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Government and People
National Capital Medical Center
District of Columbia
October 27, 2005
Appendix A - Draft Exclusive Rights Agreement Between the District
and Howard University
In November 2003, Council proposed and passed emergency legislation directing the Mayor to negotiate an agreement with Howard University to build a new hospital on U.S. Reservation 13. In January 2004, the Mayor and the University submitted a Memorandum of Understanding (MOU) to Council. This MOU stated that the District would enter into a long-term lease with Howard University for 9 acres of land on U.S. Reservation 13. On that land, Howard University would build, own and operate a new 200 to 300 bed hospital with Level One trauma capabilities, a medical office building, and a research complex. The Council unanimously approved the MOU in May 2004.
In July 2005, the District and Howard released a proposal to Council and the public that described the need for a new full-service hospital on the eastern side of the District, provided an overview of the NCMC and its services, presented a conceptual site and facility design, and offered projected operating financials. Since then, the District has been working closely with Howard University to finalize the costs and project schedule for the new facility, develop the financing package, and detail the plans for transforming the Reservation 13 site. The District has also received input from the public at a number of public meetings held in Wards 5, 6, and 7 and at the Democratic State Committee.
This document is intended to supplement the comprehensive plan released in July 2005 to respond to additional issues, including more information on costs, financing, project schedule, and Reservation 13 site preparation. It also includes an “in-progress” draft of the Exclusive Rights Agreement, which is currently being negotiated between the District and Howard University. In addition, the document will discuss some areas that are indirectly related to the NCMC, such as the District’s plan for delivering key public health services, the District’s relationship with Greater Southeast Community Hospital, the Medical Homes Initiative to promote primary care, and the Mayor’s forthcoming proposal to expand health coverage to District residents from 200-400% of the federal poverty level.
II. Overview of the National Capital Medical and key services
The establishment of the National Capital Medical Center (NCMC) on Reservation 13, as a modern, comprehensive, state of the art tertiary medical center, with Level One trauma, in alliance with community physicians and clinics has great potential to enhance the delivery of healthcare services for the benefit of a significant portion of the District’s population.
The NCMC will provide a single standard of high quality, world-class comprehensive care for all, without regard to ability to pay. The vision for the NCMC includes the following elements:
The National Capital Medical Center will be an integrated medical complex containing three major components: a hospital, a medical office building, and a research center. The medical center will also provide additional services for the surrounding community. Public health services will be offered within the complex or in close proximity. The NCMC will serve as a major hub for the community health network (see Appendix H for NCMC vision document).
The hospital will be a primary teaching facility for the Howard University School of Medicine. As such, it will provide tertiary-level services. Departments will include:
The hospital will provide four major types of beds for acute inpatient care: medical/surgical, obstetrics and gynecology, pediatric, and psychiatric. It will also include a secure unit with a separate entrance for corrections patients. The NCMC will participate in the new Department of Mental Health program to care for involuntary, acute mental health patients. The NCMC will include a sizable 24 hour, 7-day a week emergency and trauma service, with capacity for a minimum of 50,000 emergency room and approximately 4,000 trauma visits.
In addition, the NCMC will provide other outpatient diagnostics services such as radiology and laboratory. Community-based physicians will be able to refer their patients for these diagnostic services.
Medical office building
A medical office building adjoining the hospital will house community physicians. These physicians will provide outpatient primary care and specialty care to community residents. They will admit patients to the NCMC and use the NCMC procedure rooms. Community-based practitioners will be able to refer patients to NCMC-based specialists for consultation.
The NCMC will also develop facilities and services on its campus as a continuum of its public health, research, and education mission. Major research programs may include Aging, Clinical information systems, and Nursing.
Other community services
In addition, the NCMC will offer and provide an array of services as a community benefit, to improve the quality of life for area residents. Such services may include:
Community health network for underserved populations
Through thoughtful, well-planned services, the NCMC expects to significantly increase accessibility of the full continuum of care to underserved District populations. This will allow a currently underserved population to access the level of care appropriate to their need, whether it be primary and preventive care, specialty services, diagnostic and ancillary services, urgent care or emergency services.
The NCMC will offer wellness, prevention and an array of services that contribute to healthier lifestyles and positive health outcomes, particularly for those diseases and conditions that are highly prevalent within minority communities. Services will include nutrition counseling, support groups, physical fitness classes and other related programs aligned with the public health and prevention research focus of Howard University.
