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Ward 7 Councilmember Kevin P. Chavous sounded a folksy note last week reacting to news that Greater Southeast Community Hospital was on its financial deathbed. “There are tens of thousands of citizens—primarily my folk, [Ward 8 Councilmember] Sandy Allen’s folk—who but for our actions today could be totally without health care. We cannot lose that hospital: I can’t lose it, Sandy can’t lose it, my folks can’t lose it, our folks can’t lose it,” remarked Chavous last Thursday at a D.C. Council briefing on the issue.
At-Large colleague David A. Catania, who had predicted the east-of-the-river hospital’s collapse, blasted away at all the potentates who a year and a half ago made Greater Southeast the linchpin of the city’s indigent-health-care network. “This is something that should not have been a surprise to anyone, at least on the dais,” Catania reminded his cohorts. “Where is the mayor?….
Where is [former D.C. Department of Health Director] Ivan Walks? Where is [former financial-control-board Chair] Alice Rivlin?”
LL rifled through our folder: According to a morning fax, Mayor Anthony A. Williams was spending the day in Owensboro, Ky., to wow the Kentucky League of Cities on the topic: “How Has 9/11 Affected Community Life.”
Apparently the mayor remains stuck on last
Of course, Williams needn’t worry about keeping D.C. residents focused on the hospital emergency. Chavous and Catania will take care of that. They will remind the electorate that they opposed the control board’s shuttering of D.C. General Hospital, that they tried to fight the closing in court, and that they warned the mayor and his administration about the perils of handing public health to the free market.
Here’s what they might omit: that the city’s two biggest D.C. General crusaders have taken campaign contributions from the very same folks who profit from privatization. Greater Southeast is owned by the for-profit Scottsdale, Ariz.-based Doctors Community Healthcare Corp., which also owns D.C.’s Hadley Memorial Hospital as well as other struggling hospitals in Chicago and Southern California.
Doctors’ gamble on urban hospitals seems like a risky financial strategy. The company hedges its bets by relying on favorable decisions from local governments—and has been an aggressive campaign contributor and lobbyist in D.C. Not only does Doctors butter up its supporters—such as Williams, for example—but it also believes in spreading the wealth around to its detractors.
Chavous, for example, received $10,000 from individuals associated with the company, according to a July 2002 campaign-finance report. On May 15, the Ward 7 councilmember received $2,000 each from Doctors Chair and CEO Paul R. Tuft, Senior Vice President Alan Tuft, and three other Arizonans with ties to the health-care company.
According to its lobbyist-disclosure report, Doctors also contributed $2,000 to the Chavous for Mayor 1998 campaign account this year, as well as another $10,000 to what is labeled as “Chavous Exploratory.”
“Has my position changed because they gave me money?” asks Chavous. “No!”
So why take it? “I have accepted campaign contributions from a number of people I have disagreed with politically,” Chavous explains. “They obviously respect what I am doing in public life.”
Catania also received some checks with Arizona addresses. According to his March 10 filing with the Office of Campaign Finance, the save-D.C. General crusader accepted $5,000 in contributions from individuals associated with Doctors: Former Chief Operating Officer Melvin C. Redman, Vice President David A. Denslaw, Alan Tuft, Lori Coffey, and W.L. Jerome all wrote $1,000 checks to the Catania re-election effort.
“People give me money because they believe in me, not because I believe in them,” Catania responds. “A representative from Doctors was eager to give me money. He said they wanted to build a relationship.”
That relationship seems to have hit the skids since Doctors declared bankruptcy.
Chavous and Catania remain dogged opponents of the very concept behind Williams’ health plan—namely, that a for-profit entity can tend to the city’s neediest patients and still make money. “Never again should we allow ourselves to be held hostage by the financial business interests of a private entity as it relates to the most acute health-care needs of our citizens,” said Chavous at the briefing. “I won’t stand for it.”
Catania had his own version: “This is a highly leveraged, crooked outfit from the beginning.”
So Doctors’ business plan, as it turns out, is as faulty as its political plan.
Doctors, which bought Ward 8’s Hadley Memorial in the early ’90s and turned it into a long-term-care facility, acquired Greater Southeast out of bankruptcy in 1999. The hospital was $70 million in debt, and District government officials refused to plow more public monies into the hospital.
Signs of financial collapse began surfacing at Greater Southeast over the summer. In August, the hospital laid off more than 100 employees. Then, earlier this month, the Washington Post reported on the questionable operations of Doctors’ financier, National Century Financial Enterprises Inc. After National Century got raided by the FBI and declared bankruptcy, Doctors also filed for Chapter 11 bankruptcy protection.
