The board of the District of Columbia public healthcare system last week fired 18 top managers at District of Columbia General Hospital and eliminated 12 other vacant administrative positions as it seeks to reduce its $150 million annual budget by at least 17%.
Meanwhile, the board was scheduled to meet late last week to consider whether to hire lawyers to negotiate a severance package with John Fairman, the hospital's executive director who was placed on paid leave late last month.
By firing the 18 employees, the hospital will achieve $1 million per year in savings at the troubled 250-bed hospital, said Julius Hobson Jr., chairman of the board of the D.C. Public Benefit Corp., the agency that runs the hospital.
A report from Cambio Health Solutions, the turnaround unit of Brentwood, Tenn.-based Quorum Health Resources, has recommended that D.C. General reduce costs by about $26 million per year. Cambio has been working with the hospital since early this year.
Hobson said Cambio is recommending that the benefits corporation develop a turnaround plan by early August, and the board wants to have that report ready by the end of the month.
The board is reeling from revelations that the D.C. government has been advancing money to the hospital for the past 21/2 years when it overspent its budget. Hospital officials said the amount was not clear.
Those transactions may have violated a federal law that prohibits D.C. institutions from spending more than Congress allocates for them through annual appropriations for the District of Columbia government. They often took the form of loans that were later forgiven by the government.
The exchange came to light in an audit of the hospital's fiscal 1999 financial operations prepared by the Washington accounting firm Bert Smith & Co.
Hobson said the board wasn't informed of those transactions.
A spokeswoman for Rep. Ernest Istook (R-Okla.), chairman of the House Appropriations Committee's District of Columbia subcommittee, criticized the board's initial cost-cutting actions.
"A few cuts is not enough to clean up the mess they've swept under the rug for years," the spokeswoman said.
Meanwhile, Fairman began his 30-day paid administrative leave on June 30. Hobson wouldn't specify why Fairman was put on leave, but the public benefit corporation's board was scheduled to meet late last week to consider whether to hire lawyers to negotiate a severance package for Fairman, Hobson said.
Fairman was a controversial appointment when he took control of D.C. General in 1995. He had been fired in 1990 from the Denver Health and Hospitals Department for allegedly mishandling the public hospital system's finances (Oct. 29, 1990, p. 12).