Control of Hospital Shifts from Government to Nonprofit

The Atlanta Journal-Constitution reports that the board of struggling Grady Memorial Hospital, part of the Grady Health System, gave final approval over the weekend to a lease agreement that shifted management of the 953-bed public hospital to a new nonprofit corporation.  The members of the new nonprofit’s board have yet to be announced, and the nonprofit has yet to obtain federal recognition of its tax-exempt status, which may delay its actual assumption of management responsibilities for the hospital.  The change was driven in part by offers from the local business community of hundreds of millions of dollars in support if the management shift occurred, as well as the possibility of millions more from the Georgia state government.

While this changes represents a shift in contol over only slightly more than 0.1% of the nation’s community hospital beds, it indicates that the longer-term decline in the proportion of community hospital beds owned by state and local governments continues.  The Kaiser Family Foundation has reported that over the past two decades the proportion of such beds owned by nonprofits has remained relatively constant at approximately 70%, although the total overall number of such beds has declined, but the proportion owned by state and local governments has declined by 5%, from 21% to 16%, while the proportion owned by for-profits had increased to 14% through 2003.

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