Black Hospital in Atlanta in Trouble
/- Originally published in The Atlanta Journal-Constitution September 25, 2004
Southwest Hospital and Medical Center, which this month filed for Chapter 11 bankruptcy protection, seeks a financial transfusion and perhaps a partnership with an organization with deeper pockets.
Southwest is one of about five hospitals nationwide that are controlled or operated by African-Americans, says Johnnie Clark, chair of the hospital board.
"I see this as a community asset, and it needs to be preserved and supported," she says.
Southwest's financial distress resembles problems faced by many small, independent hospitals whose patients tend to be either uninsured, underinsured or in government programs such as Medicaid and Medicare.
About one of three Southwest patients is covered by Medicaid, the program for the poor that has been cutting reimbursements to medical providers. Up to 25 percent of its patients lack health insurance.
"So much of the financial problems that hospitals face are the patient mix that they are serving," says Kevin Bloye, a spokesman for the Georgia Hospital Association. That patient mix has helped constrict Southwest's cash flow.
The bankruptcy filing "is just the beginning of a trend we're going to see among smaller, at-risk hospitals that serve a heavy load of Medicaid and uninsured patients" in inner-city and rural areas, says Steve Paulus, a consultant with Jennings, Ryan & Kolb in Atlanta. "We've got to find a way to keep these hospitals going."
Not-for-profit Southwest is continuing to operate while restructuring its short-term and long-term debt under Chapter 11. It hired Kurron, a New York-based health care management firm that helped South Fulton Medical Center, an East Point hospital, during its 2000 bankruptcy. That hospital was later purchased and brought out of bankruptcy by Tenet Healthcare in 2001.
One of Southwest's major challenges is to improve its patient volume, especially attracting more privately insured people, including well-to-do residents of the Cascade Road area.
"This hospital is located in a quadrant where you have some of the most affluent blacks in the U.S.," Clark says. But these patients now tend to go to Emory Crawford Long Hospital in downtown Atlanta, Piedmont Hospital in Buckhead, or Northside Hospital and Saint Joseph's Hospital in Sandy Springs, says Clark, an ex-college professor.
"This community needs to step forward to embrace this hospital," she adds. The hospital must persuade African-American physicians to admit more of those patients there, Clark says.
At least $2 million is needed to upgrade the facility's equipment, Clark says. And a restructuring of the hospital's culture is needed, too.
"If we don't give good service, we can't stay in business," she says.
Since 1964, when it was built by a Catholic group, the hospital has established deep roots in southwest Atlanta.
"It was the only hospital in that community where people felt a sense of ownership," says the Rev. Joseph Lowery, board chairman of the Georgia Coalition for the People's Agenda and a former Southwest Hospital trustee. "I hope some way can be found to save Southwest."
Across Fairburn Road, workers at the Real Deal Car Wash say they have received good care at the facility.
"A lot of elderly people go there, and they don't have transportation," says Tarus Michael, manager of the business. "They can walk straight to the emergency room." If the hospital closes, he says, "it would hurt the community."
Unlike other hospitals, Southwest has no reserves or endowment to fall back on. Another challenge is an arrangement, struck earlier this year, in which the hospital's receivables were sold to a company in exchange for cash. The agreement was made without the hospital board's review, according to the bankruptcy filing. Clark calls it an "onerous contract."
The CEO, Marie Cameron, recently resigned.
"It was determined by the board that she should go," Clark says, but she would not comment further about the departure.
Ron Weitz of the Kurron reorganization firm now runs the hospital operations.
"It's in our best interest to get out of Chapter 11 as quickly as possible," Weitz says.
GRAPHIC: Photo: Johnnie Clark (left) is chair of the Southwest Hospital and Medical Center board. Ron Weitz is chief restructuring officer. / CHARLOTTE B. TEAGLE / Staff; Graphic: SOUTHWEST HOSPITAL AND MEDICAL CENTER
* Tax status: Not-for-profit
* Location: Southwest Atlanta
* Licensed beds: 125
* Employees: 241
* Chief restructuring officer: Ron Weitz
* 2003 revenue: $30.5 million
* Annual losses:
2003: $4.4 mil.
2002: $566,000
2001: $2.4 mil.
2000: $1.2 mil.
Source: Southwest Hospital and Medical Center, Guidestar
