By John S. Sherman

According to the recent report of the Grady (Hospital) consultants, Atlanta-based Alvarez & Marsal, Inc., “Grady has a cash short-fall for 2007 that is projected at approximately $120 million, with key supplies presently obtained on a COD basis.” Both the recent reports of the Grady consultants as well as the Greater Grady Task Force are to be commended for their outstanding work.

The Fulton County Taxpayers Foundation is equally concerned, because Fulton County taxpayers currently contribute $80,345,000 annually (among the highest line item in the Fulton County General Fund Budget), with DeKalb taxpayers contributing $22,298,237 annually.

As a former member of the Grady Board of Trustees (1996-1999), I felt then – and I feel now – that the State of Georgia should play a vital role in any Grady turn-around. Closing Grady would have impact on:

1. Class A hospitals in Atlanta: The State involvement in a Grady turn-around would prevent a “patient tsunami” for other local hospitals which would become financially overwhelmed. These hospitals, such as Crawford Long, Northside, Piedmont, St. Joseph, etc. would be legally required to treat the uninsured and underinsured patients who currently go to Grady.

2. Physicians in training: Grady trains 25% of all physicians in Georgia. The closure of Grady would have severe consequences on the future physician availability in the State.

3. The indigent & uninsured: Grady treats 30,000 in-patients and nearly 1 million out-patient visits annually, patients from all parts of Georgia. Without Grady, according to the Greater Grady Task Force, “caring for the indigent population alone would put an overwhelming strain on hospitals throughout Metro Atlanta, particularly their emergency services.”

4. Statewide patients in need: Grady’s burn clinic, cancer research, infectious disease program (HIV), neonatal clinic, and trauma center treat patients statewide. Grady is the only Level 1 trauma center in North Georgia, critical for victims of car crashes and construction cave-ins.

5. Future economic growth of the state: In the words of the Greater Grady Task Force “If the Metro Atlanta and the State of Georgia are going to attract future employers and maintain those already here, it requires a working health care network that provides superior care for all citizens and effectively manages increasingly scarce health care resources.”

Need for leadership

Alvarez & Marsal, who spent the last six months examining Grady’s operations, state: “Grady does not currently have the depth of leadership to drive a (turnaround) plan of this size.”

According to the Greater Grady Task Force, Grady could vastly improve its governance were it to be free of the restrictions of the Hospital Authorities Law. Grady then would be able to raise additional funds from new sources, develop a broader scope of profitable services, increase public and physician participation in governance, etc.

The taxpayers of Georgia would greatly benefit were the governor to appoint a blue ribbon board of highly-qualified members with expertise in hospital administration, finance, operations, fund-raising, real estate, etc.

Getting pay clients

The Greater Grady Task Force indicated that “The best example of a restructuring similar to Grady’s is University Hospital in Augusta, owned by the Augusta Hospital Authority. The county commissioners sued to try to stop the restructuring. The case went to the Georgia Supreme Court which stated that a hospital must attract private paying patients or else it will become debt-ridden, indigent-only, dependant upon tax dollars to keep its doors open.”

During my tenure on the Grady Board of Trustees, I visited (at my own expense) the Charlotte-Mecklenburg Public Hospital, recommended to me by the Association of Public Hospitals. Hugh McCall, the Chairman, mentioned that an independent management study concluded “Charlotte-Mecklenburg must attract private-paying patients or else it will become a greater burden on the taxpayers.”

Today, Charlotte-Mecklenburg treats both the private-paying patients as well as the indigent, with absolutely no taxpayer funding whatsoever.

Contrast this with Grady which is subsidized with $102,643,237 annually from Fulton ($80,345,000) and DeKalb, ($22,298,237), with a cash shortfall for 2007 projected at $120 million additional

Innovative approaches

1. To successfully turn around Grady will require bold, daring, innovative approaches. Under the leadership of the governor, I visualize a new non-profit Grady Board no longer shackled to the Hospital Authorities Law. Here are but a few thoughts for consideration:

2. Georgia’s Uninsured & Undocumented Population: The Greater Grady Task Force reports that “At the current rate of increase, the projected number of uninsured in the state of Georgia will exceed 2 million by 2008, with 37% living in the five-county metropolitan area and looking to Grady for their health-care needs. Uninsured or uncompensated care, and Medicaid patients make up about 75% of Grady’s total patients.”

3. In the best interests of the taxpayers, the governor and the state legislature should consider legislation to require employers to pay for some reasonable form of health-care insurance for every employee. To minimize the burden on small and medium-sized businesses, the state should consider some form of tax relief to these employers. The state should also reinforce efforts to penalize employers who hire immigrants without proper working papers.

4. Atlanta’s Hospitals Partnering With Grady: The case has been proven that Crawford Long, Northside, Piedmont, St. Joseph, etc., would be “financially overwhelmed” in the event of a Grady closing. Therefore, it is in the best interests of these hospitals to work closely with Grady to achieve common advantages resulting from economies of scale, i.e., purchasing, management practices, lab work, etc. Those hospitals might even consider donating older functioning equipment to help Grady in its hour of need. I envision all hospitals collaborating on marketing Grady’s specialty services (burn, trauma, neonatal, HIV, etc.).

5. Grady’s Real Estate Potential: The total Grady campus has a critical mass of acreage to justify a master plan. A task force of professionals should plan the future of the Grady campus, developing or selling off prime acreage within the Master Plan.

6. Rationalization of Underperforming Assets: The 11 Grady Neighborhood Clinics and the Grady Nursing Home are losing money annually. The sale of these properties should be considered.

7. Performance Standards: With 5,000 employees, Grady has 30,000 in-patients and nearly 1 million outpatients annually. The Alvarez & Marsal report indicated that “The average Grady stay is longer than other hospitals.” With performance standards for every procedure, Grady could reduce its cost of operations.

Grady is a statewide issue. Fulton County taxpayers and taxpayers statewide have a large stake in the success of Grady. I urge you to email the governor, requesting that the state get more involved in Grady’s future and governance. In the words of the Greater Grady Task Force, “This hospital is too important to the community to let it go under.”

John S. Sherman is president of the Fulton County Taxpayers Foundation.