A number of public health services have traditionally been offered on Reservation 13 (the former DC General site). These services, specifically a tuberculosis clinic, an STD clinic, a detoxification center and a primary care medical home will continue to be offered within close proximity of the NCMC. These services will be provided by the District Government or contracted out to the NCMC or other community providers.
In addition, the NCMC will work with several community health groups to eliminate health disparities through provision of primary and secondary preventive services designed to reduce ambulatory sensitive hospitalizations and to improve outcomes of those systemic conditions that adversely impact the surrounding population.
Specific initiatives will include:
Serving as the hub of a well-coordinated care delivery system, the NCMC will provide specialty, diagnostic, urgent and emergency care to meet the needs of Medical Homes primary care patients.
Howard University Hospital and the NCMC
Howard University Hospital and the NCMC will become a two-campus healthcare system under unified governance. The coordinated approach will provide high quality healthcare. The proposed organizational structure will maximize efficiency and use of resources.
The services that Howard University plans to offer at the NCMC are based on the needs of the community. The greatest unmet need is for Level One trauma care. Therefore, the University will move its Level One trauma and requisite related services--neurosurgery, cardiovascular surgery, and orthopedic surgery--from Howard University Hospital to the NCMC.
Given the current proximity of the University’s pediatric and adolescent services to Children’s Hospital, the University will also consider moving these services to the relatively underserved area where the NCMC will be located. The Level III NICU (Neonatal Intensive Care Unity), which supports the obstetrics service, may also be relocated.
In addition, under the Exclusive Rights Agreement (ERA) between the District and Howard University, the University will move 250 of its licensed beds from Howard University Hospital to the National Capital Medical Center and keep the total bed count of both hospitals under 482, the current number of beds licensed to Howard University Hospital. (See draft ERA in Appendix A)
III. Project Costs
Over the past several months, the District and Howard University have completed analysis to determine a more precise estimate of the total NCMC project costs. Howard University’s architects developed a more detailed facility program. The District hired cost estimators to determine the cost to build the program. Then we made a number of adjustments to the cost estimator figures to reduce the total cost of the project and determine the costs to be shared between the District and the University.
Howard University and its architects, in consultation with the District, developed an initial program for the NCMC based on industry norms and market studies completed by the Lewin Group (detailed in the July 2005 NCMC Proposal). The projected bed distribution, assuming all private beds (with the exception of the nurseries), is as follows:
NCMC Bed Distribution
Source: Perkins & Will and Marshall Erdman
In addition, Howard University’s architects projected square footage by department by allocating percentages of the total square footage of the proposed facility based on industry norms. They developed three options, a minimum square footage, an optimum square footage, and a program target.
Departmental Program Range
|Department (with notes)||Minimum Area||Optimum Area||Program Target at 0.97 of Optimum|
|Medical/Surgical Nursing Unit||32,880||36,000|
|Intensive/Critical Care Nursing Unit||44,880||48,000|
|Open Heart Surgery Cardiac ICU||8,976||9,600|
|Isolation Care Unit||5,984||6,400|
|Sleep Disorder Unit||2,200||2,400|
|WOMEN & CHILDREN||43,553|
|Gynecological Nursing Unit||3,750||3,900|
|Post Partum Nursing Unit||5,000||5,200|
|Pediatric Nursing Unit||6,250||8,000|
|Pediatric Intensive Care Unit||7,500||8,000|
|LDR or LDRP Unit||11,000||8,000|
|Levels I & II Nursery||2,300||7,000|
|Level III Nursery - Neonatal ICU||1,950||4,800|
|Observation/Clinical Decision Unit||5,500||5,500|
|Burn Intensive Care Unit||0||0|
|Rehabilitation (licensed) Nursing Unit||0||0|
|Correctional Care Nursing Unit||15,000||16,000|
|Psychiatric Nursing Unit (Locked)||5,200||6,000|
|Psychiatric Nursing Unit (Open)||4,800||5,000|
|DIAGNOSTIC & TREATMENT||51,701|
|Non-Invasive Diagnostic and Testing||384||300|
|Pulmonary Function Testing||360||240|
|Open Heart Surgery||2,616||2,700|
|Diagnostic & Testing||3,750||3,750|
|Speech & Audiology||1,500||1,500|
|Activities of Daily Living (ADL)||1,500||1,250|
|CLINICS (not in M.O.B.)||27,888|
|Clinics with offices||10,500||10,500|
|CENTRAL STERILE SUPPLY||3,750||4,500||4,365|
|PHARMACY - INPATIENT||4,500||4,500||4,365|
|EDUCATION & CLASSROOMS||6,250||6,250||6,063|
|AUDITORIUM (Movie Theater)||6,000||6,250||6,063|
|PUBLIC HEALTH EDUCATION||6,250||6,500||6,305|
|MEDICAL STAFF SERVICES||1,250||1,250||1,213|
|TOTAL HOSPITAL BGSF||644,864||728,854||706,988|
The District then worked with two construction firms skilled at providing detailed cost estimates for hospital construction projects, Turner/Tompkins and BE&K. The two firms each independently developed cost estimates, which were within a few percentage points of each other. They then worked together to agree on a “consensus” cost-per-square-foot estimate for each of the major components of the NCMC. The firms also agreed on a projected level of inflation between October 2005 and the time the NCMC project will be priced for construction, likely in 2007.
