Following is a statement written by William J. Casarella, M.D., Exec. Assoc. Dean for Clinical Affairs - Grady and published by InsiderAdvantage Georgia Sept. 28, 2007.

Emory A Great Bargain For Grady 
By Dr. William J. Casarella

Representative Steve Davis's article, "The More We Learn, The More Mismanaged Grady Seems" should better be titled, "The More Everyone Learns, the More They Will Value Grady and the Medical Schools."

Here are the real facts about Emory and Grady, which understood properly, reveal the enormous contributions being made by Emory and Morehouse to Grady, and therefore, stand Mr. Davis's analysis completely on its head:

• Emory's and Morehouse's use of Grady as a "teaching hospital" brings in $25 million a year to Grady in federal (Medicare) funding to support residency training. Medicare always pays hospitals directly for these programs. The funds are by agreement intended to pay the residents' salaries. In our case, Emory pays the salaries and Grady is supposed to reimburse us from the Medicare funds. This system is in place in every teaching hospital in the country. In the past few years, Grady has - because of severe financial problems - chosen to divert those educational dollars to other needs. Emory (and Morehouse) have continued to pay our residents. This situation accounts for a portion of the $50 million debt owned by Grady to the medical schools. Our arrangement with Grady is the same as with other hospitals in the system, which also receive federal dollars for graduate medical education. I know of no other medical school in the country (other than our colleagues at Morehouse) who are not promptly reimbursed from federal funds for resident training.
• Grady never pays Emory for teaching medical students. Emory faculty are paid for supervision of graduate physicians in training (medical residents, who are fully licensed medical doctors working on their subspecialties). This degree of oversight is approved by federal funding sources and is a requirement of the Accreditation Council of Graduate Medical Education to maintain the accreditation of all training programs.
• Since no funds accrue to Emory for indigent patient care, Emory's right and ability to bill patients who do have insurance or the means to pay for direct care services has never been questioned. Our practices are totally compliant with Medicare regulations under IL-372, the federal regulations that govern teaching physician billing.
• Grady covers malpractice costs for Emory and Morehouse physicians as well as its own nurses and other employees. Since fully 80% of Grady's patients are uninsured or underinsured, covering malpractice is essential for physicians to be willing to provide care without sufficient compensation.
• Emory's documentation for the time spent supervising residents (the only training activity Grady is obliged to pay for) is fully compliant with our contract. These data are carefully filled out and verified by individual physicians and countersigned by the department chairpersons.

They are further reviewed for accuracy and compliance by the Dean's office and then sent to Grady. A contract compliance assessment performed by the accounting firm of Cherry, Bekaert, and Holland two years ago confirmed Emory's compliance. They recommended monthly rather than quarterly reporting, which we have implemented following completion of an electronic on-line system to make the reporting more timely and to provide more data points to raise the confidence level of the calculation. Ironically, this increased attention and reporting most likely will increase the reported hours of resident supervision rather than decrease them.

The 1984 contract, which has a mutual one-year withdrawal clause, was negotiated by Grady and Emory attorneys. Grady has raised no complaint about the contract. Cherry, Bekaert, and Holland confirmed Emory's compliance with the contract but pointed out that Grady was not compliant and that the hospital underpaid Emory and Morehouse by $8 million per year for the medical schools' resident supervision and administration. CB&H further stated that the schools have been providing more faculty than they are being compensated for. These conclusions were confirmed independently by the Huron Group.

Overall, Emory generates $143 million for Grady Health System and its patients every year, through a combination of federal and state reimbursements, patient care grants awarded to Emory faculty physicians for the benefit of Grady patients, Emory faculty earnings that are invested in the medical practice at Grady, and uncompensated medical care for indigents in the amount of almost $25 million year. All of these figures can be reviewed on the Emory web site (http://whsc.emory.edu/emory_grady_budget.cfm).

It is clear that Emory's presence is a great bargain for Grady. The 377 resident physicians and 300 faculty cost Grady only about 3.6% of its internally generated revenue annually. A medical staff of this size, and with such a wide range of specialties and subspecialties, could not be purchased on the open market for anywhere near that price.

Quite the contrary, in fact, is the case -- in all of my 26 years of being associated with Grady and Emory, I have not seen any meaningful initiative by doctors in private practice ("the marketplace") to assume the responsibilities of caring for a group of patients in which 40% are totally "no pay", 45% are Medicaid and 13% are Medicare. This patient mix will not be competitive in the "free market." Would the citizens of Georgia and Atlanta wish such an outcome?

Grady is an excellent site for training physicians. Emory has four other teaching hospitals available to train residents and students. About one-third of our training is done at Grady. This could be gradually shifted to other sites. Of greater concern is the question, where would Morehouse train its residents and students? Fully 80% of their training is done at Grady.

Whose trainees are these anyway? About one-quarter of all the physicians in Georgia have trained at Grady through either Emory or Morehouse. We are training Georgia's future physicians, not Emory's.

Grady is in its precarious position because of increasing numbers of uninsured and underinsured patients, increasing costs of employees, drugs, fuel, supplies and equipment, and inflation in general. It is in financial trouble in part due to frozen funding from Fulton and DeKalb counties for the past 15 years in spite of rising costs, increased population and an increasing tax base. A 3-4% annual cost of living increase in county payments to Grady over 15 years would have averted the present crisis. Grady is in trouble because the state's handling of the Indigent Care Trust Fund and Disproportionate Share funding, which cost Grady $30 million in 2007 alone, has short- changed the hospital for the past six years.

Does Mr. Davis know that Grady serves more than 1 million inpatient and outpatient visits per year, including 55% of all primary care for Atlanta's indigents? Does he know that Grady's Level One Trauma Unit is one of the nation's best, providing critical care to accident victims on a daily basis? Does he know that Grady provides the expertise for Georgia's Poison Control Center? Does he know that Grady admits 35,000 patients per year and that these medically needy persons - if sent elsewhere - would add an average of 55-60 in-patients to every other hospital in the Metro area? Does he know that these other hospitals do not have the facilities to handle these patients? Does he know that Grady cares for 120,000 emergency room patients per year? Does he know that every hospital in the area is already overflowing with ER patients? Does he know that Grady is the home to nationally acclaimed HIV/AIDS, sickle cell and stroke treatment centers? Does he know that if Grady closes, these killing diseases will not disappear when the hospital does?

Grady is far too critical to waste precious time and attention in political sideshows that divert attention from the real issues of life and death.