A.D. “Pete” Correll's relationship with Grady Health System in Atlanta began after a tour of the emergency department in early 2007.
“It was like going back in the 1950s. People were in the halls and (medical personnel) were keeping up with patients on grease boards on the side,” recalls Correll, who visited Grady, a public system, as co-chair (sharing duties with his wife, Ada Lee) of the annual capital campaign for Emory University School of Medicine.
He told the story to a friend—Thomas Bell, retired chairman and CEO of Cousins Properties in Atlanta, a diversified commercial and residential real estate company—over cocktails that evening.
“We eventually concluded that somebody ought to do something about it. We had a couple of more drinks, and concluded that it ought to be us,” quips Correll, a civic leader and former CEO of paper and packaging giant Georgia-Pacific.
Correll has never looked back. In 2007, he was co-chair of the Greater Grady Task Force. The Metro Atlanta Chamber sponsored to figure out how to solve Grady's financial and quality problems, including old facilities and equipment, and reliance on paper-based clinical records. He then became chairman of a newly created not-for-profit organization that leases Grady Health System, which includes 697-bed Grady Memorial Hospital, Atlanta, from the Fulton-DeKalb Hospital Authority.
For his accomplishments, Correll, 68, has been named Trustee of the Year for large healthcare organizations—those with more than $75 million in annual revenue or 250 beds.
Correll's efforts helped reverse years of financial decline. By 2007, Grady was on a cash-on-delivery basis with most vendors and owed Emory and Morehouse medical schools $65 million for physician services.
“Because of who he was, his contacts and his ability to sell the Grady change and turnaround, he was able to motivate the entire community. Frankly, the whole state,” says Michael Young, president and CEO of Grady Health System.
Indeed, if Grady closed, it would have created a “tsunami” in which 1 million patients—including many without insurance or means to pay—would be dumped on other providers, according to a report the Grady task force released in July 2007.
Important medical services would have been lost as well. Grady operates the only Level I trauma center in northern Georgia and one of only two burn units in the state.
Based on the task force's findings, the not-for-profit Grady Memorial Hospital Corp. was created, and Correll was elected as chairman of the board of trustees. The board included other high-profile members: Bell; Louis Sullivan, a former HHS secretary; Robert Miller, a retired healthcare lawyer; and Duane Ackerman, former chairman and CEO of BellSouth Corp.
The next step was the most difficult: Convincing a wary public that leasing Grady to a private organization was the best way to ensure Grady's survival as a safety net provider.
“There were all kinds of rumors that we were going to convert it to apartments and condominiums, shut it down and not serve the people,” Correll recalls. But after many months of public discussion, the Fulton-DeKalb Hospital Authority transferred control of the system to the Grady Memorial Hospital Corp. in May 2008.
Fundraising was next. The Robert W. Woodruff Foundation, Atlanta, pledged $200 million, which fueled enthusiasm from other donors. The Grady board expects to meet its $325 million capital-campaign goal by the end of 2010.
The board also hired Young, who had been CEO of 406-bed Erie County Medical Center, Buffalo, N.Y. He began work in September 2008, and was immediately immersed in infrastructure issues.
“The first week here I had to replace the hot water system,” Young says. Many other capital expenditures followed, including: a fire-alarm system, ambulances, inpatient beds, defibrillators, imaging equipment, and a cardiac catheterization lab.
In addition to the basics, Grady also developed plans to go from an environment without a computer network to a $35 million electronic health-record system in just 12 months. The system will go live in the emergency department as well as two ambulatory clinics in March, while the rest of the institution will convert to the system in October. Why so fast?
“We see 6,000 patients a day—inpatient and outpatient. We produce 40,000 pieces of paper a day. We have 1 million square feet of paper storage, and it is hard to meet national Joint Commission requirements,” Young says.
Grady also cut expenses and increased revenue to reduce operating shortfalls even as contributions from Fulton and DeKalb counties have decreased. Grady had an operating loss of $40.2 million in 2007 after payments from the counties of $126.1 million, compared with a loss of $46.6 million in 2008 after county contributions of $90.4 million. Total revenue was $493.7 million in 2007 and $527.3 million in 2008.
Young estimates that the system lost $40 million after county contributions of $60 million in 2009 on total revenue of $520 million.
Meanwhile, charity care skyrocketed during the recession from $240 million in 2008 to $320 million in 2009, Young says.
While the outlook for Grady has improved, long-term survival depends on attracting paying patients for treatment in medical disciplines that naturally grow out of expertise in trauma, such as stroke, cardiovascular and orthopedic services, Correll says.
Grady “could be a really premier medical institution,” he adds.