To reach a total cost to be shared between the District and Howard University, we made a number of adjustments to the Cost Estimators’ figures, including several major design changes to reduce total project costs.
First, we eliminated underground parking in favor of a smaller, 1000-space above-grade parking structure. The traffic study commissioned by the District and completed by Parsons Brinckerhoff found that a number of comparable hospitals in urban areas, including the George Washington Hospital facility in DC, have 1000 parking spaces or fewer.
|Hospital Name||George Washington University Hospital||Howard University Hospital||California Pacific Medical Center - Davis Campus||Maryland General Hospital||Northwest Hospital & Medical Center||Proposed NCMC|
|Location||Washington, DC||Washington, DC||San Francisco, CA||Baltimore, MD||Seattle, WA||Washington, DC|
|Parking structures (occupants)||1 (patients/ visitors/ students/staff)||2 (staff)||1 (all)||2 (patients/ visitors)||1 (all)||1 (all)|
|Surface Lots||0||4 (visitors/staff)||0||0||7 (6 staff, 1 patients)||0|
|Nearest rail station (blocks)||0||2||N/A||2||N/A||1|
|Bus lines servicing facility||10||7||3||8||1||6|
|Transit share (employees, %)||Unknown||Unknown||19||Unknown||8||N/A|
|Carpooling/ Vanpooling share (employees, %)||Unknown||Unknown||19||Unknown||20||N/A|
Given NCMC’s location near a metro station and six major bus routes, it is expected that most employees will take public transportation. It is also expected that many patients, especially the elderly, will arrive via medical vanpool transportation. In order to mitigate potential traffic impacts of the hospital, it is necessary to control the number of parking spaces and encourage public transportation. In addition, the construction of a surface garage, likely located immediately to the East of the NCMC across the Hill-East River Road, will eliminate traffic issues that would have been caused by an underground parking garage with an entrance on Independence Avenue. Queuing along Independence Avenue would have disrupted commuter traffic. The City Administrator’s Office has requested the use of 525,000 square feet of Sports and Entertainment Commission land immediately adjacent to the NCMC site for the purposes of building a parking garage (see letter in Appendix B). The replacement of underground parking with a surface lot and the reduction of the number of parking spaces from 1500 to 1000 reduced the total cost of the NCMC, including soft costs, by $33,450,000.
Second, we reduced the hospital square footage per bed. The original estimated size of the NCMC was 3100 square feet per bed for a total of 775,000 square feet, including atrium and retail space. As the team looked at comparable facilities built in the U.S. in recent years, we realized that this figure was higher than average. Very few new academic medical centers have been built from scratch in the US in the past decade. The following are the most relevant comparables identified by the team:
|National Capital Medical Center - Original design||Washington DC||250||775,000||3,100|
|UCLA- Westwood Campus||Los Angeles, CA||525||1,200,000||2,286|
|Arrowhead Regional Medical Center||Colton, CA||383||920,000||2,402|
|Cook County Hospital||Chicago, IL||464||1,300,000||2,802|
|Unidentified Case Study||Unidentified||560||1,310,000||2,339|
We found that the average square foot per bed of the identified teaching hospital projects was roughly 2400. As a result, the team decided to reduce the square footage per bed of the NCMC. By eliminating the atrium and retail space, we were able to bring square feet per bed down to 2800. We then further reduced the size of the hospital facility by imposing an additional cap on square footage, down to 2400 square feet per bed, or a total of 600,000 square feet. This cap will essentially function as a budget for the hospital, by necessitating a final design that meets the size constraint. We feel that this size is attainable, given the comparables. The total cost savings from elimination of atrium and retail space and reduction of square feet per bed to the 2400 benchmark was $69,552,875, including soft costs.
