Less than two years after restructuring to treat its financial ills, Grady Memorial Hospital is enduring some fresh pains.
Hit by a spate of local and federal funding cuts, the hospital is struggling to bridge a $30 million-plus gap in money used to help care for poor and uninsured patients.
A $3.4 million drop in DeKalb County funding to Grady – part of a larger $33.6 million cut to the county’s 2011 budget – comes on the heels of a $3 million decrease in support from Fulton County and $25 million reduction in federal dollars this year.
Grady officials recently announced 100 jobs cuts, which won’t include doctors or nurses, that will save roughly $6 million to help make up for the loss. More cost-saving measures – including possible cuts to services – are expected in coming weeks, Grady spokesman Matt Gove said.
“When you look at cuts of this size, you start to figure out are we going to be hitting bone?” Gove said.
In DeKalb, health care and pension costs are up; property values and tax revenues are down, Commissioner Larry Johnson said. “We’re just facing a very difficult time.”
Budget cuts approved by commissioners last week included an 8.9 percent decrease to every department except fire and law enforcement, which took 4.46 percent cuts. Grady’s funding was cut to $20.1 million – a 14.5 percent drop from last year.
The latest financial blow to Grady follows a decrease in money it receives from the state Indigent Care Trust Fund – $63 million this year, down from $88 million in 2010, Gove said. The federal money, administered through the state, is based on the amount of indigent care provided versus payments received.
For Grady, 2009 was used as a baseline to determine funding; however, the hospital experienced a major turnaround that year — turning its first profit in years after decades of struggle.
The upswing came after a group of community and business leaders led an effort to transfer control of the hospital to a new corporate board and replaced the hospital chief. The hospital renegotiated contracts with vendors and suppliers, as well as increased its cash collections by $57 million.
More than $300 million in private donation commitments made that year have also allowed Grady to invest in more efficient equipment. The hospital launched its new, $40 million electronic medical records system in November.
Still, the hospital faced a number of financial hurdles in 2010, leading to an $11.5 million loss year-to-date through November, according to the latest data available. During that period, Grady saw a roughly 1 percent slide in insured patients and 1 percent rise in uninsured patients, costing $13 million.
The hospital’s private line of credit to cover daily operations was cut by $9 million, down to $41 million, largely because of the decrease in money from the indigent care fund, Gove said. The line is expected to max out in April, which makes the next lump sum from the fund slated for May critical, he added.
At the same time, salaries and wages last year through November hit $219.8 million, up $9.5 million from the same period in 2009, Gove said. The increase in staffing expenses was driven partly by a 1.4 percent increase in the length of stay for patients, Grady Chief Financial Officer Sue McCarthy recently told board members.
The hospital has also added about 300 jobs in the past year, including temporary and contract workers to set up its new electronic records system and 50 nurses to staff the Marcus Stroke & Neuroscience Center. Some of the job cuts happening now will include positions that deal with data and medical records made obsolete by the new system, Gove said.
Meanwhile, Fulton County has reduced its funding to Grady this year by $3 million to $52 million. Fulton has also allocated another $9.9 million for 2011 that it withheld from Grady last year after a dispute over whether the hospital had shown proof that all county funds were used to treat Fulton residents. The two sides are still locked in disagreement over how to calculate the amount of money Grady should receive.
The vast majority of the hospital’s patients come from DeKalb and Fulton counties, Gove said. Uncompensated care costs Grady more than $200 million each year with DeKalb residents accounting for an estimated $50 million to $60 million, he said.
DeKalb County’s 2011 budget is still a work in progress, Commissioner Lee May said. The commissioners have not raised taxes so far but will revisit the issue in mid-June and look at all departments for ways to be more efficient in the meantime, May said. Budget cuts that have been made may be impacted, he said.
The latest funding cuts to Grady, combined with the loss of state trauma care dollars over the years, will have a big impact on the quality of service and care, said state Sen. Vincent Fort, D-Atlanta, co-chair of the Grady Coalition patient advocacy group. “Patients are feeling the pain.”