Southern Regional hospital eyes cutbacks as Clayton balks at bond

Clayton County’s only hospital has lost money for two years and is depending on the county government to help offset a decline in patients and rising costs to treat the uninsured.

But an ongoing political feud and concerns about the struggling economy have delayed that help.

“It’s pretty tough for a hospital to be a county where 29 percent of the residents are on Medicaid,” Edward Bonn, Southern Regional Health System’s chief executive officer, said Thursday.

Like most entities in Clayton, Southern Regional has suffered from both the bad economy and negative perceptions caused by the county’s unaccredited school system and record foreclosures. Patients with insurance are delaying their care or taken their business to other metro Atlanta hospitals.

The 331-bed hospital Riverdale hospital – Clayton’s fourth-largest employer — has asked the County Commission to back a $95 million bond. The county’s good financial standing would mean a savings of at least $1.5 million in interest for the hospital.

County commissioners initially agreed to back the bond, but this week some began having second thoughts.

Commission Chairman Eldrin Bell and Commissioner Wole Ralph, who are at odds with each other, said they are worried about taking on more debt in the unstable economy.

They also were worried about residents’ concerns of a possible tax increase. Clayton taxpayers gave Southern Regional $3.5 million in 2006 and $3 million in 2007 for general operating expenses.

“There was much concern when we gave them $3 million,” Bell said Thursday. “These are tough economic times for everyone. I’m still committed to helping them, but exercising due diligence in every way.”

Ralph said he is disappointed that hospital officials have been reluctant to turn over financial records. “I’m a strong supporter of the hospital, but I need to get the documents to get a real understanding where they are financially,” Ralph said.

Bell and Ralph, who have both asked for the financial data, accused each other of wanting to take over the hospital.

The bond would help finance new technology and facility upgrades, including a new surgical suite and orthopedic center. It also would help retire some of the hospital’s $54 million debt. The hospital ended the 2008 fiscal year June 30 with a $7 million shortfall, compared with a $1.7 million deficit in June 2007.

While the bond would greatly help with the hospital’s expenses, a negative answer from the county does not mean the hospital will shut its doors, Bonn said.

“We are not in a situation of desperation, Bonn said. He insisted the hospital can still cover its $240 million annual operating budget — for now.

The hospital has already cut $27 million from its budget, including changes to billing and contracts, and laid off less than a dozen staffers. But that may not be enough.

If the number of patients continues to decrease, the hospital could have to lay off some of its 2,200 employees, offer fewer services or draw from its $50 million reserve. “We have a community responsibility to provide uncompensated care, but we also have a responsibility to earn a profit,” Bonn said.