A turnaround team from a Quorum Health Group subsidiary assumed control last week at struggling Greater Southeast Community Hospital, Washington.
As many as 10 managers from Intensive Resource Group, a division of Brentwood, Tenn.-based Quorum, will report to the board of Greater Southeast Healthcare System for two months. The IRG team also will work closely with the 305-bed hospital's current management.
Filing for federal bankruptcy protection in May were the system, Greater Southeast Community Hospital, the system's foundation and management company, and Fort Washington Nursing Home in suburban Maryland (May 31, p. 4).
Still solvent is the system's 35-bed Fort Washington (Md.) Hospital, which was not included in the bankruptcy filing.
The Chapter 11 filing was part of an effort to reverse Greater Southeast's economic fortunes. Bleeding red ink and teetering under millions in debt, it sought bankruptcy protection in return for an $8.5 million assistance package from the District of Columbia.
The district wanted to keep Greater Southeast's doors open because it is the only hospital serving the largely impoverished neighborhoods east of the Anacostia River in Washington.
The management team is working exclusively on returning Greater Southeast hospital to solvency, because the facility has been identified as the system's chief problem, said Paul Porter, the system's vice president of corporate planning and development.
Greater Southeast will pay Quorum $203,000 per month for its services.
Porter said the Quorum team will identify new cost savings and, the management hopes, validate some decisions already made to improve the bottom line. The team is to produce a report on a comeback plan in 45 days.
Porter said the system has reduced costs by $18 million since November, when Moody's Investors Service issued a report highlighting the system's financial deterioration (Nov. 30, 1998, p. 2). The system set a goal of reducing annual operating costs by $20 million in December, when it laid off 250 employees (Dec. 7, 1998, p. 24).
At that time, the system also shut down an employee PPO and closed a 46-bed subacute-care nursing unit.
For the nine months ended Sept. 30, 1998, the system suffered a $33.9 million operating loss. That followed a $2.5 million loss on net patient revenues of $129 million in 1997.
The system declined to provide more recent financial data.
Moody's downgraded the system's bond rating three times in 1998.
Greater Southeast's board includes Carolyn Lewis, chairwoman-elect of the American Hospital Association, who has been tapped as the first trustee and first African-American to be AHA chairwoman.