If Clayton hospital closes, who gets patients?

Clayton County’s only hospital has two weeks to find $40 million or possibly risk burning through its small amount of cash and closing.

Southern Regional Health System officials will meet with SunTrust Thursday to ask for an extension on a $40 million debt due Dec. 31.

The 331-bed Riverdale hospital has spent the past several months scrutinizing spending, streamlining services and seeking help from the Clayton County Commission, hospital chairman Ron Dodson said.

The final straw came Tuesday night when the commission turned down a proposal for the county to back a $40 million bond for the hospital. The proposal would require no cash from the county, only the use of the county’s bond rating. Commissioners, citing the county’s unstable finances, said they need more information.

While Southern Regional has no immediate plans to close, area hospitals in Henry, Fayette and Fulton counties are concerned they may inherit thousands of new patients, most of whom have no health insurance.

“It’s something we’re keeping our eyes on,” said Kendra Gerlach, a spokeswoman for the 460-bed Atlanta Medical Center. “Closing any hospital in the metro area would add additional challenges to the other hospitals.”

Officials at Piedmont Fayette Hospital, which has 143 beds in Fayetteville, and Atlanta Medical Center said they also have financial issues and definitely cannot take on any more patients.

Clayton County commissioners have pledged to keep their hospital but were unsuccessful this week in working out a bailout plan for Southern Regional, which is Clayton’s fourth-largest employer.

“We got no new answers,” from the hospital on Wednesday, said County Commission Chairman Eldrin Bell. “I need assurances my taxpayers won’t end up paying the hospital’s bills in three or five years.”

If Southern Regional misses a payment, taxpayers could end up with a $40 million-plus bill.

Hospital officials continued Wednesday to lobby commissioners and put together a new plan that would promise $6 million — enough to cover two years of payments — set aside in a special escrow account.

“There was so much confusion last night with the commissioners getting their budget and our budget mixed and their expenses and our expenses mixed,” Dodson said. “They just need more information. The hospital is going to be there one way or another. We just have to get the support of our county.”

Without the county help, the hospital will have to pay off the debt from its $48 million reserve. That wouldn’t leave enough to cover its $20 million monthly operating costs if it were still operating at a loss, Dodson said.

“If we have to put all of our cash out to satisfy our bond issue, then we’re broke,” Dodson said. “We have some revenues, but not enough.”

Last fiscal year, 74,212 patients came to Southern Regional’s emergency room. Most were from Clayton, but some were from south Fulton, Henry, Fayette and DeKalb counties.

Once known as a community hospital where babies are born and broken bones are repaired, Southern Regional has acquired top physicians and medical equipment to conduct the most complex surgeries. While those changes have brought in new revenues, they also have been a large expense.

However, the most troubling expense is $83 million a year in uninsured patients that the hospital covers.

The hospital ended the 2008 fiscal year with a $7.07 million loss, $3.76 million of it on hospital operations and the rest from investments, hospital officials said.

The hospital also discussed possibly partnering with another health system. But with the state of the economy, that’s unlikely, Dodson said.

Layoffs are also unlikely, since the hospital is already at bare-bones staff with 2,224, Dodson said.

Hospital consultants said Wednesday that any cost-cutting by Southern Regional would likely focus on non-medical areas.

“You would not want to cut jobs or services that affect direct patient care,” said Christopher Press, a consultant with Atlanta-based Morgan Healthcare Consulting.

Another Atlanta-based hospital consultant, Jim Price, said Southern Regional could also try short-term tactics such as accelerating hospital collections of medical bills, freezing pay and not filling open jobs.

The hospital’s operating loss of $3.76 million is not that high, Price added. “It’s not an inner-city hospital hemorrhaging cash,” he said. “They’re not losing that much.”

Despite its financial problems, Southern Regional could be an acquisition target.

“There’s value because they have patients,” said Tom Thornhill of CBIZ Valuation Group, an Atlanta company. “There are enough [hospital companies] out there looking at buying hospitals under pressure.”

If the hospital closes, the patients likely would be absorbed by nearby hospitals, some experts said. “This is not a Grady shutting down,” Price said.

But while area hospitals may compete for revenue with Southern Regional, officials of those hospitals said they are in no position to absorb any of the Clayton hospital’s patients.

The 215-bed Henry Medical Center in Stockbridge was at full capacity Wednesday, with overflow in the emergency room, spokeswoman Donna Braddy said.

“I doubt we could absorb or accommodate their patients if they were to close. It’s unrealistic,” Braddy said. “The impact for everyone in the area would be devastating for them to close.”