Third, we subtracted out the costs that will be borne wholly by Howard University. Of the total cost of the Medical Center, the District and Howard have agreed that the shared costs will include the hospital, the parking structure, and “soft costs” of the hospital and parking, such as architectural and engineering fees, furnishings, medical equipment, and administration. Howard University has agreed to separately fund the medical office and research portions of the medical center.
Finally, we made a small technical adjustment to subtract a portion of the streetscape and city park costs added by the cost estimators, which are already reflected in the Anacostia Waterfront Corporation’s site preparation budget (see chapter VI).
A summary of the major cost reductions due to design changes is as follows:
|Square Footage reduction**||$ 52,381,875|
|Total Reductions||$ 103,002,875|
* Smaller (1000 space) surface garage to replace underground parking
** To be eliminated
The total shared project costs of the NCMC, including the above adjustments, are expected to be $381,936,000. This estimate reflects expected inflation through 2007, the year that the construction contract will likely be bid. Each party has agreed to contribute 50% of this amount, or $190,968,000 each. In addition, each party will set aside $10,600,000 as a 10% design contingency. The District will contribute all or a portion of the contingency only if the total shared project costs are more than $381,936,000 and Howard University contributes an equal sum of contingency funds. The comparison of the original cost estimate and the revised cost estimate is as follows:
|Design Element||Original Assumption||Unit Cost||Original Estimate||New Assumption||Revised Estimate|
|250-Bed Hospital||705,000 SF||$325/SF||$ 229,125,000||600,000 SF||$195,000,000|
|Parking Garage||1500 cars underground||$30,000/Car||$ 45,000,000||
1000 car surface
|Retail Shell Space||40,000 SF||$160/SF||$ 6,400,000||eliminated||$|
|Atrium||30,000 SF||$300/SF||$ 9,000,000||eliminated||$|
|Streetscape Allowance||14 Acres||$ 2,000,000||$ 2,000,000|
|TOTAL - Construction Cost:||$ 291,525,000||$ 212,000,000|
|Architecture/Engineering||10%||$ 29,152,500||$ 21,200,000|
|Hospital Equipment||35%||$ 80,193,750||$ 68,250,000|
|Furniture Fixtures & Equip||7%||$ 16,038,750||$ 13,650,000|
|Owner Administration||1.5%||$ 4,372,875||$ 3,180,000|
|TOTAL - Soft Costs:||$ 129,757,875||$106,280,000|
|PROJECT TOTAL IN 2005 DOLLARS*||$ 421,282,875||$ 318,280,000|
|INFLATION TO 2007||20%||$ 84,256,575||$ 63,656,000|
|PROJECT TOTAL IN 2007 DOLLARS*||$ 505,539,450||$ 381,936,000|
|DISTRICT SHARE OF PROJECT COSTS (50%)||$ 252,769,725||$ 190,968,000|
|CONTINGENCY||10%||$ 29,152,500||$ 21,200,000|
|DISTRICT SHARE OF CONTINGENCY (50%)||$ 14,576,250||$ 10,600,000|
|MAXIMUM TOTAL DISTRICT CONTRIBUTION||$ 267,345,975||$ 201,568,000|
Source: Consensus Cost Estimate was developed by Turner/Tompkins and BE&K based on the preliminary plans and space program developed by Marshal Erdman/Perkins & Will.
The NCMC project is expected to take roughly five and one half years to complete. The preparation of the site for the construction of the hospital, including demolition of existing buildings, environmental remediation and grading, is expected to begin early in 2006, with the site completed and ready to turn over to Howard University in 18 months by June of 2007. During that same 18-month period, the University will complete all architectural and engineering work and secure financing for its portion of the project costs. Construction is expected to begin in January 2008 and be completed by July of 2010. A Medical Office Building, housing physicians of all specialties is expected to be completed as much as a year prior to the full hospital. The detailed project schedule is included in Appendix C.
The District has agreed to pay for 50% of the capital project costs of the National Capital Medical Center (NCMC), excluding the cost of the medical office building and research facilities. This projected cost, developed by the District’s team of cost estimators, adjusted to account for expected inflation by the time the facility construction is bid in 2007, is $381,936,000. The District’s 50% contribution comes to $190,968,000. The District will also agree to contribute a contingency of up to 10% of the District share if the total budget of the NCMC rises above $381,936,000 and Howard University contributes a contingency equal to the District’s.
The District is interested in pursuing financing options for the NCMC that would either obviate or minimize District debt financing of this project. Three sources of funding have been identified for the District’s portion of the project costs:
As indicated above, it would be preferable to avoid or minimize debt financing for this project; however, the District would have the option to utilize debt financing for NCMC to the extent that the options indicated above are not utilized or do not produce funds sufficient to cover the entire cost.
