Emory cuts Grady debt $20 million

Emory University has eliminated $20 million of the debt owed by Grady Memorial Hospital in a gesture to help the struggling hospital survive, officials said Thursday.

In addition, Grady officials met this week with the leaders of several metro Atlanta hospitals to request that they contribute a total of $30 million to help the safety-net facility over the next four to five years, said Pete Correll, head of the Grady board of directors.

Grady hospital continues to provide the bulk of trauma and indigent care to the region, two services that cost the hospital millions more than it recoups. Grady officials say they believe the other hospitals should help shoulder that burden, because, without Grady, these hospitals would be flooded with indigent clients and have to provide their own trauma care.

“This is a community issue,” Grady Chief Executive Michael Young said Thursday.

Even with Emory forgiving $20 million of Grady’s debt, Grady still owes Emory about $42 million, officials said. The Emory medical school provides many doctors who work at Grady, and Grady has not been able to pay the costs for them.

Correll praised the Emory move.

“I just think it is a tremendous gesture, and one more example of the outpouring of support from the community,” Correll said.

Dr. Thomas J. Lawley, dean of Emory’s School of Medicine, said, “Although it comes at a time of significant budgetary constraint for the school of medicine, we also know that shared sacrifice from all of the Atlanta health care community will be required if Grady is to achieve our common goal of not only surviving but thriving.”

Morehouse School of Medicine, which also supplies physicians to Grady, said Thursday that it has forgiven $400,000, leaving a current debt by Grady of $7.5 million.

“We are going to continue to be flexible,” said Scott Robinson, a spokesman for the Morehouse medical school.

Several hospital organizations attended a meeting Monday at Georgia Hospital Association headquarters to discuss helping Grady. They included WellStar Health System, Atlanta Medical Center, Emory Healthcare, Southern Regional Health System, Gwinnett Medical Center, Piedmont Healthcare, and DeKalb Medical.

“There was discussion of how the metro Atlanta community could help save one of the state’s most important health care resources, Grady,” said Kevin Bloye, a GHA vice president.

Piedmont Chief Executive Tim Stack said in a statement that the hospitals are considering options to help Grady.

“Along with the entire health care community, we are concerned about Grady’s future,” he said.

About two years ago, Grady officials said the hospital was in such bad financial shape that it was near to closing. Grady has since restructured its leadership and hired a new CEO. Officials say the hospital remains on shaky financial ground and that it will have a $40 million to $50 million operating deficit this year.

Correll said the meeting with the other hospital CEOs was positive.

Aside from the Emory commitment that had come before the meeting, none of the hospital heads made financial commitments.

Correll said the hospitals have yet to make a formal, final response to the request.

Area hospitals, meanwhile, have reported that the economic downturn has pressured their bottom lines.

Grady’s push for more community support is part of a plan that includes a $100 million fund-raising effort, expected to begin in earnest early next year. The hospital, which has an annual budget of about $730 million, also received a pledge of $200 million over four years from the Woodruff Foundation.

Grady patient advocates praised the decrease in debt.

“Grady was never going to be able to pay that money,” said state Sen. Vincent Fort (D-Atlanta), a leader of the Grady Coalition advocacy group.

About 50 advocates demonstrated outside the Atlanta hospital Thursday, concerned that Grady’s financial struggles will result in service cuts and cost increases to the needy.

UPDATE

THE STORY SO FAR

> Previously: As Grady Memorial Hospital struggled to emerge from a financial hole, it was stuck with about $62 million in debt to Emory University.

> The latest: Emory University, which provides doctors for Grady, agreed to eliminate $20 million of the Grady debt.

> What’s next: Grady has asked Atlanta-area hospitals to contribute $30 million to help the hospital.