Grady Boards Sign Lease, Woodruff Revealed as Donor

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(APN) ATLANTA — The Chairs of the Fulton-DeKalb Hospital Authority (FDHA) and the Grady Memorial Hospital Corporation (GMHC) signed the “lease and transfer agreement”–from the FDHA, a governmental gradybody, to the GMHC, a private, non-profit corporation–as well as the funding agreements, on Monday, April 07, 2008.

State Rep. Pam Stephenson and A.D. “Pete” Correll, Chairs of the respective Boards, moved the GMHC one step closer to taking over day-to-day operations of Grady Memorial Hospital from the FDHA.

“We have taken another major step today toward securing the mission and the future of Grady Health System,” FDHA Chair Stephenson, who is also the GMHC vice chair and Grady CEO, said. “While much work remains in this transition process, much has been accomplished that will benefit our patients, our employees, and the community we serve.”

Members are targeting May 1, 2008, as the lease commencement date, Correll said, at which point the GMHC would officially take over daily operations of Grady from the FDHA.

Upon commencement of the lease, all Grady Health System employees will transfer to the GMHC with their current jobs and salaries, and the GMHC will be responsible for the operations of the health system.

“There will be no immediate disruptions or changes to employees’ existing health, dental, and life insurance benefits or retirement benefits. Going forward, [the] GMHC will evaluate the existing plans and inform employees of any changes,” Esther Campi, spokesperson for the GMHC, told Atlanta Progressive News in an email.

Campi, in the same email, did not say directly whether or not there would be any layoffs, only that “the hospital must continuously review its efficiency and staffing levels. We will continue to do that going forward.”

Both Boards are working on all transition issues, including employee benefits and pension, regulatory filings, and Medicare and Medicaid issues, in order to ensure a smooth transition, Stephenson said.

“A top priority for both Boards is to ensure that Grady is legally and financially sound, and able to continue providing quality health care to the patients it serves,” she said. “We want this transition to be very smooth for our patients, our employees, and the whole community.”

WOODRUFF REVEALED AS ANONYMOUS DONOR

Before signing the agreements, both Boards received three commitment letters that fulfilled the requirements of the funding agreement, including one finally revealing the identity of the donor–the Woodruff Foundation–who pledged millions to Grady upon the transfer of power.

First, the Robert W. Woodruff Foundation submitted a letter to the FDHA pledging $200 million to Grady over four years for capital improvements.

The Woodruff Foundation, founded by Mr. Woodruff, the Coca Cola Company magnate who was a key player among Atlanta’s downtown corporate elite, until his death in 1985. The foundation has $2.7 billion in assets as of 2007 and gave $95 million in grants the same year.

Just some of the grant recipients of the Woodruff Foundation in 2007 included Emory University, Georgia State University, Morehouse College, the Beltline Partnership, Piedmont Park’s expansion program, Central Atlanta Progress’s Imagine Downtown program, and the Greater Atlanta Chamber Foundation.

The first $50 million from Woodruff to the GMHC is to be paid into the Community Foundation for Greater Atlanta upon the GMHC’s documentation that the new Board is incorporated; the Internal Revenue Service of the United States has recognized the GMHC as a tax-exempt entity; and the GMHC has satisfied any other requirements necessary to obtain a commencement certificate.

Correll will submit the application for recognition of for tax-exempt status to the IRS very soon, he said after the meeting.

IRS recognition of tax-exempt status will likely take several months, and the GMHC will have to provide a detailed report regarding its funding, governance, mission, and operations.

Also, the GMHC will have to show the IRS it does not privately benefit one individual or partner, meaning that funding agreements between GMHC, Emory University, and Morehouse College will be up for scrutiny, as will any conflicts of interest involving GMHC Board Members.

This first $50 million from Woodruff Foundation will be doled out over 12 months as specific capital needs are identified and prioritized.

Anti-privatization activists are furious the funds would be limited to capital expenditures, when in fact, Grady is in debt for operational expenses to Emory and Morehouse.

The remaining $150 million payments would be made directly to the GMHC and are contingent on several conditions.

For example, the GMHC has to submit annual reports accounting for the expenditure of these funds on capital projects and annual audited financial statements and detailed financial reports on Grady’s operations.

Among other provisions, the GMHC has to continue operating Grady as a safety net, operate as a tax-exempt organization, and maintain its accreditation by The Joint Commission on Accreditation of Health and Health Care Organizations.

