Georgetown University in Washington is moving ahead with plans to link its troubled hospital with MedStar Health, a seven-hospital system that serves an area from Baltimore to Washington.
Officials of the university and MedStar signed a letter of commitment late last week to proceed with exclusive negotiations to form a mergerlike partnership between MedStar and Georgetown's clinical operations, which include 335-bed Georgetown University Hospital.
The letter of commitment envisions a partnership in which the hospital, its community physician network and infusion therapy business would be operated by MedStar. It also states that the medical center would continue operating as a teaching institution in its current location, and that the academic and research functions would continue as part of the University.
MedStar is only about a year old, created last year through the merger of Baltimore-based Helix Health and Medlantic Healthcare Group, based in the District of Columbia (Feb. 23, p. 18).
Georgetown University Medical Center, which includes all of the university's healthcare operations, lost $62.4 million in 1998 on total revenues of $468 million. That prompted Moody's Investors Services earlier this year to lower the bond rating on the entire university (Jan. 11, p. 16).
The 1998 losses came despite some $21.5 million in operational savings that had led the facility to project a loss of just $35.5 million, but those savings were wiped out when installation of a new billing system caused uncollected bills to rise.