DeKalb County Consents to Grady Hospital Lease Agreement

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(APN) DECATUR — The DeKalb County Board of Commissioners unanimously approved a resolution Tuesday, February 26, 2008, consenting to the lease and transfer agreement by and between the Fulton-DeKalb Hospital Authority (FDHA) and the newly formed Grady Memorial Hospital Corporation (GMHC).

The vote comes one week after Fulton County approved the lease, and one month after the FDHA approved an earlier version of the lease. State leaders put pressure on Fulton and DeKalb to move quickly so the transfer of power could move forward.

“This Commission had to deliberate and make sure [Commissioners] were looking out for [DeKalb’s] tax dollars,” DeKalb CEO Vernon Jones said.

Both Counties had to sign off on the lease in order for it to take effect because each has bond agreements with Grady, providing about $100 million annually.

Attorneys for DeKalb, working with lawyers for the FDHA and GMHC, negotiated several revisions to the lease, which could provide commissioners with more oversight.

These include requiring the GMHC to have at least two DeKalb residents, to provide reports to Fulton and DeKalb on its financial and quarterly performance, and to hold public meetings.

Additionally, the FDHA could not receive its annual $2.5 million rental payment from the GMHC until the FDHA provides the GMHC with an annual budget describing how the money is spent that is approved by Fulton and DeKalb Counties. Rental payments made by GMHC to FDHA will be used to cover the FDHA’s costs of maintaining an office including for preparing reports and audits. Fulton and Dekalb’s bond agreements are with FDHA, not the GMHC.

Stephenson also said the FDHA will meet soon with the alleged donors who have pledged millions of dollars in private donations to the hospital upon transfer of power to a nonprofit structure.

She would not identify the donor or donors but said the FDHA will make the identity public very soon.

The money promised by the business community is short of what Grady actually needs.

A report compiled last July by the Metro Atlanta Chamber of Commerce, which recommended the FDHA hand power over to a 501(c)(3), noted Grady needs an estimated $370 million to complete a two-year turnaround.

This includes $120 million for short-term funding to overhaul operations, pay debt to Emory University and Morehouse College’s Medical Schools, and address immediate capital needs; and $250 million for long-term capital improvements.

Business leaders have pledged to give Grady only $50 million immediately following the completion of the power transfer.

Another $150 million would allegedly go to Grady over the next three years and the business community has also pledged to raise another $100 million, which would also go to the hospital over three years.

The Chamber of Commerce report notes the Grady needs an additional $50 million every year just to cover its annual operating deficit.

It is unclear if anyone will actually follow through on delivery of promised pledges or if donors are legally bound to follow through.

“Show me the proof,” Commissioner Lee May (District 5) said Tuesday. “If you don’t follow through with this commitment, you’re a liar in the public’s eye.”

Commissioner Burrell Ellis (District 4) told citizens to contact State leaders to urge them to provide more money for Grady.

“Call upon the State to do its part,” Ellis said. “In order for Grady to survive, it’s going to take more than the creation of a 501(c)(3).”

There are other issues in the lease that trouble some members of the public. Section 5.4 states the GMHC “will irrevocably, absolutely, and unconditionally provide indigent care and charity care…and operate the hospital as a safety net hospital.”

Section 5.6 states the GMHC “shall continue to provide the major service lines at substantially the same levels.”

However, the lease does not define what constitutes service lines and provides that the GMHC would only have to consult with the FDHA prior to ceasing any major medical service lines.

Previous drafts provided the FDHA with veto power over any service cuts proposed by the GMHC.

The lease also allows the power transfer to take place without the GMHC obtaining a determination letter of tax-exempt status from the Internal Revenue Service of the United States (IRS).

Previous drafts stipulated the GMHC must obtain this letter before the commencement of the lease.

Lewis Horne, a Troutman Sanders attorney working for the FDHA, said at a public information meeting last week that it will be up to the new members of the GMHC to apply to the IRS for that letter.

While potential names of new GMHC members have been floated, the FDHA has not named anyone to the new Board. Horne said it could take months before the IRS provides the determination letter.

About the author:

Jonathan Springston is a Senior Staff Writer for Atlanta Progressive News and may be reached at jonathan@atlantaprogressivenews.com.

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