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Atlanta Hospital Board Poised to Relinquish Operational Control

ATLANTA– In the 115-year life span of Atlanta s Grady Memorial Hospital, today could be historic.

Several members of the Grady board say the board is poised to relinquish operational control of the hospital, aiming to save it from financial ruin.

The 10 members are due to vote on a much-debated proposal to create a nonprofit management group, which would run the hospital with its own board chosen from the community.

I fully expect this to pass, said Dr. Chris Edwards, vice chairman of the Grady board, adding that he supports the change. It is clearly the best opportunity now to save the hospital.

Several board and community leaders also believe the board will pass it. Only one Grady board member has spoken against the plan.

Still, board approval is not a sure thing. Some board members support is softer than others, and some said they might change their minds depending on final discussions or the last-minute details.

The Grady board is clearly being pressed to make this change. A series of promises — some would say pressures — as well as downright threats have come from the medical schools that work with Grady, powerful state officials and the business community.

In response, Grady board members have pressed for commitments from these parties. If some of those promises don t come through, the plan could collapse, Edwards said.

This is a historic day, Edwards said. But people have to honor their commitments to Grady.

If matters progress as planned and commitments are honored, the new nonprofit board would be operating in late February, some board members said.

A promise from business leaders that Grady would receive $200 million in aid from foundations — once the change is made — has done much to sway people. Another $100 million could follow, they said.

We believe that they will provide the funding, but if that changes, that could be a problem and likely a deal-breaker, Edwards said. He added, My No. 1 deal-breaker is any attempt to change the historic mission of the hospital to the poor.

The governor and state legislative leaders have said they will support state funding for the trauma units across the state, including the Level 1 unit at Grady.

Edwards said state officials have also said they will consider revising the formula for funding hospitals that serve the indigent, to Grady s benefit.

Then there are the threats.

Lt. Gov. Casey Cagle has said that if the board does not vote for the nonprofit, he will press the Legislature to force that change by law.

The heads of Emory and Morehouse medical schools, which provide nearly all the doctors for Grady, have said that unless the board makes the change, they will start sending some doctors to other hospitals.

While some board members view the interlocking series of commitments as a kind of quid pro quo, opponents view it in another light.

It s a strong-arm job, said Sen. Vincent Fort (D-Atlanta).

Grady board member Geoffrey Heard said he is not convinced that a nonprofit corporation is the change that Grady needs. He favors expanding the current board.

Opponents paint the plan as a veiled attempt at a white takeover of a hospital that has a black CEO, a black chairwoman of the board and many black patients. Most of all, they worry that it will threaten the hospital s historic mission to help the poor and uninsured.

There s gonna be a lot of dead people, and mostly dead poor people, said Ron Marshall, chairman of the New Grady Coalition, a group of patients, employees and doctors concerned about the future of Grady.

Marshall said he believes the business community wants to gain a hold over the millions in contracts in the hospital system s $730 million budget.

Exact language of the resolution for change may change right up to the vote, Edwards said, but the resolution will stress that the hospital s historic mission to serve the poor and needy must continue.

The resolution will probably specify that implementation of the nonprofit is contingent on the fulfillment of promises made by the business community and state, he said.

The Grady board would remain in place after the new nonprofit board is in place, representing continued public ownership of the hospital. The board would receive periodic reports from the nonprofit board.

Not all of the interlocking promises are deal-breakers, Edwards said.

But he stressed that the business community must come through on its financial commitment.

In addition, Edwards said the existing Grady board wants to retain a level of control over the hospital that includes final say over proposals that would alter the mission to serve the needy.

He qualified that by saying, I would not anticipate us micromanaging the nonprofit group — something critics say the board does now with Grady management.

Should the Grady board of trustees approve the resolution today, the clock starts on crafting the lease, which includes two public hearings in December and the board s final consideration of the lease Dec. 27.

By then, the board will have chosen the membership of the nonprofit management board, which Edwards expects would have about 15 members representing medicine, community, business and the faith community.

By law, at least one member of the existing Grady board must serve on the nonprofit, and the lease agreement cannot exceed 40 years.

Though expectations are high that the Grady board will create the nonprofit, even some advocates couple their hopes with fears.

The Rev. Gerald Durley, who is co-chairman of the Regional Council of Churches of Atlanta, worries that the nonprofit board could become a group of discompassionate people.

He added, The devil is in the details.


  • Budget shortfalls: Grady has operated in the red for 10 of the past 11 years, and the hospital is on track toward a record annual deficit of $55 million in its $730 million budget.
  • Debt: Grady s doctors are provided by the medical schools at Emory and Morehouse. The hospital owes them about $63 million, increasing the debt by $3 million a month.
  • Government funding cuts: Grady suffered a $50 million drop in state and federal aid for the period 2005 to the present.
  • Growing unpaid care: The cost of unpaid charity care increased $39 million from 2005 to 2006.
  • Operational inefficiencies: Grady recently hired a global accounting firm, which has identified 37 revenue streams that can be improved to generate savings and new revenue exceeding $135 million. These include the hospital s inefficient systems for collecting money for Medicare, Medicaid, commercially insured and self-paying patients.
  • Shortage of paying patients: Only about 7 percent of Grady s patients have private insurance. More than half are covered by Medicaid, which reimburses the hospital only 85 cents on every dollar of care.
Source: Grady Memorial Hospital