DC CFO says United Medical Center is 'functionally bankrupt': 6 things to know

While Washington, D.C.-based United Medical Center voted Jan. 26 to hire a new consulting firm to take over management of the facility, the CFO of the city claims the hospital still has a long way to go to recover financially, The Washington Post reports.

Here are six things to know about the hospital's financial situation.

1. UMC's board voted Friday to hire Mazars USA, a New York City-based accounting and financial consulting firm, to run the hospital. The D.C. City Council terminated the hospital's management contract with Veritas, UMC's previous manager, in November.

2. A hospital board member told The Washington Post Mazars USA is expected to assume control of the hospital in mid-February. The board member said eight companies bid for the management contract. The representative declined to tell The Washington Post the price of Mazars USA's contract, but said it would not be "appreciably different" from Veritas' $4.2 million annual agreement, the report states.

3. However, Jeffrey S. DeWitt, CFO for the city, said during an earlier board meeting Friday if Mazars USA's contract was priced above $4.2 million, administrators would need to ask the city for a subsidy to make up the difference. According to Mr. DeWitt, the hospital is operating in the red and is practically bankrupt.

"You are functionally a Chapter 11 hospital right now," Mr. DeWitt told UMC board members Friday. "You are running with patient volumes down, with expenses that are not under control, with a revenue cycle that is not fixed."

4. Mr. DeWitt reportedly told the board UMC is on track to run an annual deficit of $25 million if officials do not make sizeable changes to hospital operations — a move that would result in additional taxpayer bailouts. The Washington Post reports the city provided UMC with $7 million in December to assist with the hospital's short-term operating costs and to repay Medicare for overbilled funds.

5. Hospital board members have attributed UMC's financial difficulties to declining patient admissions, which they claim have occured because of reports of questionable patient deaths at the facility, according to the report. Officials also attributed some of the hospital's financial issues to billing issues at its nursing home, which they claim is a result of the city's mismanagement.

6. Mr. DeWitt said Friday a large part of the hospital's operating losses resulted from misguided spending by Veritas. He also noted Veritas, not the city, was responsible for billing issues at UMC's nursing home, according to the report.

To read the full report by The Washington Post, click here.

Editor's note: Becker's Hospital Review reached out to United Medical Center for comment and will update the article as more information becomes available.

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