Howard intends to use tax-exempt revenue bonds to finance its portion of the NCMC. The bonds will be issued through a governmental conduit of the District used by other District nonprofit organizations for similar financings in order to qualify for tax-exempt status.
The NCMC’s obligation to repay the bonds will be secured by hospital revenues and a debt-service reserve fund funded from bond proceeds and equal to one year's debt service payment. In order to access the tax-exempt bond market with a security that will be attractive to investors and provide the lowest possible interest cost, NCMC intends to apply for mortgage insurance from the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development under Section 242 of the National Housing Act. The FHA mortgage insurance will provide credit enhancement for the bonds that will result in bond ratings in the highest rating categories.
In reviewing an application for mortgage insurance, FHA will conduct an evaluation of the project. FHA will issue a commitment to insure a mortgage note under which NCMC will grant FHA a first mortgage lien on the hospital and its revenues and related equipment. Under the FHA program, NCMC will be required to meet certain FHA construction requirements and execute a regulatory agreement containing certain FHA requirements with respect to the operations of the hospital.
The Anacostia Waterfront Corporation (AWC) was established as the entity charged with the responsibility of revitalizing the Anacostia waterfront. Over the next five years, AWC will facilitate the construction of more than 3 million square feet of new office space, more than 4,500 units of new housing, 32 acres of new public parkland, and a 20mile riverwalk along both sides of the river. For the NCMC project, AWC’s primary responsibility will be to prepare the proposed development site for building construction and to construct the surrounding public infrastructure. Site preparation activities include demolishing existing buildings, abandoning and removing underground utilities, remediating any soil contamination as well as completing preliminary grading. The construction of public infrastructure will include final site grading, and construction of utilities, streets, sidewalks and public parks.
AWC’s role with respect to the NCMC project is limited to the preparation of the Reservation 13 project site for NCMC construction. AWC will coordinate site infrastructure improvements to the Reservation 13 site with improvements to the surrounding street and transportation network to ensure the Council-adopted Reservation 13 Small Area Plan is implemented. The off-site transportation improvements that will be necessary to facilitate access to the hospital and other new developments on Reservation 13 will be the responsibility of the District Department of Transportation (DDOT).
Prior to the proposal to construct the NCMC, the AWC was engaged in the necessary site assessment activities required for site redevelopment. The following represents the due diligence completed by AWC regarding site redevelopment:
In addition, the District Department of Transportation (DDOT) has completed a traffic study to better understand the traffic impacts to the surrounding community and the regional network. The major findings of that study suggest that it will be necessary to make the following off-site arrangements:
Source: Parsons Brinckerhoff
In addition, the DDOT traffic study suggests the following on-site improvements to facilitate access to the site:
Source: Parsons Brinkerhoff
A second phase of Environmental Assessment and Remediation Strategy will need to be completed in order to finish the site development component of the project. The completion of this assessment will determine the nature and amount of soil contamination, remediation strategy, and the overall costs associated with these activities. These costs have not been estimated to date and are not represented in the overall project budget, due to the fact that they are unknown.
The AWC has estimated the site infrastructure improvements directly related to the NCMC project to be as follows:
|Hazardous Material Removal||$5*|
|New Street Construction||$5.5|
|Metro Streetscape Improvements||$1|
|Hill East Park||$5|
|Project Contingency and Soft costs||$9|
Of this amount, the Council has already appropriated $9M in the FY2005 and FY2005 Supplement Budget Acts for Reservation 13 site infrastructure. This $9M dollar amount represents a significant first step towards the site preparation activities.
The AWC has estimated the total public infrastructure improvements related to the buildout of the entire Reservation 13 site to be an additional $48.1 million for a total Reservation 13 site infrastructure investment of $80.1 million. This figure represents site preparation and public infrastructure investments listed in the above categories for the entire 67-acre site, including the extension of Massachusetts Avenue SE from the existing neighborhood to the parklands along the Anacostia River. This figure does not include the unknown soil remediation costs, nor does it include any additional public parking investments the District may or may not chose to pursue.
In addition to on-site infrastructure improvements, DDOT has estimated transportation improvements to the surrounding street network which would facilitate access to the NCMC hospital. These improvements are estimated as follows:
|Barney Circle Improvements||$21.3|
|Hilleast Waterfront Park Road||$4.8|
|Pennsylvania/Potomac Ave. Intersection||$2.6|
|Total Street Improvements||$28.7|
|Subtotal - NCMC Site Preparation*||$32|
|Subtotal - Other Reservation 13 Site Preparation||$48.1|
|Subtotal - Street Improvements||$28.7|
|TOTAL AREA-WIDE INFRASTRUCTURE COSTS||$108.8|
*This figure does not account for the unknown soil contamination on the proposed hospital site.
