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How Grady Memorial Hospital skirted death

In 2007, Georgia's largest hospital was $60 million in debt and facing closure. This is the story of its resurrection.



This is part one of a three part series on the past, present, and future of Grady Memorial Hospital.

In 2011, more than 600,000 patients visited the Grady Health System. Across the Atlanta superstructure's 16 floors and the institution's six neighborhood health centers, 5,300 doctors, nurses, and staff members do everything from refill prescriptions to resuscitate lives. With more than 950 beds, Grady is the state's largest hospital. For Fulton and DeKalb counties' uninsured residents, the safety-net facility isn't simply a mammoth infirmary — it's a lifeline.

Six years ago, Grady nearly closed its doors. Although the 121-year-old hospital has experienced a recent turnaround, it's not out of the woods yet. For this three-part series, CL spoke with more than 50 doctors, patients, administrators, politicians, advocates, and others to learn about the fall, rise, and uncertain future of one of Atlanta's most important institutions.

In 2007, two of Atlanta's most powerful men sat down over drinks to try to "solve the problems of the world." Former Georgia-Pacific Corporation chairman A.D. "Pete" Correll remembers his first conversation with Cousins Properties CEO Tom Bell about Grady Memorial Hospital's plight like it was yesterday.

"I said, 'That place is in serious trouble,'" Correll recalls. "[Bell] said, 'You don't know the half of it.'... So we decided, 'Why don't we go fix it?'"

Grady was on the verge of shutting down. The downtown Atlanta hospital system had amassed a $60 million deficit and could barely meet payroll or pay vendors. As debt continued to accumulate, questions were raised about the future of the aging, 950-bed facility, which was long overdue for more than $360 million worth of upgrades.

As a public safety-net hospital, Grady provides free health care services to the city's uninsured. The system's behemoth size enables its staff to treat more indigent men and women than any other Georgia hospital. It also houses the most advanced level-one trauma center within a 100-mile radius of Atlanta, as well as a top-notch burn unit and stroke center. Grady's physicians provide patient care in more than 50 specialties and 100 subspecialties.

Closing the hospital's doors would not only have hurt thousands of employees and patients, it also would have been catastrophic for hospitals throughout metro Atlanta. No longer would suburban medical facilities be able to send indigent men and women to the massive structure alongside the Downtown Connector's "Grady Curve." Victims of car crashes and gunshots normally treated at Grady would flood other hospitals' smaller and less-prepared emergency rooms.

"It couldn't close," says Dr. Michael Frankel, the hospital's chief neurologist. "Shutting it down would've had a ripple effect on the health care community. Without Grady, profit margins at other hospitals are gone. It would be like shutting Hartsfield-[Jackson International] Airport and would have ramifications for decades."

Grady required help. Over the next several years, administrators would overhaul the institution's operations not only to keep the lights on, but to make sure they stayed on for good. The road to solvency began with the hospital's privatization. From there, changes brought dramatic power shifts, unpopular cuts, and public backlash against those in charge. Tensions boiled, death threats were made, and jobs were lost. The first year of restructuring resulted in a more than $75 million turnaround. Despite the uproar over how best to move forward, the hospital still stands today.


When Grady Memorial Hospital first opened in 1892, 18 employees oversaw 100 beds. The hospital, born out of former Atlanta Constitution managing editor Henry W. Grady's vision for the New South, served both black and white patients. Its mission was to provide medical care to the poor and emergency care for the entire city, still in the process of rebuilding following the Civil War.

In its early years, Grady comprised four wings and separated patients by gender and race. It was one of the only infirmaries available to blacks, at times housing three-quarters of the city's hospital beds available to African-Americans. As desegregation occurred in 1965, Grady's finances were transformed. That year, President Lyndon B. Johnson created Medicaid and Medicare, which offered hospitals some compensation for previously uncovered patients — a huge boon for Grady.

Yet Grady has consistently remained underfunded, despite receiving money from federal, state, and county governments, as well as private donors. In a state where 1.9 million people are currently without health insurance, patients are constantly seeking affordable health care options. From the beginning, the hospital has received little to no money for the uninsured it treats.

"A young physician who trained at Grady came up to me and asked, 'What were the most troubled years of Grady hospital?,'" recalls Martin Moran, a retired doctor and author of Atlanta's Living Legacy, a detailed account of the hospital's history through 2008.

Moran replied, "The first 120."

When the institution's financial crisis came to a head in 2007, the Fulton-DeKalb Hospital Authority, a politically appointed board tasked with overseeing Grady, looked outside the hospital for solutions. The FDHA, along with the Metro Atlanta Chamber of Commerce, formed the Greater Grady Task Force in March 2007. Its objective: resurrect Grady.

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