Citizens Fight Privatization of Grady Hospital


(APN) ATLANTA — The under-funding crisis facing Grady Hospital has led some politicians in Atlanta to call for privatization of this public hospital which provides a large portion of Georgia’s indigent care. A report by the Greater Grady Task Force recommends turning over management to a private, nonprofit corporation in order to attract funding from banks, the State of Georgia, and other sources.

Grady currently owes millions of dollars in debt to Emory and Morehouse University medical schools, which provide staff to Grady, and it now also lacks sufficient funds to operate for more than a few months.

Activists including Ron Marshall, Chairman of the New Grady Coalition, see a problem with this privatization approach.

“Private means there is no accountability,” Marshall told Atlanta Progressive News. “How do we keep checks and balances? You can’t privatize public funds. We’re entitled to know where our money goes.”

In Houston, Boston, and in California, hospitals of comparable size to Grady all failed after switching to a private governance model, Marshall said.

“When you start privatizing something, it goes bad,” he said. “It affects the community as a whole. We lose the benefit of well-trained doctors. Who’s going to take in the indigent? [There would be] five thousand people out of a job at Grady.”

Nevertheless, State Sen. David Shafer (R-Duluth), said this month he will introduce a bill when the Georgia General Assembly reconvenes in January 2008 to put pressure on Grady to switch to private management, according to The Atlanta Journal-Constitution newspaper (AJC).

Shafer’s bill would create a 12-member nonprofit board comprised of appointees by the existing hospital board, the Governor, Lieutenant Governor, and Speaker of the House.

One out of every nine Georgians must pay out of pocket or rely on indigent services for their medical care.

“For this reason alone, an institution like Grady Memorial Hospital is vital if hardworking Georgians are going to have reliable access to medical service,” State Rep. Stephanie Stuckey Benfield (D-Decatur) said.

“If not for the existence of Grady, many of our poorest residents would seek similar services at local hospitals that do not have the resources or personnel to efficiently provide indigent care,” she added.

“The rippling effect [would be] unconscionable,” Marshall said.

“Grady’s failure and potential collapse could create a ‘patient tsunami’ for area hospitals and jeopardize trauma care in the state. Everyone in the region would be affected, not just the poor and uninsured among us. The stakes are getting higher as the financial crisis grows more severe,” according to a report by the Greater Grady Task Force.


The Grady Hospital governing board approved August 21, 2007, a multi-million dollar plan to fiscally stabilize the troubled Grady Health System and to prevent its closure.

The 10-member Fulton-DeKalb Hospital Authority approved the $125 million plan 9-1. Citigroup and Morgan Keegan & Co. agreed to provide a $100 million line of credit with the provision that either Fulton County or DeKalb County backs the loan.

The new money would allow Grady to pay its debt to Emory and Morehouse and provide operational money to fund the Grady Health System through the third quarter of 2008.

Fulton County Commission Chairman John Eaves has objected to Fulton backing the loan because he says it would place an undue burden on the taxpayers of Fulton County. Eaves, a Democrat, was recently elected to replace Republican Karen Handel as Commissioner, when Handel ran for, and became, Secretary of State of Georgia.

Fulton and DeKalb are the only two counties in Georgia that pay money into the Grady Health System, making up almost 20 percent of all money Grady receives. The counties paid $86 million and $27 million respectively for fiscal year (FY) 2007.

In addition to the loan, $125 million funding plan includes $5.3 million recently provided by the Fulton County Commission, and an $20 million emergency fund request from Grady to Fulton and DeKalb.

The Fulton County Commission on August 17, 2007, considered two proposals, one for $20 million in emergency funding, and $15 million in emergency funding with the understanding future emergency funding would be conditioned upon the participation of DeKalb County, the State, and the business community.

Both proposals lacked the four affirmative votes necessary to pass.

Fulton County Commissioner Emma Darnell (District 5) told Atlanta Progressive News the commissioners will look at emergency funding again and possibly discuss the $125 million Grady governing board plan at its September 05, 2007, meeting.

“We’re going to do what we can on any proposal before us and we cannot do anything beyond our fair share,” she said. “We cannot do it all, but we ought to do what we can.”

Long-term funding problems, spending accountability, and the debate over public versus private management will remain even after this short-term crisis is averted, however.

It’s important to first understand what Grady is and its importance to the region as a whole.


Grady is more than just a large hospital nestled in downtown Atlanta. It is an entire health system from which the entire state benefits.

It has an annual operating budget of approximately $700 million, more than the entire budget of the City of Atlanta, and manages over 900,000 patient visits each year.

Grady receives about 60 percent of its funding from Medicare and Medicaid in addition to the millions it receives from Fulton and DeKalb Counties. The rest comes from grants and other sources.

