PRESS RELEASE
`Health-Care Enron' Scandal Erupts:
Exposes D.C. General Shutdown Corruption
Nov. 11, 2002 (EIRNS)—Hospitals and health-care institutions across the country, including in Washington, D.C., are threatened by the rapidly unravelling financial crisis around National Century Financial Enterprises (NCFE)—the now-insolvent firm which finances the accounts-receivables of hospitals and other institutions. The lives and well-being of thousands of patients are at risk, as health-care personnel, including nurses and emergency-room physicians, and medical-equipment supplies, are not being paid.
This scandal erupting around NCFE and its partner Doctors Community Healthcare Corp. (DCHC), was foreseen, but ignored by Congress last year, when Congress failed in its moral duty to override the actions of D.C. Mayor Anthony Williams and the D.C. Financial Control Board. Congress agreed to the shutdown of the capital's only public hospital—D.C. General Hospital—and privatized the District's health-care system.
Spokesmen for EIR and for Lyndon LaRouche warned last year that DCHC and NCFE had been investigated and sued for fraud and racketeering in a number of jurisdictions, and that they had been charged with looting hospitals and health-care institutions after capturing the income-stream of those institutions. But Congress, led by Senate Majority Leader Tom Daschle, operating under the corrupt influence of D.C. Delegate Eleanor Holmes Norton and her aide Donna Brazile, capitulated to the actions of Wall Street's Financial Control Board and refused to reverse the shutdown of D.C. General. Now, the nation's capital is paying the price of their moral cowardice.
National Century—described as the nation's largest financier of health-care receivables—makes loans to hospitals and other institutions at high interest rates, and buys up their receivables due from HMOs, and from the federal government as Medicare and Medicaid reimbursements, so that those institutions can obtain quick cash to operate. National Century then "bundles" these receivables and issues bonds to finance its ongoing operations. However, since May, National Century has been unable to issue new bonds—because of questions about its own accounting practices. It is now in default to some bondholders, and it has missed payments to doctors, nurses, and other health-care providers. According to sources familiar with the situation, $500 million is missing from NCFE reserve accounts.
Among institutions affected is Greater Southeast Community Hospital in the District, the hospital which was given the contract last year to shut down and take over its only public hospital, D.C. General Hospital. Greater Southeast was purchased by DCHC (of which NCFE is part owner) in 200O with $30 million in financing from NCFE, and NCFE has continued to pick up Greater Southeast's receivables, to the point where Greater Southeast been unable to pay its vendors. Those not being paid range from private companies which provide nurses to Greater Southeast (one reportedly is owed $4 million), to smaller vendors, including a provider of laundry services.
Nationwide, NCFE has stopped making payments to at least 60 health-care companies, at least one of which has already been forced into Chapter 11 bankruptcy. The DCHC-owned Michael Reese Hospital in Chicago says it is having trouble meeting its payroll. Other health-care providers and suppliers will likely be forced into bankruptcy over the next few weeks. Meanwhile, NCFE is diverting funds from hospitals and health-care providers in order to pay banks and bondholders; among its major underwriters are Credit Suisse First Boston, ING, J.P. Morgan/Chase, and Bank One.
If Congress had taken up the issue of D.C. General last year, as was its moral obligation under its responsibility for the welfare of the nation's capital, much of the disaster currently unfolding, could have been prevented.
