who have health insurance, Correll said.

He added, "The issue is money. We have a major indigent-health care hospital that is going to fail if someone doesn't do something quick. ... People are saying they would like to help, but they would like a say in the hospital's governance. That's not unreasonable." According to Correll, philanthropic groups have pledged $200 million in aid for the hospital if the board votes to transfer control to the not-for-profit governing panel (Jarvie, Los Angeles Times, 11/26).

Plan Details
In voting to approve the plan, the board asked for:

• Written confirmation of the $200 million pledge from private donors and a first payment of $50 million by the end of next month;
  
  
• Written confirmation from the governor, lieutenant governor and House speaker to increase state funding by at least $30 million annually;
  
  
• "Necessary budgetary measures" for a statewide trauma network and support for medical education;
  
  
• Consideration from DeKalb and Fulton counties to support $200 million more in bonded indebtedness for the hospital;
  
  
• Commitments from the Emory University School of Medicine and the Morehouse School of Medicine to continue their medical education programs at the hospital; and
  
  
• Commitment to maintain the hospital's mission of serving the poor.

According to the Journal-Constitution, the plan could be "scuttle[d]" if the board's requests are not met (Atlanta Journal-Constitution, 11/26).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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