Sources: Site infrastructure estimate based on Reservation 13 Infrastructure Cost Estimate prepared by EEK Architects and G&O Consulting Engineers with professional quality assurance review by Accucost Inc. Estimate based on Reservation 13 Concept Grading and Infrastructure Layout prepared by G&O and Reservation 13 Phase I Environmental Analysis prepared by G&O. All materials prepared in 2004 for the District of Columbia, Office of Planning – Anacostia Waterfront Initiative. Traffic study completed in 2005 for District Department of Transportation by Parsons-Brinckerhoff. Roadway costs are from the Middle Anacostia Crossings Study, District DOT 2005
To prepare the NCMC site for medical center construction, the District has developed the following timeline. A number of key milestones have been identified as “critical path actions” necessary to complete prior to construction. Other milestones can be completed concurrent to NCMC construction.
SITE PREPARATION AND INFRASTRUCTURE SCHEDULE
Critical Path Actions Necessary to Prepare the Site for Construction
|Appropriation of Demolition Funds ($9 of $12m)||Summer 2005|
|Funds Become Available (MOU and Transfer)||December 2005|
|Procurement of Civil Consulting Services||November 2005|
|Consultant Selected / AWC Board Approval||December 2005|
|Completion of Phase II Environmental Report||February 2006|
|Remediation/Demolition Design Complete||March 2006|
|AWC Board Approval of Demolition Contract||May 2006|
|Relocation of all Uses from Affected Buildings||May 2006|
|Remediation/Demolition Ground Breaking||June 2006|
|Site Prepared for Howard University||June 2007|
|Actions That Can Be Completed Concurrent to NCMC Construction|
|Funding of Grading, Street and Park Funds ($20M)||TBD|
|Procurement and Design||8 months|
|Construction of Grading, Streets and Parks||12-18 months|
The Master Plan for Reservation 13 was approved by the Council on October 15, 2002 and identified four distinct districts on the property that are different in character and use and serve different needs. One of the districts, the Independence Avenue District, is identified for a mix of Citywide Uses and Services, Health Services, Recreation, and Education. The Plan states that “. . . Sites in this area are also large enough to support the construction of a new hospital, should future need or funding for one be demonstrated.” As part of its adoption of the Master Plan, the Council recommended that an area on the property be reserved for a hospital. The location of the National Capital Medical Center (NCMC) on Blocks B and C is consistent with these recommendations.
Although the D.C. General Hospital was located on Reservation 13, the property was federally owned and was not assigned a zoning category. Therefore, in order to implement the recommendations of the Master Plan, the property must be zoned.
The Office of Planning has recommended the creation of a new Hill East Zone District through the use of form-based coding that will be applicable to all developments on Reservation 13. Form-based coding is a design-oriented format with a Regulating Plan that indicates the desired building forms.
The proposal for the Hill East District was submitted to the District of Columbia Zoning Commission at a public meeting on February 27, 2004 and the Commission voted to proceed towards a public hearing (setdown the proposal). This action by the Zoning Commission vested the proposed zoning, and all proposals will be subject to its recommendations. The proposed zoning text allows hospital use on Blocks A, B, and C, consistent with the recommendations of the Master Plan.
The proposed zoning text states that all projects within the Hill East District shall be considered contested cases and proposed developments must demonstrate how they conform to the Reservation 13 Master Plan and the Hill East Design Guidelines. NCMC will be required to submit a Planned Unit Development (PUD) application to the Zoning Commission for review. The timeframe for PUD review is approximately twelve (12) months.
