As Grady Memorial Hospital’s new CEO prepares to take the reins this fall, the Texas hospital he comes from is in danger of losing hundreds of millions of dollars in federal funding after inspectors identified widespread problems putting patients at serious risk.
During an extensive survey of Dallas’ Parkland Memorial Hospital in July, state inspectors found expired medications, employees failing to wash their hands, patients lost in hallways and inadequate screening of emergency room patients, among other issues.
Consequently, federal regulators have threatened to cut off the public hospital’s Medicare funding if the problems aren’t addressed by Friday . Also this week, Parkland's governing board announced the hospital's CEO will be replaced when his contract expires at the end of the year.
John Haupert, who will become Grady’s top executive in October, has served as Parkland’s chief operating officer since 2006, making him the hospital's second in command.
Haupert told Grady’s search committee about the Parkland inspection during the interview process but the results weren't released until after he was hired, said Pete Correll, chairman of Grady’s corporate board. Correll said he spoke with Haupert and Parkland’s CEO about plans to fix the problems. Correll said he doesn't think Haupert bears responsibility for the hospital's troubles.
“We understand the findings,” Correll said. “We understand the correction plan, and we don’t think it has any impact on Grady or our decision.”
Still, some local officials say questions need to be answered about Haupert’s role at Parkland before moving forward. Grady’s board approved Haupert’s hiring Aug. 8, less than two weeks before officials released the findings of the Parkland inspection, which was triggered by the February death of a psychiatric patient.
Grady's CEO has the critical and difficult role of guiding the safety net hospital, which has struggled financially over the years, said Fulton County Commissioner Bill Edwards.
“They should have really done their homework in terms of even recommending someone to take that spot,” he said. “You don’t need anybody with any cloud over them.”
DeKalb County Commissioner Larry Johnson said the situation is a concern but he wants to hear directly from Haupert what he knew about the problems and when before making a judgment.
Fulton has a big stake in Grady, and this issue won’t be ignored, Edwards said. Fulton County is expected to contribute $52 million to Grady to care for the poor and uninsured this year with DeKalb County adding another $13 million.
“When we put in millions of dollars of taxpayer money into a hospital, we have a right to know,” Edwards said.
If there was any concern, Grady’s board would have immediately addressed it, said Thomas Dortch, a corporate board member and chairman of the Fulton-DeKalb Hospital Authority board of trustees.
“We wouldn’t do anything that would jeopardize Grady,” Dortch said.
Haupert, who declined to talk about the Parkland situation, comes at a critical time for Grady.
The hospital is facing an up to $25 million shortfall this year -- stemming in part from a $20 million drop in local and federal funding. Grady has cut more than 200 jobs, shut down two neighborhood clinics and upped prescription drug co-pays in an effort to bridge the gap. It spends more than $200 million in uncompensated care annually.
Parkland, which is roughly 20 percent larger than Grady, provided nearly $600 million in uncompensated care in fiscal 2010. ER visits there jumped 21 percent in the past year to more than 170,000. Parkland CEO Ron Anderson said in July that Haupert, an Arkansas native, played an important role in overhauling ER operations -- dramatically reducing wait times.
Last month, Parkland delivered a plan to correct the problems to the U.S. Centers for Medicare & Medicaid Services, which deemed conditions at the hospital to be “an immediate and serious threat to patient health and safety” in an Aug. 9 letter to Anderson.
It’s rare for the government to take such action with only two or three hospitals among the more than 400 in Texas facing such measures each year, said Bob Moos, a spokesman for the federal agency. Since the beginning of 2008, 10 hospitals nationwide have been involuntarily removed from the Medicare program, which can account for up to 50 percent or more of a hospital's patient revenue, experts say.
Inspectors found that unsanitary conditions, including the failure of staff to properly dispose of medical waste, "placed patients at risk of severe infection and possibly subsequent death," according to the agency's report. Children were sent from the ER to another facility without medical screenings in violation of the Emergency Medical Treatment and Labor Act. Nurses failed to monitor patients -- some in severe pain -- waiting in chairs.
While inspectors questioned various Parkland executives, the agency can’t confirm whether Haupert was among them, Moos said.
Parkland has recruited more than two dozen new nurses, re-educated staff on proper hygiene and other procedures, gotten rid of expired drugs, updated its ER policy and increased monitoring, among other changes, in advance of the Sept. 2 deadline.
Grady has also faced the threat of losing Medicare funding. In 2005, regulators threatened to cut off about $300 million in funding after an investigation revealed dozens of incidents, including unanticipated deaths, went without an internal review for more than a year.
In Dallas, Parkland’s Board of Managers announced Tuesday that Anderson, who has led the system for nearly 30 years, will no longer be CEO when his contract expires Dec. 31. The group has hired a consultant to help define a new leadership role for him.
While it’s unclear what influence Haupert had or should have had in the Parkland situation and how that reflects on his ability to lead Grady, responsibility ultimately lies with top management, said William Custer, a health care expert at Georgia State University.
“Clearly, nobody looks good here,” Custer said.
It’s about the culture of a hospital, said Sheldon Greenfield, co-director of the Health Policy Research Institute at University of California, Irvine. Having guidelines doesn’t mean people will follow them, he said.
“It’s like having a red light,” he said. “You don’t have to stop … if you don’t want to.”
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