Fulton holds back on Grady funding

Fulton County slashed its public funding for financially troubled Grady Memorial Hospital by $30 million Wednesday over issues of spending accountability.

The board, however, promised more money if Grady provides an annual audit and monthly reports of income, patient numbers and standard of care.

Fulton commissioners voted 4-3 Wednesday to give the charity hospital $50 million this year, down from $80 million last year and $100 million in 2007. The county budget commission had only recommended paring the allocation this year by $3.5 million, to $76.5 million.

Grady must earn the remaining $26.5 million, Fulton said. “We are changing from this institution telling us what it wants to us telling them what we need,” said Commissioner Emma Darnell, who made the motion.

A.D. “Pete” Correll, board chairman of the private, nonprofit corporation that manages the Grady Health System, said Grady will comply.

“We’re going to give them whatever they need,” he said. “We thought we had been giving it. If we haven’t, we’ll do a better job.”

Fulton and DeKalb counties are the only local governments that provide public funding toward Grady’s $730 million annual budget. The hospital, in turn, is supposed to provide care for indigent patients in the two counties.

Last year, DeKalb gave Grady nearly $23 million. DeKalb commissioners have not yet set 2009 funding.

In recent years, the two counties have kept their contributions to Grady fairly flat while the cost of indigent care rose and federal funding for the uninsured declined.

Fulton commissioners have complained for years that they are uncertain exactly what they get for the money they give to Grady. They’ve also been trying for years to get Grady to redraw a contact between the two that governs what Grady is supposed to do and what Fulton is supposed to pay for.

Commissioner Lynne Riley said she voted for the measure Wednesday to force that conversation to the fore.

“We need our concerns addressed,” Riley said. “Back in October of 2007, we asked to renegotiate our contract so we could clarify terms. We are still waiting. This was a way to bring it to the table.”

Correll said the hospital’s governing board is “working hard to clarify all terms in the agreement.”

Fulton commissioners appoint a majority of the Fulton-DeKalb Hospital Authority, the board that ran the hospital until last year and still holds the hospital system’s property. As the health system’s losses mounted amid warnings that it faced closing, Atlanta’s business community and state leaders pushed for shifting power to a private nonprofit corporation. That move brought a pledge of $200 million over four years from the Robert W. Woodruff Foundation, to be used for capital projects —- not operating expenses.

Conditions of the Woodruff grant include continued support by the counties and audited financial reports, Correll said.

Grady officials refused Wednesday to say what the loss of $26.5 million might mean.

“This isn’t a cut,” said Grady CEO Michael Young. “We asked for around $80 million, and nearly the full amount is earmarked in the budget. It’s simply a matter of providing the commissioners with the information they want in order to receive the full allocation.”

Grady officials complained to the Fulton board just two weeks ago that Grady’s financial situation was still dire because of the economy, with a rising need for indigent care compounded by falling revenues. Health system officials say the hospital’s 2008 operating deficit could reach $50 million.

Just last month, Emory University’s medical school forgave $20 million owed by Grady to the university for the medical services provided by Emory physicians, who use Grady as a teaching hospital, and Morehouse School of Medicine wrote off $400,000. Grady still owes $42 million to Emory and $7.5 million to Morehouse.

Fulton County’s decision on Grady came as commissioners set spending priorities for 2009 by adopting a $665.8 million general fund budget. Commissioners Bill Edwards, Darnell and Riley were joined by Robb Pitts in supporting the cuts to Grady. Chairman John Eaves and Commissioners Tom Lowe and Nancy Boxill opposed the changes.