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District of Columbia Financial
Responsibility
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| FOR IMMEDIATE RELEASE December 4, 2000 |
CONTACT: Jim Davison 202/504-3435 |
Statement of the Chairman
Alice M. Rivlin
Good morning. The Financial Authority meets today to consider a Resolution on Recommendations and Orders on the Public Benefit Corporation and D.C. General Hospital. We are acting to ensure continuity of service to patients at D.C. General Hospital and the public health clinics in the event that the current cooperative efforts between the Financial Authority, the Mayor and the Council do not resolve the problem before the funds available to the PBC are exhausted.
I would like to briefly describe the history of this problem, how we arrived at this point in time, and the reasons for the actions the Financial Authority is taking today. The Authority granted the District of Columbia Health and Hospitals Public Benefit Corporation ("PBC") final approval to assume operational authority for D.C. General Hospital and the public health clinics on October 1, 1997.
Final approval was the result of certification, through the Chief Financial Officer ("CFO"), that the operational plan submitted by the PBC was consistent with the multiyear Financial Plan and Budget for the District of Columbia.
The Authority took this action in 1997 to ensure that residents of the District would have access to high quality, comprehensive community-centered health care. As my predecessor, Andrew F. Brimmer noted at that time, delivery of such services was vital to the health, safety, and welfare of the City and its citizens.
D.C. General Hospital has generated operating deficits nearly every year since 1990. For each of the past three years, the cash deficits have steadily worsened. The PBC and D.C. General are in serious financial trouble. They have produced a cumulative deficit of more than $100 million dollars over the last three years, and are currently facing financial collapse and closure.
The CFO of the District has said that at its current rate of spending, the PBC will exhaust its $45.3 million FY 2001 District subsidy by the middle of March, 2001. And, if money is set aside to maintain PBC’s clinics throughout the fiscal year, D.C. General Hospital will be forced to close even sooner, perhaps as early as mid-January. In either case, the CFO will be unable to redirect funds from any source to continue PBC operations unless a plan to restructure PBC is submitted to Congress in a timely manner.
The PBC Board itself has recognized that the current status of the PBC is precarious, and that action must be taken quickly before funds run out and the facility is forced to close. They have at times been ready to restructure the PBC and D.C. General, and at other times, backed away from taking the necessary steps. They passed a resolution at a recent PBC board meeting identifying broad criteria to be used in developing a plan for reorganization of the PBC and D.C. General. They then withdrew their support for the previous reorganization plan, making it clear that the Mayor, the Council and the Authority needed to take immediate action to prevent the imminent closure of the PBC.
Adding to the difficulties is the District of Columbia Health and Hospitals Public Benefit Corporation Emergency Amendment Act of 2000, passed by the Council of the District of Columbia ("Council") in October, 2000. This Act requires that the PBC receive approval from the Council prior to eliminating services at D.C. General. The Act also requires a 45-day period of review, excluding Saturdays, Sundays, legal holidays and days of Council recess, which is projected to result in at least a 70 day period for review. The financial projections from the CFO indicate that this holdover period would extend past the date at which D.C. General would run out of funding and be forced to close.
In addition, the U.S. Congress has imposed stringent conditions on the solution in the form of directions found in the District of Columbia Appropriations Act of 2001, (the Budget for the District of Columbia) which was signed by President Clinton just a couple of weeks ago. The Congress said, "That no appropriated amounts and no amounts from or guaranteed by the District of Columbia government (including the District of Columbia Financial Responsibility and Management Assistance Authority) may be made available to the [PBC] (through reprogramming, transfers, loans, or any other mechanism) which are not otherwise provided for under this heading until a restructuring plan for D.C. General Hospital has been approved by the Mayor of the District of Columbia, the Council of the District of Columbia, the Authority, the Chief Financial Officer of the District of Columbia, and the Chair of the Board of Directors of the [PBC]…." (Public Law 106-522, H.R. 5633, 106th Congress, 2d Session, page 17 (Nov. 22, 2000)).
The Congress also provided that the District might transfer from other non-Federal funds in an amount not to exceed $90,000,000 for the purpose of restructuring the delivery of health care services in the District.
