Grady Hospital Corporation Seeks Tax-Exempt Status, Sets New Target Date

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(APN) ATLANTA — The Chairman of the Grady Memorial Hospital Corporation (GMHC), A.D. “Pete” Correll, announced Monday, May 5, 2008, a new target date for the commencement of the lease and transfer agreement between the nonprofit and the Fulton-DeKalb Hospital Authority (FDHA).

Correll expects the lease and transfer to commence on May 20, 2008, at which point the GMHC would officially assume day-to-day operations of the Grady Health System from the FDHA, he said.

The GMHC had previously targeted May 1, 2008, as the commencement date when it met April 7, 2008. It has been pushed back by almost three weeks.

At the April 7 meeting, FDHA Chairwoman Pam Stephenson and Correll had signed the lease and transfer agreement as well as the funding agreement, leaving little unfinished business.

The GMHC, however, still needs to receive recognition of tax exempt status from the US Internal Revenue Service in order for the lease for commence.

Correll filed the application, which is over 1,000 pages, in mid-April, he said, seeming confident the IRS would grant recognition of tax exempt status and would do so in a timely manner.

The IRS usually takes several months however to approve such applications, so it is unclear why GMHC believes it will be approved so quickly.

To meet the other conditions of the funding agreement, the GMHC has received four letters.

First, the Robert W. Woodruff Foundation revealed itself as the donor of $200 million for capital improvements to be doled out over four years.

Second, the GMHC, which includes many members of the business community, pledged to raise an additional $100 million over four years.

Third, the Emory and Morehouse Schools of Medicine agreed to renegotiate their contracts and outstanding debt obligations with Grady.

Fourth, the State of Georgia pledged financial support, although not to the extent that many advocates had wanted.

Georgia lawmakers failed to pass legislation this Session that would have funneled millions of dollars annually into Georgia’s state trauma care network, but did amend the Fiscal Year 2008 budget to include a one-time payment of $58 million to be shared by all of Georgia’s trauma hospitals, including Grady Memorial Hospital.

Originally, when the FDHA passed a resolution approving of privatization, they were supposed to receive letters from the Governor and leaders of the State legislature pledging their support. These were never received.

Meanwhile, the Trauma Care Network Commission will meet May 15, 2008, to determine how much of the $58 million each trauma center in Georgia will receive, Correll said.

Stephenson, in an April 7, 2008, letter to the GMHC, wrote the FDHA needs a satisfactory clarification regarding the trauma money available in Fiscal Years 2008 and 2009 prior to the commencement of the lease.

Once this business is settled and IRS recognition is approved, the lease can commence, according to the GMHC.

When the FDHA and GMHC are ready to do so, the GMHC would alert the Woodruff Foundation 48 hours in advance, Correll said.

At that point, the first payment of $50 million would be deposited into the Community Foundation for Greater Atlanta.

The $50 million will be paid out over 12 months as specific capital needs are identified and prioritized. The funds have been earmarked for capital improvements and thus will not help Grady address its budget shortfall and debt to Grady and Morehouse.

A Search Committee charged with finding a permanent CEO for Grady Hospital has been in contact with about 30 candidates for the job so far, Correll said.

The FDHA fired previous CEO Otis Story in January 2008 for unknown reasons.

Stephenson has filled the post since then.

Stephenson has drawn numerous attacks from critics who contend she has a conflict of interest by serving as Grady Hospital CEO, GMHC Vice Chair, and FDHA Chair simultaneously, while also serving as a State Representative.

While she has publicly expressed interest in staying on as CEO, Stephenson has yet to make a formal announcement on whether or not she has officially applied for the job.

Correll hopes Grady will have a new CEO by early June, he said Monday.

Atlanta Progressive News has made a request for an interview with Correll to discuss the pending privatization of Grady Hospital at this time, and is waiting to hear back from Esther Campi, Metro Atlanta Chamber of Commerce Senior Vice President of Communications.

APN also previously requested a copy of the IRS application from Lewis Horne, attorney with Troutman Sanders law firm, and has not yet received it. Although Mr. Horne advised APN to get the documents from the IRS, the organization itself is legally required to provided the documents to any member of the public who requests them.

About the author:

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

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