Grady in search of healing
by Andy Phelan
andy@dekalbchamp.com
 DeKalb County taxpayers might be asked to shoulder more of a financial burden for Grady Memorial Hospital after a task force report showed the venerable health care institution is in a deep funding crisis.
Using terms like “dire,” “grave” and “death spiral” to describe Grady’s financial health, members of a task force released a report June 25 at the Metro Atlanta Chamber of Commerce that shows the facility is on the verge of collapse.
To fix it, they said, the hospital must find new sources of funding and change the way it’s run.
If not, said Pete Correll of Georgia-Pacific and co-chairman of the 17-member Greater Grady Task Force, “a patient tsunami will sweep across the metro area that will be unprecedented.”
The findings, part of a study commissioned by the Fulton-DeKalb Hospital Authority that governs Grady, showed the system is losing about $7 million a month and can only afford payroll until the end of the year.
“The number of uninsured patients and the cost of health care have skyrocketed,” said Correll. “But the funding and payments have either stayed the same or declined. It’s as bad as I’ve ever seen.”
According to a 15-page executive summary, Grady will be $120 million in the red by the end of 2007, which includes $65 million owed to Emory and Morehouse medical schools for its doctors.
Because so many indigent patients rely on Grady, hospitals throughout the metro area would be swamped by the tide of people seeking health care and buckle under the great weight if Grady closed, the preliminary report said.
“Emergency rooms all over Atlanta would be overwhelmed,” said Correll. “Profitable institutions would go broke. If Grady goes down, it’s going to cost hundreds of millions of dollars.”
Part of the solution, said co-chair Michael Russell of HJ Russell & Company is to create a private, not-for-profit corporation to run the system’s finances while the existing 10-member board would still own the property.
“We have a business model that doesn’t work,” said Russell. “We have to find a way to bring more funds to the table.”
The task force recommended that Grady overcome both a short-term financial gap of about $120 million and address long-term funding needs.
That includes, but is not limited to seeking more money from Fulton and DeKalb counties, which collectively spent $107 million in taxpayer money on Grady in 2006 (DeKalb’s contribution was about $22 million), charging surrounding counties for the indigents they send Grady, courting state and foundation dollars and controlling costs.
One suggestion was for Grady to sell or lease its “considerable real estate holdings.”
Even with all these revenue streams, Correll said Grady “would still carry a $40 million to $55 million annual shortfall.” “This institution has been under-funded for 10 years. We must stop the hemorrhaging.”
Attorney Jim Miller, a member of the task force, told the group by restructuring the governing body by creating a private entity “is the best solution.”
“The new structure would open access to cash that under its current structure it cannot,” said Miller. “As time marches on, the imbalance between revenue streams and costs increases. We must consider going down the corporate governance path.”
State Rep. Pam Stephenson, D-Decatur, who is also chair of the Grady Health Systems Board of Trustees, said she appreciates the report.
“I’ll bring it back to the board,” she said. “We’ll continue to reach out. Grady is an integral part of our fabric. We need this safety net.”
The task force will meet for the last time on July 13 before making its final recommendations to the hospital board.
“This is not the business community’s problem,” said Correll. “This is a citizens’ problem. All of us.”
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