That’s a tough set of facts for Doctors’ very own D.C. spin machine, aka lobbyist Kerry S. Pearson. A longtime local power broker, Pearson is the perfect field general for the company’s policy of ingratiating itself with all of elected officialdom.
Over the years, Pearson has hosted fundraisers for all but a few councilmembers. His ties cross party lines and municipal ideological fissures, such as whether a councilmember is pro-business or a fighter for NIMBY groups. His work on the tin-cup circuit extends to health-care-privatization opponents Chavous and Catania.
Two months ago, a third of the council flew out to Scottsdale for fun: Chair Linda W. Cropp, Ward 2’s Jack Evans, Ward 5’s Vincent B. Orange Sr., and Allen attended Pearson’s wedding. Pearson married Lauren Vaughan, president of Kerry S. Pearson LLC.
On Nov. 7, the D.C. Council passed the Kerry S. Pearson Recognition Resolution of 2002 and the Lauren Vaughan Pearson Recognition Resolution of 2002.
Doctors is Pearson’s biggest client. He also lobbies for ISI Professional Services and Affiliated Computer Services, which has the contract for the District’s red-light cameras. Over the past two years, Pearson has earned $318,000 working the hallways of the John A. Wilson Building for the health-care provider.
Pearson was not available for comment.
According to lobbyist activity reports, Pearson began working for Doctors in late 2000. On Dec. 5, 2000, according to filings with the Office of Campaign Finance, he chatted up the company with Chavous, Cropp, and Orange. Two weeks later, on Dec. 19, Pearson spoke with those three councilmembers as well as Evans, Ward 3 Councilmember Kathy Patterson, and At-Large Councilmember Harold Brazil.
Pearson had collected $30,000 by the end of the year for his conversation skills.
Pearson’s talking points became even more important to Doctors in 2001, when the company entered negotiations with the city to contract for indigent health care. According to records at the D.C. Office of Campaign Finance, Pearson spoke multiple times over the course of that year with Cropp, Catania, Chavous, Evans, and Chief Financial Officer Natwar M. Gandhi.
In February 2001, Catania authored a paper titled “The Case Against Contracting With Doctors Community Healthcare Corporation.” The 10-page document outlined the company’s loss-leading finances as well as the hardball negotiating tactics that more than once had left municipalities in the lurch. In the late ’90s, Doctors pursued buying Boston Regional Medical Center, a financially troubled hospital in Stoneham, Mass. Two years later, Doctors broke off talks, and the hospital ended up in bankruptcy court seeking unspecified damages for 16 counts including alleged fraud, misrepresentation, breach of fiduciary duty, and civil conspiracy.
A hospital in Pittsburgh broke off negotiations with Doctors after learning of the mess in Boston.
In April 2001, Doctors-owned Greater Southeast signed an agreement worth up to $90 million a year as the prime contractor for the newly formed D.C. Healthcare Alliance. The alliance consisted of Greater Southeast and subcontractors D.C. Chartered Health, Children’s National Medical Center, George Washington University Hospital, and Unity Health Care.
In the fall, Pearson lobbied on behalf of a 20-year tax abatement for Greater Southeast and Hadley. Over two decades, the company expected to save about $20 million in property taxes. The bill passed 11 to 2, with At-Large Councilmembers Phil Mendelson and Carol Schwartz voting against the tax deal.
Pearson received $198,000 from Doctors in 2001.
Although Doctors has netted mixed results from its D.C. Council contributions, it has fared better with the mayor. According to his Jan. 31, 2002, campaign-finance report, Mayor Williams received $98,000 from Doctors Community Healthcare, affiliated companies, its executives, and their families (Loose Lips, 2/15).
Doctors CEO Tuft and his wife, Lori Tuft, also contributed $500,000 to the University of the District of Columbia. The mayor and school leaders honored the Tufts at the university’s gala at the Corcoran Gallery of Art in April.
In his public pronouncements on the crisis, Williams avoids addressing big-picture issues about Doctors. Williams defends the D.C. Healthcare Alliance, separating Greater Southeast’s financial woes from his new health-care system. “The question’s been asked why we entered into these arrangements with the Healthcare Alliance, recognizing that there were these financial questions,” Williams said in a press conference last Wednesday. “We’re in a suboptimal world. The only optimal environment is heaven, and none of us are there yet.”
With a failing hospital, though, we’re one step closer.
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