Privatization of Grady Hospital Commences Despite Unmet Conditions


(APN) ATLANTA — The Fulton-DeKalb Hospital Authority (FDHA) officially transferred operations of the Grady Health System to the new 501(c)(3), the Grady Memorial Hospital Corporation (GMHC), on Monday, May 19, 2008.

The lease will commence on May 20, 2008, and all Grady employees will transfer under the control of the GMHC with their current jobs and salaries and the GMHC will be responsible for the operations of the health system.

However, the FDHA inexplicably moved forward without a specification from the State of Georgia regarding the amount of trauma funding Grady will receive, despite an April 7, 2008, letter, in which FDHA Chairwoman Pam Stephenson said such specification would be a precondition to the transfer.

In the April 7 letter to the GMHC, Stephenson wrote, “I hereby execute the lease on behalf of the [FDHA] subject to the condition that clarification…be received by the [FDHA] regarding the amount and level of funds available to Grady Memorial Hospital for fiscal years 2008 and 2009.”

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

But Stephenson, who also serves as Grady CEO and GMHC Vice Chair, told Atlanta Progressive News on Monday that the FDHA “decided to move forward” without knowing how much of the $58 million Grady would receive.

The $58 million was appropriated for the 2008 fiscal year, so the money has to be divided no later than June 30, Stephenson told APN.

She appeared confident Grady would know how much it is going to get and receive that amount on or before June 30, but offered no explanation for why the lease was moving forward despite her previous statements.

This is not the first time the conditions surrounding the privatization of Grady Hospital have shifted or simply disappeared.

As previously reported by Atlanta Progressive News, it was stipulated in the original FDHA resolution leading to the formation of the GMHC that numerous state legislators and officials would need to sign letters promising Grady funding. That condition vanished when the FDHA and other parties voted on the lease.

Grady still faces a number of issues in the near future, namely figuring out how to obtain more funding for its Level I trauma center, the only such hospital in north Georgia.

The Georgia General Assembly failed to pass legislation this Session that would have pumped millions of annual dollars into all of Georgia’s trauma hospitals, including Grady.

Lawmakers did succeed in amending the fiscal year 2008 budget to include a one-time payment of $58 million to be shared by all of Georgia’s trauma hospitals.

The Trauma Care Network Commission, a State committee charged with determining how much of this $58 million each trauma hospital in Georgia is to receive, canceled its May 15, 2008, meeting for unknown reasons, APN learned Monday.

That Commission was supposed to determine how the money was to be divided at that meeting.

As a result, the lease will take effect without Grady knowing how much of the $58 million it will receive.

Over the coming months, both Boards will continue to work with lawmakers to obtain continued trauma funding, Stephenson said.


APN delivered a written request Monday to Grady legal counsel and registered agent, Timothy Jefferson, requesting to inspect the GMHC’s application to the IRS seeking recognition of tax-exempt status.

Federal law requires a tax-exempt organization to provide any member of the public access to their IRS recognition application for inspection on that same business day, unless extenuating circumstances exist, in which cases the organization must provide it on the next business day.

APN previously requested the application months ago and was told at that time it did not exist. Now that the application was approved, APN has made several phonecalls to the GMHC to identify the person who had access to the document.

APN requested an appointment to view the documents under federal law; however, Jefferson insisted he would treat the request as an Open Records Act request under Georgia law, because he said the document did not exist in physical form and he needed time to print it out.

APN expects to be able to view this document later this week and will report on its findings.

If not, APN is prepared to take further steps. APN let the GMHC know that a corporation which does not comply with the law can be exposed to extensive fines from the IRS.


“Tomorrow begins a new chapter in Grady’s history,” A.D. “Pete” Correll, Chairman of the GMHC, said in a press release.

“The [GMHC] has a singular focus – to preserve Grady’s historic mission as a safety-net hospital for this region by getting Grady the funding it needs,” he added. “The first infusion is already on its way. And in the weeks and months ahead, we will be calling on the broader community to do its part to rally around this critical resource we all depend on.”

Correll appeared Monday during the regular meeting of the FDHA as a “special guest” and said the Robert W. Woodruff Foundation would deposit $50 million in the form of Coca-Cola stock into the Community Foundation for Greater Atlanta on May 20, 2008.

The $50 million is the first of several installments of $200 million promised by the Woodruff Foundation to be doled out over four years for capital improvements.

The GMHC has also pledged to raise an additional $100 million over four years for capital improvements.

“It’s been a long journey…but we’ve reached the goal line,” Correll said Monday. “We have given this hospital a chance. We have given this hospital a future.”


Stephenson has served as Interim CEO at Grady since January 2008 after officials fired Otis Story for unknown reasons.

Story filed a lawsuit against the FDHA two weeks ago in Fulton County Superior Court in which he asserts Stephenson had him fired so she could take his job, The Atlanta Journal-Constitution newspaper (AJC) reported May 12, 2008.

The AJC obtained a dismissal letter from Stephenson to Story that claims Story did not provide good leadership and made decisions without getting approval from the FDHA.

Story is seeking $1.8 million in severance pay, a $60,000 signing bonus, and unspecified punitive damages, according to the AJC.

Meanwhile, critics contend Stephenson has a conflict of interest by serving in three posts at Grady: CEO, FDHA Chair, and GMHC Vice Chair.

A Search Committee has spoken to about 30 candidates for the permanent CEO position and hopes to hire one by the end of June, Correll said last week.

Stephenson has said publicly that while she is interested in staying on as CEO, she will not make a formal announcement on whether she has applied for the post.

Correll is scheduled to speak with reporters May 20 in his downtown office about the transfer. The GMHC will hold its first meeting as the Grady Health System operator on June 2, 2008.

About the author:

Jonathan Springston is a Senior Staff Writer for Atlanta Progressive News. He may be reached at

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