Look at Grady Memorial Hospital — a big, sprawling health center of last resort for Atlanta's poor and uninsured, struggling to pay its bills while serving so many who can't pay theirs.

Then look at Memorial Health University Medical Center in Savannah. Much the same.

Jenni Girtman/Staff (ENLARGE)

An airlifted patient is transported to Grady's trauma unit recently. Hospitals in Savannah, Macon and Florida's Dade County give some clues as to how restructuring might affect the bottom line.

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As cash-starved Grady hospital teeters on the brink of financial failure, those trying to save the hospital are scanning the medical landscape, hoping to find a similar hospital that has faced hard times — and survived.

Consultants hired by Grady have examined other top-level trauma hospitals around the state and country, including the Savannah facility. Trouble is, they've found no Grady twin. In general, Grady is bigger. Grady serves more poor people. Grady serves fewer paying patients. Grady is poorer.

Still, experts say examining other major urban hospitals is worthwhile, particularly as hospital officials ponder some of the biggest issues in Grady's 115-year history. A dominant question is whether the authority that runs the hospital should relinquish daily management to a nonprofit, community-based operating board.

That may sound like a mouthful of bureaucratic mush, but the prospect of management realignment has proven the most controversial, and durable, plan to come out of the Grady's crisis, crackling with issues such as race, class and Atlanta-versus-the-suburbs politics.

The urgency of the decision is heightening: The hospital expects a record deficit of $55 million in its budget of about $730 million this year and may start cutting services. The board overseeing Grady, the Fulton-DeKalb Hospital Authority, could vote on the management question as soon as November.

Advocates of restructuring, such as Metro Atlanta Chamber of Commerce leaders, say the change could help remove politics from hospital management and open doors to new funding and profit-making ventures.

But critics such as the hospital workers union and some black leaders say the proposal is a takeover attempt by powerful white business people who don't support Grady's historic mission of caring for the needy. They say the real issue is the shortage of funding, state and federal.

A nonprofit operating board allows public hospitals to be run more like private hospitals. The public authority still owns the hospital, but a lease arrangement gives day-to-day policy decisions to the operating board. The structure allows hospitals to skirt restrictions under the state Hospital Authorities Law that prohibit certain investments and profit-making sidelines.

Northside Hospital in north Fulton County, DeKalb Medical Center and the WellStar Health System in Cobb, Douglas and Paulding counties operate under such boards.

But the change at comparable hospitals around the state hasn't been the salvation some Grady supporters seek. Some envision Grady generating a stronger financial base through profitable joint ventures with physician practices and drawing vastly more paying patients.

A recent report Grady commissioned from the law firm Troutman Sanders, along with interviews with several hospital presidents, says the change allowed other hospitals to generate profits that helped stabilize their finances, but did not insulate them from bad years.

Moreover, the hospitals generally did not see a significant increase in their percentages of paying patients, although they did retain paying patients in an increasingly competitive marketplace.

Most Georgia hospitals run by nonprofit boards made the change in the 1980s. They saw the need to be more financially flexible and competitive in an era of increased managed care and reduced Medicaid and Medicare.

Indeed, virtually every major urban public hospital in Georgia made the change back then.

The change helped them compete in the new world of HMOs, bring down costs and expand services beyond the restrictions in the state Hospital Authorities Law, said Joseph Parker, president of the Georgia Hospital Association.

But times have changed, particularly for urban hospitals that care for the needy and uninsured — like Grady. The numbers of poor and uninsured patients are skyrocketing. Nearly 1.7 million Georgians — about one in five — are uninsued. That's about 700,000 more than in 1991, according to U.S. census figures.

At the same time, government aid to hospitals through programs like Medicaid is shrinking.

Only about 7 percent of Grady patients are privately insured. Many have no insurance, and many are covered by the Medicaid program for the poor. Medicaid reimburses the hospital for only 85 percent of care costs. In 2005, that left Grady to cover $144 million, the most recent figure available.

The heads of several large Georgia hospitals cautioned that while moving to a nonprofit board could help Grady, huge challenges will remain.

"It sets the stage for solving some problems, but it's not the silver bullet," said Don Faulk, CEO of the Medical Center of Central Georgia in Macon. "There are no easy buckets of money to tap into."

