Following the lead of many states, the District of Columbia is considering legislation that could slow the purchases of not-for-profit hospitals by investor-owned hospital chains.
The deep division over the legislation belies the shallow pool of available hospitals. Nine nonfederal acute-care hospitals serve the district, according to the latest data from the American Hospital Association. Eight of those are private not-for-profits.
Not surprisingly, the legislation is aimed at a specific deal: the pending joint venture between not-for-profit George Washington University Hospital and for-profit Tenet Healthcare Corp. If the deal goes through, it would mark the first entry by an investor-owned hospital chain into the district (Nov. 4, 1996, p. 24).
The legislation is supported by Medlantic Healthcare Group, owner of not-for-profit Washington Hospital Center, which leads the district in admissions, patient days and outpatient surgery. GWU Hospital, one of Medlantic's chief competitors, is second in admissions and fourth in patient days and outpatient surgery.
The legislation would require-outside of the district's certificate-of-need approval process-an analysis of any sales of not-for-profit institutions to for-profit companies by the district's corporation counsel. That post is equivalent to attorney general in a state. The analysis would focus on whether the charitable assets involved in such a sale are used in the public's best interest.
The bill also would require for-profit buyers to pay the district real estate taxes equivalent to what the acquired not-for-profit would have paid in the previous five years if it were a for-profit corporation.
John Green, Medlantic's executive vice president for corporate services, said the legislation is necessary to open the details of all such deals to public scrutiny and ensure that charitable assets are valued properly.
But Allan Weingold, M.D., executive dean and vice president of GWU Hospital, said Medlantic's concerns are based in self-interest. He said he wants an investigation of the possible anticompetitive nature of Medlantic's support of the conversion legislation.
Weingold said the measure would discourage deals between struggling institutions threatened with closure and cash-rich companies that could save those institutions.
Medlantic and GWU are, along with Suburban Hospital in Bethesda, Md., in a bidding war over the acquisition of Columbia Hospital for Women Medical Center (March 17, p. 6).