Universal Health Services, a for-profit hospital chain, late last month completed its $125 million purchase of an 80% stake in George Washington University Hospital in the District of Columbia, making the 346-bed hospital the first for-profit facility in the district.
The completion of the deal came one week after Mayor Marion Barry signed a law regulating not-for-profit hospital sales in the district.
The law, however, exempted GWU Hospital and King of Prussia, Pa.-based Universal from its provision that requires for-profit buyers and not-for-profit sellers to disclose the details of transactions to the district corporation counsel for review.
In addition to the district, at least nine states since 1995 have passed laws aimed at increasing public scrutiny of not-for-profit hospital sales.
The partnership deal will bring an immediate $80 million in much-needed capital investments for GWU Hospital's aging facilities. Universal will pay another $45 million over 10 years. Officials are expected to announce construction plans soon for the facility, which is licensed for 501 beds.
But because of the hospital sales law passed in the wake of the GWU-Universal deal, GWU Hospital also will have to cough up about $600,000 in back property taxes. That's 10% of what it would have paid for the last five years had it been a profitmaking institution.
That was one of two retroactive provisions the district's hospital conversions bill imposed on the GWU-Universal deal.
The other is a requirement that GWU Hospital continue to spend the same amount on uncompensated care to the poor for the next five years. The hospital spent $19.9 million on uncompensated care in 1996.
The new law, however, doesn't require Universal and GWU to submit details of their transaction for review by the district corporation counsel to ensure that GWU Hospital's charitable assets aren't being misused.
Future deals in the district, such as the potential sale of not-for-profit Columbia Hospital for Women Medical Center, would face that review. Universal and two not-for-profit organizations have pending bids for the hospital.