While many are familiar with Grady Memorial Hospital, there are also 10 neighborhood/airport health centers, Children’s Healthcare of Atlanta at Hughes Spalding, which is operated by a Children’s affiliate, a level I trauma center (the only one within a 100 mile radius of the Metro area), a burn unit, and one of the busiest emergency care centers in the country.

Grady also staffs a poison control hotline and an infectious disease center.

Grady Health System is an internationally recognized teaching complex as well. Emory and Morehouse provide exclusive staff and 25 percent of all Georgia doctors are trained at Grady.

But Grady has lost money every year since 2000 and faces financial insolvency. Rising healthcare costs and indigent populations coupled with a flat or decreasing revenue stream are the main culprits.


The Metro Atlanta Chamber of Commerce formed April 9, 2007, the Greater Grady Task Force, a 17-member group made up of prominent business leaders from Atlanta, and charged the group with finding long-term solutions to Grady’s problems.

The group’s final report, released July 13, 2007, in addition to calling for private management, estimates the health system needs $370 million to complete a two-year turnaround.

Therefore, in addition to the Hospital Authority’s $125 million plan, Task Force Members suggest raising $250 million that could go toward desperately needed long-term capital improvements.

The report recommends another $50 million is needed every year to cover the annual budget shortfall bound to occur because Grady cares for so many uninsured patients.

In fact, 93 percent of all Grady patients are not privately insured, according to Rep. Benfield’s report.


Top state officials like Lt. Gov. Casey Cagle believe the governance issue, not the funding issue, is what should top the Grady agenda.

“The simple reality is any legislative effort to fund Grady is unlikely to succeed until the system can demonstrate an ironclad ability to be good stewards of State funds,” Cagle told The Atlanta Daily World newspaper (ADW).

Mr. Marshall said his group, The New Grady Coalition, has made at least 60 open records requests to Grady, the State, and others in the last three years to find out how money is being spent in the system, but has not received any of the requested materials.

“Where is the money going?” he asked. “That’s all we want. There are enough good public people that you don’t have to pay millions of dollars to tell you are screwing up.”

Marshall believes a public watchdog should keep track of how money is spent at Grady.

“We’ve got to have a blue ribbon commission and [it has] to report back to the people on a weekly basis,” he said. Marshall recommends that it be non-political, it monitors “every contract and every dollar,” and it should contain a current or former patient, a retired Grady worker, a physician, and a citizen.

Benfield doesn’t discount the need for fiscal stewardship, but says, “without State assistance, it does not matter who governs the hospital for it will still operate with a growing deficit.”


Other Metro Atlanta counties that benefit from Grady’s services should pay into the system, Paul Hays, member of the New Grady Coalition and Congress of the People-Poor!, says.

“I don’t think people in suburban areas know what their counties are doing,” Hays said. “I don’t think you realize how many people are being treated from your area and it’s not being paid for.”

Indeed, for FY 2007, every other Metro county besides Fulton and DeKalb paid zero dollars for benefits reaped from Grady.

The Task Force report notes the State of Georgia has no obligation to Grady and does not guarantee its existing debt. Also, Grady treats uninsured patients from Clayton, Cobb, and Gwinnett Counties, but, to be sure, those counties also receive some uninsured from Fulton and DeKalb, it notes.

While the Task Force report concludes the surrounding counties need to form a net sharing agreement to resolve the issue of paying for its uninsured residents for the sake of fairness, it adds this alone will not solve Grady’s financial crisis.


Fulton County Commissioner Robb Pitts (District 2 At Large) proposes raising $20 million for short term capital improvements and $35 million in operating costs, the ADW reports. This would include $10 million from Fulton County, $3 million from DeKalb, $7 million from other counties, and $15 million from foundations, corporations, and financial institutions.

State Rep. Harry Geisinger (R-Roswell) is preparing legislation that would raise as much as $150 million a year through the imposition of a telephone subscriber fee to help the state pay for maintaining a network of trauma care hospitals, according to Benfield.

His measure would require every telephone service provider to levy a $1 monthly fee on every subscriber. The Department of Human Resources would divide the $150 million among hospitals designated trauma centers, based on the number of patients who receive uninsured trauma services.

During the most recent legislative session, Speaker of the House Glenn Richardson (R-Hiram) established a House study committee to investigate Grady’s financial crisis.

Richardson remarked at the time, “each of Georgia’s 159 counties sends patients to Grady,” perhaps signaling the time has come for every Georgian to pitch in to save Grady.

About the author:

Jonathan Springston is a Senior Staff Writer for The Atlanta Progressive News and may be reached at

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