The following is an outline of the Planned Unit Development approval process:
Applicant issues “Notice of Intent to File” 10 days
prior to filing application
Application filed at Office of Zoning
Office of Zoning notifies ANC and refers application to Office of Planning (OP) and other City agencies
Setdown Report: OP makes recommendations to Zoning Commission on whether to schedule public hearing
Applicant gives presentation to ANC and possibly other interested groups
Applicant files “prehearing statement” and Office of Zoning schedules public hearing – typically about 60 after prehearing statement filed
OP coordinates information from other city agencies, such as DDOT, DPW, Police, Fire, Parks
OP works with applicant, ANC and other neighborhood groups to resolve any outstanding issues
ANC makes recommendation to Zoning Commission regarding project
OP issues final report and recommendation to Zoning Commission at hearing
Public Hearing held at Zoning Commission
Proposed Action typically at next regular meeting –
published in DC Register and written comment received for 30 days after publication
Proposed Action Referred to NCPC for 30 day comment period – public comment also taken
Final Action taken at next regular meeting and becomes effective 10 days after final action
The Certificate of Need (CON) process is a mechanism used by state governments based on the theory that it will control the costs of health care by regulating the supply. In 1974, the Federal government imposed the National Health Planning and Resources Development Act, which mandated Certificate of Need programs and provided that certain federal funds were contingent on a state’s establishment of CON. The climate at the time was one of skyrocketing health care costs, and Congress enacted this law as an attempt to reduce national costs. The National Health Act was repealed in 1986 because lawmakers found that this mechanism failed to effectively control costs.1
Since that time many states have reduced or completely eliminated their CON programs. The following 14 states do not have a CON process at all: Arizona, California, Colorado, Idaho, Indiana, Kansas, Minnesota, New Mexico, North Dakota, Pennsylvania, South Dakota, Texas, Utah, and Wyoming. Four states have limited the CON process to no more than two services. An additional eight states (Missouri, Oklahoma, Arkansas, Wisconsin, Oregon, Ohio, Nebraska, and Louisiana) do not mandate CON for acute care or ambulatory surgical centers.2 The Federal Trade Commission and Department of Justice issued a report in July 2004, based on a series of 27 hearings and workshops with experts, which recommended that states reconsider their CON process on the basis that it does not control health care costs and is used by market incumbents to create barriers to competition.3 The American Medical Association also took an official stance in December 2004, encouraging states to limit the use of the CON process.
By law, health facilities in the District must apply for and receive a CON prior to commencing any new construction project and/or providing new services. However, the Council may through legislation exempt a health facility from the CON process, and there is precedent for such an exemption. An exemption was granted in September 2000 for the closure of DC General and the transfer of some of its services to Greater Southeast Hospital. In addition, an exemption was granted when Doctors Community acquired Greater Southeast Community Hospital in December 1999.
The City Administrator’s Office is recommending that the National Capital Medical Center legislation seek a legislative exemption from the CON process for the construction of the new NCMC and for any transfer of services from Howard University Hospital to the NCMC, so long as total operating beds of the two hospitals do not exceed Howard University Hospital's current license of 482 beds. The proposed legislation is included in Appendix D.
The rationale for this exemption is that the NCMC is not a typical CON project. By the time this project makes it through the Council process it will have already undergone much more scrutiny than would occur in a typical CON process, with at least four public hearings, multiple public analyses, and at least three Council votes. Multiple interest groups will have commented and issued their own opinions on the numerous analyses already presented by the District and Howard University. Moreover, the CON process itself is a multi-stage process involving multiple appeals that could take as long as five years. Even if passed by a Council majority and signed by the Mayor, the NCMC project could easily be stalled by the CON process. In addition, the CON process would add an additional $300,000 to the budget.4
The CON process is as follows:
The Certificate of Need process requires that each facility or service meet the following criteria, published by SHPDA:
The need for services addresses the adequacy of health care services that are currently available and the type, amounts and levels of service that should be available to meet the aggregate need. In determining the need for services, the State Health Planning and Development Agency (SHPDA) asks questions such as the basis for the need to establish new or expanded services, the reasons why the need cannot be met by existing providers, and whether the proposed services will be able to meet the demonstrated need for services.
Accessibility is the measure of an individual’s or group’s ability to obtain needed services. It addresses factors that either enhance or inhibit a patient’s ability to get to where the services are located and to receive timely and appropriate services. It is associated with such issues as hours of operation, location, distance, environmental or physical barriers, and financial accessibility (affordability). It also addresses the need that residents should be able to received services regardless of sex, race, color sexual orientation, socio-economic statues, cultural background, method of payment or ability to pay.
The quality criteria and standards deal with the level of excellence of the proposed services. The measures include the qualifications of staff, the existence and extent of quality control mechanisms, the appropriateness of services, the documentation of treatment provided, the ability to meet recognized standards of care, and the ability to keep pace with advancements in health care knowledge and techniques.
Acceptability is a measure of the degree to which patients may be satisfied with the services they receive. Issues addressed include operating policies, personnel capabilities, involvement of the community in the planning and development of the proposed project, and the physical and environmental condition of the facility. It also deals with such issues as the patient bill of rights, grievance procedures, and procedures for the explanation of problems and treatments that follow.
