Washington's Greater Southeast Healthcare System, often cited as an example of a thriving provider in a poor neighborhood, late last week filed for bankruptcy protection and promptly received $8.5 million in assistance from the District of Columbia government.
The bankruptcy and financial assistance were part of an agreement aimed at turning around the troubled system.
Financial help will come in the form of a 90-day loan, loan guarantee or cash advance to help the hospital meet its June 4 payroll and keep its doors open through August.
Filing for Chapter 11 bankruptcy protection were Greater Southeast Healthcare System, Washington-based Greater Southeast Community Hospital, the system's foundation, the system's management company and Fort Washington Nursing Home in suburban Maryland.
Fort Washington Hospital, which the Greater Southeast system also owns, did not file for protection, although the district may require it to do so to complete the reorganization plan.
As part of the deal, the system must present a strategic plan by June 30 with several options to guarantee its long-term viability. The city has brought in William Cleverley, president of the Center for Healthcare Industry Performance Studies in Columbus, Ohio, to serve as a turnaround consultant.
The filing is noteworthy because Greater Southeast Hospital is the only major healthcare facility in the largely impoverished area east of the Anacostia River in the District of Columbia. In 1989, it won the prestigious Foster G. McGaw Prize for Excellence in Community Service.
It's also noteworthy because a prominent member of the hospital's board is chairman-elect of the American Hospital Association. Carolyn Lewis is the first trustee and the first African-American to hold that AHA post. She will become chairwoman next year.
The system struggled financially in 1998. Moody's Investors Service downgraded its bond rating three times to the current Caa3, considered a "junk" rating. The system suffered a $33.9 million operating loss for the nine months ended Sept. 30, 1998, according to Moody's.