Memorial Health University Medical Center in Savannah is considered by many to be more like Grady than any other hospital in the state. Like Grady, it has a Level 1 trauma center and many nonpaying and Medicaid patients.

Savannah CEO Bob Colvin said shifting to a nonprofit board helped shelter the hospital from the local politics that consumed it under the prior board, which was composed of political appointees.

He compared the old system to "having two masters"— the hospital and the politicians.

Now Savannah has a nonprofit operating board of 15 people, including physicians, business people and attorneys. The hospital authority retains ownership of the facility.

The Grady hospital authority, appointed by Fulton and DeKalb elected officials, has been accused over the years of playing politics and misusing its power to steer contracts and provide jobs.

The change benefited Memorial Health financially, too.

Memorial Health invested $14 million in a community partnership to provide health and social services for the poor. That helped save $50 million as people made fewer trips to the emergency room for everyday care.

Importantly, Colvin said the hospital has not compromised its historic mission to serve the needy. That's critical to Grady supporters.

But the new age of hospital finances has hit Savannah hard. After years of making profits that were reinvested in the hospital, Savannah is losing money. The hospital is on track to lose upwards of $30 million this year in its $565 million budget.

Colvin said the hospital is considering sacrificing its status as a Level 1 trauma center, one of only four top-level trauma units in the state. Colvin blamed many of the same problems plaguing Grady — decreases in state and federal funding and increases in patients who don't pay. Grady loses an estimated $42 million a year on trauma care, according to a July report by the Metro Atlanta Chamber.

The state Legislature, Colvin said, needs to step up for hospitals such as Grady and Savannah to fund the trauma centers and to offset losses from serving the poor and uninsured. Several of these issues are expected to come before the 2008 Legislative session.

Like Grady and the Savannah hospital, the Medical Center of Central Georgia in Macon is a teaching hospital and a Level 1 trauma center.

Macon was making money when it became a nonprofit in the mid-1990s. The change provided flexibility in investments and business opportunities, but it has not made a big difference in the hospital's finances, Faulk said.

"It won't make the difference between being profitable and not being profitable," Faulk said.

The hospital remains profitable, but faced with more nonpaying patients and reduced Medicaid payments, management is considering cutting some services and sacrificing the facility's Level 1 trauma status.

Like Grady, the Macon hospital faced concern that the governance change would lead to less care for the needy. To address the concern, Faulk said, provisions were placed in the lease agreement to ensure the hospital's mission remained intact.

"We're doing a higher percentage of indigent care now than in 1995," Faulk said.

The move also helped the Macon facility get around the Hospital Authorities Law to use its reserves to pursue a wider array of investments and to form joint ventures with physicians. That helped attract more paying patients and improve the hospital's image in the community.

"That has really helped to make us a financially solid hospital," Faulk said.

Advocates of switching Grady to a nonprofit, community-based operating board say similar benefits could occur here.

But, again, the comparison is limited. Grady has no reserves to invest as Macon did.

Even nationally, comparisons with Grady are few.

One that is frequently cited is Jackson Memorial Hospital in Miami, which is also a major "safety net" hospital in its region, meaning it is a prime destination for the poor and uninsured.

Jackson gets 20 percent of its revenue from patients with private insurance, compared to Grady's 7 percent, says the Troutman Sanders report.

Grady receives direct annual funding of about $120 million from Fulton and DeKalb counties. Each year, Grady must request the funding, which remained level for years until the financial crisis this year prompted a bump in funds.

Miami-Dade County dedicates a half-cent sales tax and ad valorem tax to its hospital, which provides about $330 million.

Grady also has public-image issues that are unique.

Metro officials have bickered publicly over whether counties other than Fulton and DeKalb should pitch in to pay for nonpaying patients who come to Grady from throughout North Georgia.

Some business leaders say the community has lost faith in the leadership structure at Grady and that a much-needed infusion of cash from foundations, banks and the state will only come when that structure changes.

"Creating a nonpolitical board creates a level of trust in investors that simply doesn't exist now," said Pete Correll, former chairman of Georgia-Pacific Corp. and co-chair of the Atlanta chamber's Grady task force.

Lt. Gov. Casey Cagle has said if the Grady authority doesn't move to a nonprofit board, he will force the issue in the state Legislature.

"The simple reality is that any legislative effort to fund Grady is unlikely to succeed until the system can demonstrate an ironclad ability to be good stewards of state funds," Cagle said.