2010 better than expected for Grady Hospital

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2010 better than expected for Grady Hospital
May 9, 2011
By Misty Williams
The Atlanta Journal-Constitution

Grady Memorial Hospital did better financially last year than officials initially expected with an overall loss of $208,000, though it's now wrestling with a new spate of financial troubles.

It marks the second year in a row the massive safety net hospital has come close to breaking even or better. Once on the verge of financial collapse, Grady saw its first profit in years in 2009 after a group of key Atlanta business leaders came together and transferred the hospital to a corporate board.

“I think we’ve gotten to this point a little faster than we all expected to,” spokesman Matt Gove said. “I think it’s a testament to the potential that existed inside Grady.”

The hospital initially estimated its overall loss for last year at $6.3 million. An audit by KPMG, however, found that Grady had overestimated costs in some categories, such as the retiree health plan. The operating loss, which doesn't include investment income and other revenue, was $1.25 million.

Challenges lie ahead for Grady in 2011.

The hospital’s federal and local county funding to help pay for the poor and uninsured fell by roughly $20 million this year. It provided around $220 million in indigent care in 2010, compared with $180.9 million in 2007.

The drop in funding prompted officials to cut 100 jobs, increase prescription drug co-pays and announce the closure of two neighborhood clinics. South DeKalb Health Center in Decatur and Otis W. Smith Health Center in southwest Atlanta will close May 31. Together, those changes will save an estimated $10 million.

The hospital may be on more sound financial footing, but it's at the expense of the poor people it's supposed to serve, said state Sen. Vincent Fort, D-Atlanta, who heads the Grady Coalition, a patient advocacy group.

“Grady’s mission of serving poor people has been degraded,” he said. “The closing of the clinics is a dramatic example.”

Fort added that with health care costs rising, he wouldn’t be surprised if Grady’s leadership found a way to rationalize more cuts down the road.

Hospital executives are discussing ways to make up the rest of the funding gap without making dramatic program cuts, Gove said. They are looking at ways to improve operations, such as reducing the average length of stay for patients and managing overtime more closely, he said. Grady’s budget is roughly $870 million.

The hospital is also in the middle of conducting a nationwide search for a new top executive following the resignation of CEO Michael Young, whose last day is June 15.