New York Times Examines Financial Problems, Potential Closure of Atlanta Public Hospital
The New York Times on Tuesday examined the financial troubles faced by Grady Memorial Hospital in Atlanta, one of the largest U.S. public hospitals and "viewed as a hospital that primarily serves blacks, who comprise 48% of the population of Fulton and DeKalb counties." The hospital is facing a "multimillion-dollar shortfall in the cost of providing charity and emergency care that no one -- not the counties, the state nor the federal government -- has been willing to cover, though Grady provides vital services to the entire region," the Times reports.
Only "short-term financial transfusions have kept [Grady] from closing its doors," the Times reports. The hospital faces an estimated $53 million fiscal year 2008 budget gap and owes Emory University and Morehouse College, the largest creditors of the hospital, an accumulated $71 million. In addition, Grady requires $366 million to meet capital needs, according to hospital officials (Dewan/Sack, New York Times, 1/8).
The hospital's board in November unanimously voted to transfer most of its authority to a new, private, not-for-profit management board, hoping that the change would allow the hospital to address its financial problems and remain open (Kaiser Health Disparities Report, 11/27/07). The board approved the plan "with strings attached, demanding that the state and counties pledge hundreds of millions of dollars to Grady," the Times reports. The details of the new arrangement have yet to be worked out, and "it is not yet clear how things will be resolved," according to the Times.
The closure of Grady "would flood the region's other hospitals with uninsured patients and eliminate the training ground for one of every four Georgia doctors," the Times reports. According to the Times, the "prospects that Grady could close, and that Atlanta's health infrastructure could crumble, have forced a civic re-examination of the region's commitment to its least fortunate, a reckoning that has revived old antagonisms over race, power and class."
The "code red at Grady is emblematic of the crippling effect America's health care crisis has had on public hospitals around the nation," as the number has decreased from about 1,600 to about 1,300 in the past 15 years, the Times reports. According to the National Association of Public Hospitals, although public hospitals account for 2% of all U.S. hospitals, they account for 25% of all charity care provided by the facilities.
The business model used by Grady and other public hospitals is "no longer sustainable," as one-third of patients lack health insurance and one-third are Medicaid beneficiaries, which reimburses at rates "well below" hospital costs, according to the Times. Many public hospitals use revenue from the treatment of patients with private health insurance to help cover the cost of charity care, but "better-financed private and nonprofit hospitals are able to market their services and high-tech equipment to patients with good insurance coverage, including those on Medicare," the Times reports (New York Times, 1/8).