The District’s only public hospital will require a $40 million taxpayer subsidy to stay afloat, city officials have determined, the latest and largest in a series of government bailouts for the struggling facility over the last several years.
The troubles come despite a management overhaul at the facility, which until last year was run by a consulting firm whose leaders had ties to Mayor Muriel E. Bowser (D). The council voted not to extend that company’s contract after The Washington Post reported on fatal lapses in care at the hospital and current and former UMC executives came forward to criticize the consulting firm, Veritas of Washington.
Early last year, D.C. Chief Financial Officer Jeffrey S. DeWitt said that under Veritas management, UMC had “functionally” gone bankrupt, with out-of-control expenses and declining patient visits. Under the new operator installed by the hospital’s board, Mazars USA, the facility has continued to struggle.
“UMC is and has been in financial distress for years,” hospital board chair LaRuby May said during her testimony at the health committee hearing. “Eventually bandages are not strong enough, and just like any other cracked structure, eventually it will break.”
News of the hospital’s persistent financial straits comes as the District is in the midst of negotiations with George Washington University Hospital to open a new Southeast facility that would replace UMC. Last summer, Bowser announced a tentative deal with GWU Hospital to build a new hospital on the campus of St. Elizabeths.
Since then, the deal has come close to falling apart amid opposition from Howard University Hospital — whose leaders fear competition from an expanded GWU Hospital — and the complaints of neighborhood groups in Foggy Bottom, where GWU Hospital leaders are seeking to erect a new medical building as part of their deal with the city. City officials and GWU Hospital leaders are continuing to negotiate over the project.
Council member and health committee chairman Vincent C. Gray (D-Ward 7) said in an interview that UMC’s persistent troubles show that a new hospital needs to be built as soon as possible. Bowser is aiming to open the new facility in 2023; Gray said the target date should be moved up to late 2021.
With recurrent subsidies to UMC, Gray said, “I just feel like we’re throwing good money after bad.” He added that it was too early to judge the performance of Mazars, the management company that took control of the hospital last year.
“We’re waiting to see more,” Gray said.
UMC chief executive Matthew Hamilton testified that initiatives Mazars has put in place to stanch the loss of patients and boost revenue are “gaining traction” but would take time to show effects.
UMC is owned by the city but is expected to be financially independent. Yet the hospital required a $2 million taxpayer subsidy in fiscal year 2017, $29 million in fiscal 2018 and $10 million for the 2019 fiscal year, which ends Sept. 30. The requested $40 million subsidy would help stabilize a proposed fiscal 2020 budget of $170 million.
Like many hospitals in low-income areas, UMC relies heavily on patients insured by Medicaid and Medicare, and it has struggled for decades to find a viable business formula.
At the end of 2017 the hospital was also visited by repeated scandals involving patient care. Its nursery and delivery rooms were shut down by regulators after a woman and her newborn died. A resident of UMC’s nursing home died after crying out for help but being left on the floor for at least 20 minutes by his nurse.
