Grady officials: Contracts with medical colleges fair

ATLANTA - Grady Memorial Hospital officials on Wednesday defended contracts the financially ailing hospital has with two Atlanta medical colleges from charges that they're wasting tax dollars.

The Emory University and Morehouse medical schools not only use Grady as a teaching hospital, Michael Ayres, chief financial officer for Grady Health System, told a Senate committee. They also provide the hospital's physicians, he said.

"They're the sole source of medical care in the Grady Health System," Ayres said. "They won't come to the table and provide services without compensation."

The two schools' longstanding contracts with Grady have come under fire in recent months as a contributing factor in the chronic deficits plaguing Georgia's largest public hospital. Grady has lost money in 10 of the last 11 years and could run out of funds by the end of this year without a major infusion of cash.

Currently, Grady owes Emory and Morehouse more than $60 million.

Republican legislative leaders in September called for an audit of state money that flows to Grady, including funds going to the two medical schools.

Democrats, too, have raised concerns.

"Many people in the community believe Emory has a sweetheart deal," Sen. Vincent Fort, D-Atlanta, a member of the Senate Urban Affairs Committee, said Wednesday.

Fort said hospital officials should look for ways to reduce the costs of the two contracts before reducing vital health care services to the large number of poor and uninsured patients who depend on Grady.

"One dollar that's wasted is one dollar taken from an indigent patient who needs care," he said.

Grady President and CEO Otis Story assured Fort that hospital officials are closely reviewing the contracts. But Story added that the Emory and Morehouse contracts are similar in structure to contracts between large hospitals and medical colleges in other communities.

Earlier this month, Emory and Morehouse officials sent a joint letter to the Fulton-DeKalb Hospital Authority, which oversees Grady, endorsing a proposal to turn over the hospital's day-to-day operations to a nonprofit board. Failure to do so, according to the letter, could prompt the schools to send some of their doctors to other hospitals.

But on Wednesday, Story told senators that Grady and the medical schools have a good working relationship that benefits the hospital's bottom line.

"If I had to go to the market to try to acquire physicians, I couldn't afford it, even if they were available in the numbers we need," he said.

Wednesday's committee meeting was likely the last public discussion on Grady before the hospital authority board meets Monday. Board members are expected to vote on whether to move forward with conversion to nonprofit status.

Supporters said such a move likely would make state lawmakers, banks and private foundations more willing to come to the hospital's aid.