D.C. takes control of United Medical Center

The District has taken control of troubled United Medical Center, after its owner, Specialty Hospitals of America defaulted on loan and grant agreements designed to save the only hospital in Southeast D.C. from collapse, the Washington Business Journal reports.

The move comes less than three years after the company took over the former Greater Southeast Community Hospital. In late 2007, the District provided the New Hampshire-based company with a $30 million grant for physical upgrades and equipment, a $29 million loan to pay off the hospital’s creditors and another $20 million loan for working capital. The city recently invested another $5.9 million as the hospital’s financial condition worsened.

But Specialty Hospitals, the city claims, failed to make its $2 million-plus annual payment in lieu of taxes and to maintain performance measures. There were “numerous instances of default,” Attorney General Peter Nickles told the Washington Business Journal on Wednesday.

“We tried to reach an accommodation with them to keep them involved,” Nickles said. “That was not successful and so we’ve issued a notice of default and a notice of entry. We have taken over for a temporary period to stabilize the hospital.”

Frank Delisi remains as chief executive officer, under the District’s watch. Eric Rieseberg, now former United Medical Center chairman and president, could not be reached for comment.