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Facing $120 million in debt, Grady Hospital is fast-exploring funding options, including transferring operations of its 953-bed facility to a private corporation

The Fulton County Commission (FCC) failed to allocate additional funding August 16 to Grady Memorial Hospital. Instead, the commission voted 4-2 to support the Metropolitan Chamber of Commerce task force to turn over hospital operations to a private, non-profit corporation.

Resolution Would Grant Grady $15 Million in Emergency Aid

But FCC Chairman John Eaves and Commissioner Lynn Riley did approve a resolution to give Grady $15 million but tied it directly to a plan for privatization. The resolution awaits an approval vote by the FCC. The task force said Grady needs $120 million to pay bills and meet capital needs and added the hospital may not meet payroll later this year. Grady has lost money every year since the millennium.

Fulton-DeKalb Hospital Authority (FDHA) Chairwoman Pamela Stephenson said Grady would close November 30 without emergency funding. The Georgia Chamber of Commerce (GCC) and officials from Emery and Morehouse medical schools endorse the move to privatization, according to the Atlanta Journal-Constitution (AJC).

“Is it smart to go down with a sinking ship?” asked retired oral surgeon David Allen, chairman of the GCC. “If they don’t change the governance, banks won’t loan money, foundations won’t grant money and the business community won’t contribute.”

Protestors of going private claim the existing board can successfully operate Grady with an infusion of funds. They also are wary of turning hospital administration over to private business interests.

Medicaid is Biggest Funder of Grady

Grady has limited funding since the bulk of its 953 patients are treated under Medicaid or Medicare. Hospital suppliers are demanding immediate cash payment for past debts. In 2005, 41.8% of its income came from Medicaid and 16.7% came from Medicare. Fulton paid over $84 million while DeKalb paid over $21 million during the same year.

The Grady Health System (GHS) is known for its Diabetes Detection & Control Center, Georgia Cancer Center for Excellence, Comprehensive Sickle Cell Center, Primary Stroke Center, Avon Foundation Comprehensive Breast Center and the Crestview Health and Rehabilitation Center – the largest nursing facility in the state. Grady also has a nationally acclaimed Emergency Care Center and Burn Unit as well as the only level I trauma center in the region, according to its web site, gradyhealthsystem.org. Its burn unit is one of only two in the state. GHS employs 5,000 people and contributes over $1.5 billion yearly to the metropolitan Atlanta economy.

Privatization is Hospital’s Lifeline, Some Claim

Those wanting change say funding won’t flow until Grady’s directorship is removed political appointees. Elected officials from DeKalb and Fulton decide who will sit on Grady’s management board.

“If other entities are going to contribute large sums of money, they’re not going to want Grady to be politically controlled by two counties,” said Pete Correll, co-chairmen of the chamber task force. “But if those two counties want to bail out Grady, then the issue goes away.”

The FDHA was created by the Georgia Legislature in 1941, decades before Medicaid and Medicare were established. It hired Otis Story as its CEO in May of this year. He replaced Timothy Jefferson, who had held the position on an interim basis since January.