On July 12, 2000, the Authority decided to convene key elected and appointed District leaders under the heading of the PBC Collaborative in hopes that a mutually agreeable solution to the problems of the PBC could be worked out. The Collaborative has agreed on a course of action, however, significant elements of the health care delivery program have yet to be agreed upon.
We have not given up on a cooperative solution. The Mayor, the Council and the Authority are jointly and diligently working to restructure and privatize services currently provided by the PBC by March 1, 2001, in advance of the deadline for the exhaustion of the PBC’s subsidy identified by the CFO.
But, this process leading up to the restructuring and privatization of health care delivery by the PBC involves a complex contract bidding procedure, which could reasonably be delayed past the subsidy exhaustion deadline of mid March 2001 identified by the CFO.
The Authority anticipates that such a delay is possible, even likely, and deems it prudent to plan to act immediately to assure the uninterrupted delivery of heath care services in the interim, while allowing the restructuring and privatization process to continue.
The Authority’s powers under section 207 of Public Law 104-8 are two-fold: first, the Authority may issue recommendations under section 207 (a) – (c) requesting the Council to enact legislation. Second, the Authority can issue Orders and act in the shoes of the Mayor or the head of any District government agency.
When the Authority issues 207 recommendations to the District Council, the Council has 90 days to submit to the Authority, the President and the Congress notice as to whether the District government will adopt the recommendations.
Section 207 D provides the Authority with the additional power to enact the recommendations should the District government not act quickly enough.
To assure the uninterrupted delivery of health care services in conformity with Federal and District law, including the FY 2001 D.C. Appropriations Act, the federal Anti-deficiency Act, and federal appropriations law, the Authority must act now to preserve its options in the event that the PBC restructuring and privatization process is not successfully completed prior to the exhaustion of the PBC’s subsidy.
Hence, although we fervently hope the bid and contract negotiation process undertaken by the Authority, the Mayor and the Council jointly produces a successful result, we feel we must provide a fallback solution to ensure continuity of service in case of failure. Therefore we will reluctantly use the ultimate authority provided to us through our enabling statute, Public Law 104-8.
The Authority recommends that the Council act to approve the restructuring plan required by the FY 2001 DC Appropriations Act, Public Law 106-522, which is to be submitted by the Mayor to the Committees on Government Reform of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Appropriations of the House of Representatives and the Senate.
The Authority exercises its 207 recommendation powers today with one purpose. If the Council and the Mayor fail to adopt these Recommendations, the Authority will enact and implement them in accordance with the provisions of Section 207 after consultation with the appropriate Committees of Congress.
What do we expect to happen next?
In order to ensure continuity of care and to ensure that the District complies with Congressional requirements, we are directing the Mayor to, immediately prepare and submit a Reorganization Order to the Council, restructuring the delivery of health care services by the PBC that is consistent with the following recommendations:
Finally, the Authority directs the CFO to identify the funding resources needed to implement these Recommendations and Orders and the cost of the contracts necessitated by the final restructuring and privatization process, consistent with the FY 2001 D.C. Appropriations Act.
That finishes my statement, I will now turn to my colleagues for any comments they may wish to make.
