Nonprofit Newswire | City Created Nonprofit to Take Over Hospital

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June 30, 2010; Source: Washington Post | Can a financially and managerially challenged city government take over a troubled for-profit hospital and run it as a nonprofit? Some years ago, Greater Southeast Hospital, the only hospital east of the Anacostia River, shut down in virtual chaos. The District of Columbia city government arranged for the hospital to be sold to a for-profit, Specialty Hospitals of America, and provided a substantial amount of financing to go with it, apparently some $70 million.

Specialty Hospitals of America is defaulting on the city’s financing triggering the city’s ability to foreclose on the firm and retake the facility. But to do what? And how? If this hospital were to close, these communities would be left without a safety-net hospital, so the City has decided to create its own nonprofit—the Not-for-Profit Hospital Corporation—to take and run the facility, despite two warnings.

The chairman of the for-profit owner of the hospital—perhaps with a tinge of self-interest given that it’s his operation that is facing foreclosure—warned that the City would find itself unable to deal with the complexities of running a hospital. And the City’s Chief Financial Officer gave the City Council a memorandum that running the hospital would lead to a negative financial impact for the debt-strapped city.

It seems like there’s a long way to go between passing emergency legislation to create a 14-member board for the new nonprofit hospital corporation and actually creating the managerial and staff structure that is capable of giving Greater Southeast the breath of life. This, unfortunately, is the issue that was not covered in national health reform. The reform legislation passed by Congress addressed health insurance, not health care. If the Anacostia neighborhood of Washington D.C. loses its safety net hospital, it loses health care—even for the insured.—Rick Cohen