Councilman: Hospital deal requires government money

Officials who helped broker a deal involving the troubled medical center in Southeast say buyers want to see an investment

Catania’s comments came as he and other city officials gathered Tuesday for the re-opening of the Greater Southeast Community Hospital, which was officially renamed United Medical Center. Under a partnership with the city, the struggling hospital was bought by a private company last fall and is in the midst of major renovation in partnership with the city.

Southeast’s troubles bear a remarkable similarity to problems with the Prince George’s Hospital system, which includes facilities in Cheverly, Bowie and Laurel. Both hospitals have been losing money for years because of the high number of uninsured patients. As the physical plant deteriorates, insured patients have sought medical care elsewhere.

After years of stalled negotiations, financial disputes and failed deals, Prince George’s County and state officials signed an agreement last week for an independent authority to create a plan to sell the hospitals to a private buyer. Representatives for both governments have until August to figure out how much each will be willing to spend to attract a company to the deal, which they hope to have in place for approval next January.

In Washington, it took a city pledge of $79 million in loans and grants to get private company Specialty Hospitals of America to take over last October, a move that company officials said will likely be necessary in Prince George’s as well.

‘‘I don’t see any way around it,” said Frank Wilich, a founding partner of the Washington-based health care company.

A government pledge or loan helps entice buyers by giving them the cash to rebuild struggling medical centers, Wilich said. The Washington package to Specialty included a $20 million loan for capital improvements at the center, which had power outages, broken elevators and out-of-date X-ray equipment that has since been upgraded.

‘‘Without that investment, you’re going to struggle mightily [to find a buyer],” Wilich said.

Past estimates for turning around Prince George’s County’s hospitals have gone as high as $200 million for capital equipment alone. The system operates at an annual loss of about $24 million a year because of uninsured patients, and it carries a debt of about $270 million.

County officials said the new authority is working to determine how much each government is willing to pay for a buyer. But it’s unclear whether budget constraints will work against them.

After the county passed its $2.6 billion spending plan last week, Council Chairman Samuel H. Dean (D-Dist. 6) of Mitchellville said money was tight, telling reporters that the $12 million the county was spending just to keep the hospitals breaking even was ‘‘a sizeable chunk of our budget.”

County Council spokeswoman Karen Campbell referred all questions about hospital negotiations to County Executive Jack B. Johnson (D). A spokesman for the executive said the authority has until later this summer to settle on a possible government pledge.

‘‘I don’t know that we have an exact figure,” said John Erzen, Johnson’s spokesman.

Regardless of the amount, the county must be united and proactive in its support if it wants to attract a buyer, said Catania, who said he’s met informally with Prince George’s lawmakers to offer advice.

‘‘No hospital organization is going to be willing to invest itself with that level of uncertainty, and that’s the truth,” Catania said. ‘‘Postponing the inevitable does not make it any better.”

If negotiations work out on the authority this summer, that should happen, Erzen said.

‘‘That’s what the hospital authority is all about,” he said. ‘‘The county and state are on the same page, and any buyer will know what we’re willing to put up front.”

Both governments have until Aug. 20 to hammer out the financial terms of the deal.

E-mail Daniel Valentine at dvalentine@gazette.net.