If Grady Memorial Hospital is to survive, it faces tough decisions about how much free care it can afford to offer. Those decisions won't be made if the Fulton-DeKalb Hospital Authority — in the midst of the worst financial crisis in the hospital's history — insists on micromanaging Grady's administrators.

Case in point: Earlier this month, the authority ordered Grady CEO Otis Story to keep the hospital's outpatient kidney dialysis center open. The unit costs the hospital about $4 million annually to operate because virtually none of its patients has insurance.

Rich Addicks/AJC (ENLARGE)

In September, Grady's CEO Otis Story (right) met with the Fulton-DeKalb Hospital Authority chairwoman Pamela Stephenson and others to discuss a strategy to save the hospital. Despite discussions, a consensus about what will secure the hospital financially has yet to be agreed upon. Most recently, Story's decision to close the dialysis unit was overturned by the authority.

Physicians and social workers were starting to phase out the dialysis clinic — trying to place about 100 patients elsewhere — as part of a plan to reduce the hospital's projected $55 million deficit for the year. Yet, the trustees buckled under criticism from community activists who claimed that they were reducing Grady's commitment to the poor.

The public reversal of Story, the administrator they hired in April to help set the hospital's priorities, is the latest example of one of Grady's worst problems — interference in day-to-day decision-making by the politically appointed trustees. With the dialysis unit decision, the board not only rebuked Story, but it also ignored a key component of a financial recovery plan for which it paid consultants $2 million before Story arrived. There are dozens of other money-saving proposals in the plan — such as closing and consolidating some community clinics and getting out of the outpatient pharmacy business — that have yet to be implemented.

In July, a task force of the Metro Atlanta Chamber of Commerce recommended that management of Grady be turned over to a nonprofit, nonpolitical governing board. That group would replace the 10-member hospital authority, which is appointed by the Fulton County Commission and DeKalb County's chief executive officer. Changing how the hospital is governed is necessary to restore public confidence in the hospital, the task force said.

In 1999, during a similar financial crisis, the trustees forced another administrator to drop Grady's plans to charge a $10 fee to outpatients who had been getting prescriptions filled for free at the hospital pharmacy. The fee plan generated heated rhetoric and threats from local politicians and community activists who claimed it would cause a hardship on the hospital's poor patients. Instead, the trustees changed the fee to 50 cents and insisted Grady administrators seek more funding from the state.

The crisis was resolved when then-Gov. Roy Barnes found a way to provide a one-time $52-million infusion of Medicaid money into Grady's coffers. But the hospital was back in the red the following year and has accumulated larger yearly deficits since then.

Unfortunately, that's typical of Grady's governing board; it refuses to accept the realities of the cost of health care — demanding, instead, more money from the state or local taxpayers to subsidize its operations. Today, the hospital's outpatient pharmacy loses about $4.5 million annually.

It's worth repeating: Grady's financial problems are the result of many factors, including the low reimbursement rates for Medicaid patients and the state's unwillingness to help subsidize some of the expensive services, like trauma care, that the hospital provides to patients outside of Fulton and DeKalb counties. But they also stem from the unwillingness of the board and Grady administrators to consider curtailing some very expensive services to the poor when they have no plan for how to pay for them.

The outpatient dialysis clinic is in that category.

Grady opened its dialysis unit to a handful of outpatients years ago when it determined uninsured kidney disease patients often could find nowhere else to go. Dialysis patients need treatment three or four times a week at a cost between $2,500 to $3,000 per month.

But in recent years, the dialysis unit has been averaging 80-100 patients per day, forcing the hospital to use temporary-service nurses to supplement its regular staff. Between 20 percent to 30 percent of the unit's patients are illegal immigrants without insurance. Because of their undocumented status, they don't qualify for any government programs that might help the hospital offset the cost of their care. Grady, by the way, also handles prisoners and mentally ill or emotionally unstable patients who have been refused treatment elsewhere.

Without the Grady clinic, what would happen to the poor and uninsured patients who depend on it? Left untreated, their kidney disease would cause toxins to build up in their bodies, forcing them to hospital emergency rooms where they would likely be admitted for dialysis. Under the worst scenario, they would die. That's why outpatient dialysis is so important.

The critical issue is, who should pay for it?

No other public hospital in Georgia — nor other urban charity hospitals around the country that Grady is often compared with — offers outpatient dialysis. In other cities, private dialysis centers, many of them operated by large companies, spread the load of indigent patients. But not in Atlanta, despite the fact that more than 30, for-profit outpatient clinics operate within 20 miles of downtown.

That's what Story, the hospital's CEO, meant when he told the authority members, "the benevolent Grady" cannot afford to keep the dialysis clinic open. He and his staff should have been allowed to start placing the patients elsewhere. It's past time for other medical providers as well as charitable, religious and community groups to step up and help.

The true test of leadership is in setting priorities. Grady can't do it all.

— Mike King, for the editorial board