Grady Memorial Hospital's new CEO, Michael Young, declared himself optimistic Monday as he pledged that the financially stressed hospital will break even within three years.

The bad news came later in the day, when he heard during a Grady board meeting that the hospital's deficit is likely to hit $51 million this year and that patients are increasingly going elsewhere.

Derek Gee/Buffalo News (ENLARGE)

Erie County Medical Center CEO Michael A. Young announces that he will accept a job as chief executive of Grady Memorial Hospital in Atlanta during a press conference at ECMC, July 21, 2008.

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Grady financial chief Michael Ayres said the hospital is treating 8.6 percent fewer inpatients than a year ago. Grady served 12,098 inpatients in the first five months of 2007, versus 11,055 for the same period this year, Ayres said.

His report took some of glow off Young's upbeat first public appearance in Atlanta, but the incoming CEO didn't back off his pledge to stanch the financial hemorrhage.

"It's really bad. I think everybody recognizes that," Young said after the meeting.

If Young balances Grady's budget, it would be only the second year in about a decade the hospital has operated in the black. Grady reported a $43 million deficit last year and continues to lose $4.5 million a month. A $51 million deficit would be among the highest in Grady history.

Young said his hope is that the hospital will break even on a monthly basis. He did not address a $71 million debt to the Morehouse and Emory medical schools, which provide Grady's doctors.

"I think the target for Grady, and my commitment to the board, is to break Grady even," he said. "A break-even situation would be a three-run homer for us."

He said he would do so by improving services, reducing long waits for care and updating equipment.

A year ago, Grady officials said the hospital, facing a projected deficit of about $70 million, was on the verge of closing. The state's largest and busiest hospital has struggled with a lack of insured patients, dwindling government aid and years of neglect.

Now, fewer patients with private health insurance are visiting Grady, leaving hospital to care for the poor and uninsured, Ayres' figures showed.

Young, who is due to start at Grady in early September, is already analyzing the problem. He said many obstetrics patients, particularly Hispanic women, a large constituency for Grady, have been drawn to competing facilities. Cardiac patients have left as equipment breakdowns led to long delays, he said.

Young said plans are under way to attack the problems.

"I know what Grady means to this community," Young said. "I'm also an optimist."

Young currently heads Erie County Medical Center in Buffalo, N.Y., — a smaller but similar hospital to Grady — where he transformed a $30 million operating deficit into a $17 million surplus in about three years.

Grady has a great start with a $200 million gift from the Woodruff Foundation, Young said, describing the grant as a "once in a lifetime" opportunity. But that money can be spent only on capital improvements such as equipment, leaving Grady to reduce its operating deficit using other funds.

Young said Grady has a lot of strong attributes, singling out for praise the doctors, nurses and staff as "stellar."

"I think the employees are energized. I think they are excited" and they have a "commitment to patient care," Young said.

Young praised Grady's historic mission as Atlanta's top trauma center and safety net for poor and uninsured patients.

"Disease does not care about a person's color or where they live and neither do I," he said.

Young answered reporters questions during the news conference.

Q. How do you make patients want to come to Grady?

A. You run patients through the hospital in a professional way. If you make patients line up for three hours, they probably won't want to do that tomorrow. It's our responsibility to build those systems and make it easy. And I have a lot of experience doing that.

Q. What will you do in the next 90 days?

A. Probably, the first thing, I want to get some capital equipment ordered such as cat scanners and cath labs, things that are greatly slowing up care. Second, I'd like to get the top 10 financial issues identified and addressed.

Q. What lessons in turning around hospitals can you bring to Grady?

A. At Lancaster, Pa., we had to switch from a top-down management style to a participatory style. We had to train that 100-person middle management group on how to analyze, how to measure and how to implement. In Buffalo, N.Y., I was the sixth CEO in four years. There was no direction. That's what we have at Grady — everybody doing everything, which means no one is doing anything.

Q. How do you go about changing Grady's image?

A. It is a big old mess. You change it for real. We will be producing change. You get rid of the chaos by stopping it. I'll stop it. You bring honesty, integrity, fairness. You take the politics out of it.

Q. How do you get more middle-class people to come to a hospital known as a place for homeless and poor people?

A. You take the good care that we deliver today, and you put it in an environment that's not negative and then you share that with the community.

Q. Can you talk about preserving Grady's historic mission to the poor?

A. Everybody will know they get the highest quality of care at Grady. But it doesn't mean keeping things exactly the same. Exactly the same is failed, broken, bad, unprofessional and shouldn't be tolerated.