Federal Bankruptcy Court Releases Funds to Doctors Community Healthcare, Keeps Services in Washington, D.C., Indigent Care System Running

A federal bankruptcy judge on Nov. 26 released $17.1 million in emergency funding to Arizona-based Doctors Community Healthcare to keep "essential services" running at its facilities through Dec. 13, the Washington Post reports (Goldstein/Moreno, Washington Post, 11/27). Doctors Community, which entered Chapter 11 bankruptcy protection Nov. 20, is the general contractor for the D.C. Healthcare Alliance, a private corporation that runs Washington, D.C.'s, indigent health care system (Goldstein, Washington Post, 11/26). The company also owns Washington, D.C.-based Greater Southeast Hospital, which treats patients enrolled in the alliance who require hospitalization or trauma care. The hospital has also entered bankruptcy, threatening patient access to care (Kaiser Daily Health Policy Report, 11/25). The action by U.S. Bankruptcy Judge S. Martin Teel will allow Doctors Community to pay its vendors and contractors across the country, including Greater Southeast (Washington Post, 11/27). In a separate move, CMS on Nov. 26 said it will suspend monthly collections of $1 million a year in debt payments, "accelerate" Medicare payments already approved for Greater Southeast and speed up payment of $3 million in outstanding Medicare claims (Washington Post, 11/27). Ana Raley, a senior executive with Doctors Community, said the federal money will allow the hospital to pay providers, the Washington Times reports (Bhatti, Washington Times, 11/27). "This is like a resurrection," Raley said (Washington Post, 11/27).

Bankruptcy Proceedings
Doctors Community is the latest customer of National Century Financial Enterprises, the nation's largest health care lender, to file for bankruptcy following the collapse of the lending company. On Nov. 18, National Century filed for Chapter 11 bankruptcy protection because it owed approximately $3.6 billion to bondholders, large money-management firms that buy bonds and other creditors (Kaiser Daily Health Policy Report, 11/25). At the bankruptcy hearing, Doctors Community was given access to hospital revenue that had been pledged to the lending company. A hearing is scheduled for Nov. 27 in Ohio, where attorneys for National Century are expected to argue that the $17.1 million belongs to the lending company and should not be released to Doctors Community (Washington Post, 11/27).

D.C. Officials Weigh Changes
Washington, D.C., Mayor Anthony Williams (D) and city officials on Nov. 25 agreed to restructure the city's privatized indigent health care system in the wake of the Doctors Community bankruptcy, the reports. Williams and D.C. Council members are looking for a new contractor to replace Doctors Community (Goldstein, Washington Post, 11/26). City officials are in discussions with D.C. Chartered Health Plan, a Medicaid HMO; Howard University Hospital, a trauma center and teaching hospital that had resisted joining the alliance; and Unity Health Care, a not-for-profit chain of clinics, to replace Doctors Community (Kaiser Daily Health Policy Report, 11/25). However, D.C. Council member Kevin Chavous (D) "expressed reservations" about having a hospital as a general contractor because of its "inherent competition" with other hospitals in the network, the Post reports. In addition, while city officials say the alliance is "healthy and safely separated" from the financial troubles of Greater Southeast, Washington Hospital Center has said the system "threatens" the "financial health" of all the district's hospitals. Washington Hospital Center and MedStar presented a plan to "reconstitute" the alliance to boost the system's reimbursements for hospital services (Washington Post, 11/26).

Washington Post Questions System's Stability
A Washington Post editorial says that the closure of Greater Southeast would "further weaken an already fragile system" and asks Williams for "proof" that the D.C. Healthcare Alliance is, as he has said, "vibrant and serving the city and its poorer residents" (Washington Post, 11/26). The editorial is available online.