Grady to benefit from new hospital funding formula

ATLANTA - In a move aimed at helping financially ailing Grady Memorial Hospital, the state board that oversees health policy Thursday overhauled a program that compensates hospitals for the costs of serving poor and uninsured patients.

Grady will get an additional $5 million a year under the new funding formula for the Disproportionate Share Hospital program adopted unanimously by the Georgia Board of Community Health.

To pay for the increase, other hospitals across the state will have to make do with slightly less.

Officials with Grady Health System had been seeking an even larger slice of the federal DSH program, which is designed to help hospitals that serve a "disproportionate share" of poor and uninsured patients make ends meet.

Georgia's largest public hospital - with the most nonpaying patients - has been losing money since 2000 and is projecting a record deficit of $50 million to $55 million this year.

Fulton and DeKalb counties, which jointly operate the hospital, have kicked in $25 million to help keep Grady afloat, and state lawmakers are expected to take up its financial plight during this winter's General Assembly session.

The $5 million DSH increase was the best the state Department of Community Health could do for Grady considering the needs of Georgia's other hospitals, said Carie Summers, the agency's chief financial officer.

"We have almost $1 billion in uncompensated care and only $250 million in federal money," Summers told board members before Thursday's vote. "Given that there's not enough money to go around, any time you tweak the money, somebody's going to win and somebody's going to lose."

The changes in the DSH funding formula adopted by the board, which still are subject to the federal government's approval, divide the Georgia hospitals splitting the money into three pools.

Grady, as the sole member of one pool, would receive a 7 percent increase in DSH funding as of Dec. 1, Summers said.

She said the state's small rural hospitals, a second pool, would lose 3.3 percent of their money. The third pool, consisting of all other hospitals receiving DSH funds, would be cut by 3.6 percent, she said.

Jimmy Lewis, CEO of HomeTown Health Care, which represents rural hospitals, praised the state for recognizing a need to go easier on small rural hospitals, which often operate on thin ice.

"With Medicaid underpaying at 85 percent (of hospitals' costs), this program has become in reality a Medicaid supplement," he said. "A drastic change would have had a draconian impact. ... This probably preserves some hospitals' tenures in rural Georgia."

The changes approved by the board on Thursday also will broaden the eligibility requirements for DSH funding, making an additional 36 hospitals eligible for the money.

However, Summers said the newly eligible hospitals will only receive small allocations. The total impact of the new hospitals will only be about $2 million, she said.

SideBar: At a Glance

The new funding formula for Georgia's Disproportionate Share Hospital program divides hospitals into three pools. Grady Memorial Hospital, a pool of one, would receive an increase in funds as compensation for treating poor and uninsured patients, while all other DSH hospitals would get less money:

Pool Funding change

Grady Memorial Hospital


Small rural hospitals -3.3%

Other hospitals


Source: Georgia Department of Community Health