Second, the GMHC delivered a letter to the FDHA promising to raise an additional $100 million over four years for capital improvements.

Tom Bell, a GMHC trustee and finance committee chair, has agreed to chair this campaign. Correll said after Monday’s meeting there are no further legal hurdles to begin this campaign and that planning is underway.

Third, the Emory and Morehouse Schools of Medicine submitted letters agreeing to renegotiate their existing contracts and outstanding debt obligations that exist as of December 31, 2007.

PUBLIC WANTS STATE HELD ACCOUNTABLE

Rhonda M. Meadows, a Commissioner with the Georgia Department of Community Health, also submitted a letter to the GMHC assuring Grady of the State of Georgia’s support.

However, the Georgia General Assembly failed to pass legislation this Session that would have pumped millions of annual dollars into the State’s trauma care network.

Such legislation could have provided Georgia’s trauma hospitals with an estimated $73 million, $33 million of which could have gone to Grady, Campi told APN.

“It’s a devastating blow,” Stephenson said of lawmakers’ lack of action. “It’s devastating to our citizens…we’ve all admitted that was a failure.”

Members of the Grady Coalition are furious over lawmakers’ failure to take action this Session.

“The hostile takeover happened and the Governor and [Lt. Gov. Casey Cagle] reneged,” State Sen. Vincent Fort (D-Atlanta), a Grady Coalition co-chair, said. “We were had bad by these folks.”

Fort, upset over the lack of public speaking time, stood up in the middle of the meeting and demanded some answers from the GMHC.

“How can this lease be consummated when the State did not provide funding,” he asked. “The Chamber of Commerce, Governor, Speaker…made a commitment and it fell through. You ought to be ashamed for letting these commitments fall through.”

“I’m severely disappointed, as you are, in what happened at the State House,” Correll answered. “This Board has a challenge next Session to get a trauma funding bill passed.”

Lawmakers did pass, and Gov. Sonny Perdue signed into law, Georgia’s fiscal year 2008 amended budget that includes a one-time payment of $58 million to be shared by all of the State’s trauma hospitals.

The Trauma Care Network Commission, according Meadows’s letter, is currently determining how this $58 million will be divided. Grady could get about $24 million of this total, Campi estimates.

Meadows’s letter goes on to outline some of Governor Perdue’s proposals for fiscal years 2008 and 2009 as it relates to Medicaid and outpatient hospital reimbursements but does not give specific, projected dollar figures Grady and other hospitals could look forward to receiving.

These numbers could arrive “in a matter of weeks,” Correll said.

Grady could receive $10 million of $22 million in increased annual Medicaid reimbursements for all Georgia’s hospitals, Campi said.

Stephenson submitted a letter to the GMHC stating the FDHA’s concern over the lack of hard, confirmed figures from the State.

“I hereby execute the lease on behalf of the [FDHA] subject to the condition that clarification of the state letter [Meadows’s letter] be received by the [FDHA] regarding the amount and level of funds available to Grady Memorial Hospital for fiscal years 2008 and 2009,” Stephenson’s letter states.

“Such clarification satisfactory to the [FDHA] shall be required prior to the acceptance of a commencement certificate under the lease by the [FDHA],” Stephenson wrote.

“The lease has been defaulted upon,” Fort charged Monday. “What you need to tell us is…has the lease been certified?”

“We signed the lease, not commenced the lease,” Correll answered. “Nobody is in default. This Board has said it will not commence the lease until [these] State funds are certified.”

GRADY COALITION CRITICIZES BELL

The Grady Coalition also charged Tom Bell Monday with what the Rev. Timothy McDonald called “a blatant conflict of interest.”

Bell is the CEO of Cousins Properties, Inc., a powerful real estate development company that, along with Emory, owns 50 percent of the Crawford Long Medical Office Tower in Atlanta.

The Grady Coalition argues Bell’s interest in Crawford Long is at odds with his looking out for the best interests of Grady, which competes for paying patients with Crawford Long, and say Bell should step down from the GMHC to avoid conflicts of interest.

“I don’t for the life of me see what renting office space has to do with a conflict of interest,” Correll told Atlanta Progressive News after the meeting.

The Georgia General Assembly also failed this Session to pass legislation addressing ethics and conflicts of interest as it relates to public hospital boards like the GMHC.

Bell was not present at Monday’s meeting to answer the Grady Coalition’s accusations.

The GMHC will meet again May 5, 2008, from 2 to 5 p.m. at an as-yet-undetermined location.

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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