Washington, D.C.'s struggling United Medical Center is seeking a partnership with a private sector hospital chain, according to a Washington Business Journal report.
The district and Chicago-based Huron Consulting Group — which took over the hospital's operations earlier this year on a two-year, $12.7 million contract to prepare UMC for a potential buyer — are "cautiously optimistic" about UMC's potential for affiliation following preliminary meetings with regional hospital chains, Huron's lead consultant Dawn Gideon told the Washington Business Journal.
A partnership would be crucial for the district and Huron to execute a new UMC business strategy, according to the report. Serious discussions concerning a partnership have not yet begun. The district and Huron haven't identified the prospective buyers, although Columbia, Md.-based MedStar Health could be a potential partner, according to the report.
UMC has struggled financially for several years and reported $13.8 million in losses for fiscal year 2012, largely due to Medicaid overpayments. In February 2012, the hospital requested $15 million from local taxpayers to shore up its finances. In 2010, the district had to take over UMC because Specialty Hospitals of America, the previous for-profit owner, defaulted on its payments.
Despite considerable district intervention, UMC has seen few lasting changes in its management or operational structure. As of March 2013, the 350-bed hospital had received about $100 million from the district since 2007. However, even with recent increases in patient volume, most of the hospital's patients have government insurance or no insurance. Combined with changes to the disproportionate shares funding formula, UMC CFO Michael Davis reported in March the hospital had only four days of cash on hand.
In April, the district paid the hospital $11 million from the city's "contingency reserve," funds that must be paid back within two fiscal years.
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