WHEREAS, the mission of the District of Columbia Health and Hospitals Public Benefit Corporation (the "PBC"), including D.C. General Hospital ("D.C. General"), is to provide comprehensive community-centered health care to residents of the District of Columbia;
WHEREAS, the PBC and D.C. General are operating in a manner inconsistent with the multiyear financial plan and budget of the District of Columbia in that the PBC and DC General are generating, and are projected to continue to generate, operating deficits in excess of $64 million in Fiscal Year ("FY") 2001;
WHEREAS, the Chief Financial Officer of the District of Columbia (the "CFO") found that:
"At its current rate of spending, PBC will exhaust its $45.3 million FY 2001 subsidy by the middle of March 2001. If money is set aside to maintain PBC’s clinics throughout the fiscal year, D.C. General Hospital will be forced to close even sooner, perhaps by as early as two months from today. In either case, [the CFO] will be unable to redirect funds from any source to continue PBC operations unless a plan to restructure PBC is approved by Congress." (The CFO’s Nov. 14, 2000 Memorandum attached as Exhibit A);
WHEREAS, the CFO also projects that the PBC is currently deficit spending in excess of $6 million per month over its authorized appropriation and at this rate of spending will require in excess of $64 million in FY 2001 and in subsequent years may well require subsidies in excess of its legally appropriated funding level;
WHEREAS, there is now agreement by all concerned parties that the continued expenditure of funds at this rate by the PBC and D.C. General will necessitate the closure of the PBC and D.C. General and loss of the health care services provided by them to the residents of the District of Columbia;
WHEREAS, a delay in addressing these spending pressures could affect the ability of the District government to adhere to the overall FY 2001 District of Columbia Budget and Financial Plan;
WHEREAS, the District of Columbia Appropriations Act, 2001, Pub. L. 106-522 requires:
"That no appropriated amounts and no amounts from or guaranteed by the District of Columbia government (including the District of Columbia Financial Responsibility and Management Assistance Authority) may be made available to the [PBC] (through reprogramming, transfers, loans, or any other mechanism) which are not otherwise provided for under this heading until a restructuring plan for D.C. General Hospital has been approved by the Mayor of the District of Columbia, the Council of the District of Columbia, the Authority, the Chief Financial Officer of the District of Columbia, and the Chair of the Board of Directors of the [PBC] …." (Pub. L. 106-522, H.R. 5633, 106th Cong., 2d Sess., pg. 17 (Nov. 22, 2000)).
WHEREAS, the District of Columbia Appropriations Act, 2001, Pub. L. 106-522 further requires:
"That notwithstanding any other provision of law, to augment the District of Columbia subsidy for the District of Columbia Health and Hospitals Public Benefit Corporation (PBC), the District may transfer from other non-Federal funds appropriated under this Act to the Human Support Services appropriation under this Act an amount not to exceed $90,000,000 for the purpose of restructuring the delivery of health services in the District: Provided further, That such restructuring shall be pursuant to a restructuring plan approved by the Mayor, the Council, the Authority, and the Board of Directors of the PBC: Provided further, That—
(1) the restructuring plan reduces personnel levels of D.C. General Hospital and of the PBC consistent with the reduction in force set forth in the August 25, 2000, resolution of the Board of Directors of the PBC regarding personnel structure, by reducing personnel by at least 500 full-time equivalent employees, without replacement by contract personnel;
(2) no transferred funds are expended until 10 calendar days after the restructuring plan has received final approval and a copy evidencing final approval has been submitted by the Mayor to the Committee on Government Reform of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Appropriations of the House of Representatives and the Senate; and
(3) the plan includes a certification that the plan does not request and does not rely upon any current or future request for additional appropriation of Federal funds." (Pub. L. 106-522, H.R. 5633, 106th Cong., 2d Sess., pg. 13 (Nov. 22, 2000)).
WHEREAS, the Mayor of the District of Columbia (the "Mayor"), the Council of the District of Columbia (the "Council"), and the Authority (collectively referred to as the "Parties") are jointly and diligently working to restructure and privatize certain services currently provided by the PBC and D.C. General by March 1, 2001, just in advance of the deadline for the exhaustion of the PBC’s subsidy identified by the CFO;
WHEREAS, the process leading up to the restructuring and privatization of health care delivery by the PBC and D.C. General Hospital involves a complex contract bidding procedure which could easily be delayed past the subsidy exhaustion deadline identified by the CFO;
WHEREAS, the Authority anticipates that such a delay is possible, even likely, and deems it prudent to plan to act immediately to assure the uninterrupted delivery of health care services in the interim, while allowing the restructuring and privatization process to continue; and,
WHEREAS, in order to be able to act to assure the uninterrupted delivery of health care services in conformity with Federal and District law, including the FY 2001 D.C. Appropriations Act, the federal Anti-deficiency Act, and federal appropriations law, the Authority must act now to preserve its options in the event that the PBC restructuring and privatization process is not successfully completed prior to the exhaustion of the PBC’s subsidy.
NOW, THEREFORE BE IT RESOLVED THAT:
RECOMMENDATIONS
1. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, repeal D.C. Act 13-454, "District of Columbia Health and Hospitals Public Benefit Corporation Emergency Amendment Act of 2000" (attached hereto as Exhibit B);
2. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, repeal D. C. Act 11-389, codified at Title 32 of the D.C. Code, §§ 261.1 and 262.1 through 262.20, et. seq.;
3. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council work with the Mayor to prepare and approve a plan to establish an alternative publicly-financed health care delivery system in the District of Columbia that a) is consistent with the current multi-year financial plan and budget for the District of Columbia, b) provides for equivalent volumes and types of services as currently provided by the PBC to uninsured District residents, and c) ensures that the services meet standards of quality and accessibility;
4. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, approve and/or enact legislation, regulations, and reprogrammings, and take any and all other actions necessary to authorize and implement an alternative publicly-financed health care delivery system;
5. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, act to approve the restructuring plan required by Public Law 106-522, which plan is to be submitted to by the Mayor to the Committees on Government Reform of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Appropriations of the House of Representatives and the Senate; and,
6. All of the above Recommendations must be enacted by the Council and approved by the Mayor within 90 calendar days of the adoption of these Recommendations and Orders by the Authority.
7. If the Council and the Mayor fail to adopt these Recommendations, pursuant to Section 207 of Public Law 104-8, the Authority will enact and implement them in accordance with the provisions of Section 207 after consultation with the appropriate Committees of Congress.
ORDERS
It is further ORDERED, that, during the pendency of these Recommendations before the Council and the Mayor and until further Order of the Authority, the Authority:
1. Directs the Mayor to, exercising authority under Title 1, Chapter 2 of the District of Columbia Code, immediately prepare and submit a Reorganization Order to the Council by December 19, 2000, establishing an alternative publicly-financed health care delivery system in the District of Columbia consistent with the Recommendations issued hereunder and is a) consistent with the current multi-year financial plan and budget for the District of Columbia, b) provides for equivalent volumes and types of services currently provided by the PBC to uninsured District residents, and c) ensures that the services meet standards of quality and accessibility;
2. Directs the Mayor and the PBC to eliminate 500 full-time equivalent employees ("FTEs") in accordance with the FY 2001 D.C. Appropriations Act, P.L. 106-522, and identify those health care services to be reduced and those to be eliminated to achieve the 500 FTE reduction (with supporting utilization data for the services to be reduced or eliminated and for the services to be retained). The Mayor and the PBC must: a) submit to the Authority by December 19, 2000, the 500 FTE positions identified for elimination, b) begin implementation of the personnel reductions and elimination of services by January 19, 2001, and c) complete implementation of the elimination of 500 FTE and reduction and elimination of services previously identified, by January 31, 2001;
3. Directs the PBC to comply with all appropriation law requirements and be vigilant in not violating the strictures of the Anti-deficiency Act, 31 U.S.C. 1341, et. seq.;
4. Directs the Mayor to authorize and approve contracts, personnel actions, expenditures, regulations, and reprogramming of funds, and take any and all other actions necessary to implement an alternative publicly-financed health care delivery system, including establishing by the dates identified in Order No. 2 above, a mechanism to secure services currently provided by the PBC and implementing changes that may be required with regard to emergency medical services and transportation.
5. Directs the CFO to identify to the Authority, the Mayor and the Council, by December 19, 2000, the funding resources and available sources needed to implement these Recommendations and Orders and the cost of the contracts necessitated by the final restructuring and privatization process, consistent with the FY 2001 D.C. Appropriations Act, P.L. 106-522.
Adopted this 4th day of December, 2000.
Alice M. Rivlin
Chair
Exhibit A: Memorandum from Natwar M. Gandhi, Chief Financial Officer,
“Urgent Need for Action in Regard to PBC,” November
14, 2000
Exhibit B: “District of Columbia Health and Hospitals Public Benefit Corporation
Emergency Amendment Act of 2000,” D.C. Act 13-454
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