Acceptability also deals with the level of community involvement and participation in the preparation and development of the proposed project, and the adequacy of the public notice that the applicant provided to the affected ANC. This is important not only because it enables the community to know what services are being established in their neighborhood but also provides them a forum to be involved in the decision making process.
The criteria and standards for continuity of care deal with issues regarding patient and medical information transfer, follow-up procedures, patient care plans, and maintenance of medical records. Applicants are required to establish transfer agreements between providers of primary, secondary and tertiary levels of care as well as between different services providers with the same level of care. Applicants are also encouraged to establish services with other social service delivery systems in the community in order to ensure that patients receive the range of services that they require. Continuity of care measures the ease with which patients are moved into various levels of care and the degree to which the referral system is integrated.
The issues addressed here include the financial ability of the applicant to establish and operate the services and the long-term financial viability of the proposed project. In other words, does the applicant have the resources to cover any proposed capital expenditures or any deficits, and will the facility be able to generate more revenues than expenses?
In addition, the CON law and regulations require health care providers to provide uncompensated care to needy patients in an amount at least equal to three (3%) percent of the CON holder’s operating cost. CON applicants are required to certify that they will meet the requirements.
The following is a brief summary of how the NCMC meets the CON criteria:
The need for the hospital has been evidenced by the unequal distribution of hospital beds on the eastern side of the District (detailed in July NCMC Proposal). Currently, there is only one hospital on the east side of the District to serve the most densely populated neighborhoods in the District. These neighborhoods are underserved and have the highest concentration of families living below 200% of the Federal Poverty Level, children under 18, and adults suffering from chronic conditions. A disproportionate number of emergency calls originate from the neighborhoods that will be served by the NCMC. The NCMC will ensure a more appropriate distribution on medical resources by adding services for residents on the east side of Washington, DC.
The NCMC will be situated to meet the needs of the currently underserved and will better distribute District hospital services geographically. The NCMC will add a Level 1 Trauma Center on the east side of the District, so patients will no longer have to be transported across town to receive the most acute emergency services. The proposed location on Reservation 13, adjacent to major freeways and bridges, is praised by District EMS officials as one of the most accessible sites for ambulances. In addition, the NCMC will be several blocks from a metro station and is served by six metro bus lines. NCMC and its faculty physicians will build on Howard University Hospital’s record and welcome Medicaid, Alliance, and uninsured patients.
The NCMC will be an all digital hospital with state-of-the-art medical equipment, patient safety and clinical information systems. This academic teaching facility will be the home to distinguished Howard University faculty physicians with expertise in a number of specialty areas. There will be a research center on aging, clinical information systems, and nursing.
NCMC will serve as a major hub in an integrated system of care to provide residents with access to primary, preventive, specialty, and inpatient care. NCMC will work closely with the Medical Homes Initiative to ensure strong relationships and appropriate referral mechanisms between the NCMC and nearby community health centers. NCMC will work closely with District electronic medical record initiatives to ensure HIPAAcompliant exchange of patient health data.
Overall, the NCMC will meet many of the needs of the community by strengthening public access to health care. A medical office building will house community physicians so that patients may be seen by a doctor that they are familiar with. The NCMC will boost the economy of the surrounding neighborhood. The hospital will spur economic development, with at least 500 new jobs on the east side of the District, and jobs will also be created through the construction of the hospital itself. The NCMC will be equipped to serve the District in the event of a disaster, and it will be located apart from many of the District’s other major hospitals in the event that all hospitals in one part of the city are incapacitated or inaccessible.
The District of Columbia and Howard University will each provide 50% of the funds to construct the hospital. Based on projections from Howard’s financial reports, the NCMC is expected to have a positive operating margin after several years of ramp-up. Howard University has agreed to provide working capital to cover the expected losses in the first several years of operation. (See July 2005 NCMC proposal for operating financial statements.)
The Council-adopted Hill East/Reservation 13 Small Area Plan calls for the consolidation of healthcare uses on the site into better planned and more functional buildings that more efficiently utilize the land on Reservation 13. The redevelopment of the site will result in the demolition of most of the existing buildings on the campus, most of which are in substandard or neglected condition. A number of the buildings house key District public health services, though most of these facilities are in need of major renovation or relocation. This provides the opportunity to modernize the District’s public health facilities to improve delivery of services. In addition, it provides new redevelopment opportunities, which allow for a new mixed-use neighborhood to emerge on Reservation 13. The City Administrator’s office, working with the Office of Property Management and Anacostia Waterfront Corporation, has developed a strategy to address these existing public health services:
The Office of the Chief Medical Examiner (morgue) will be combined with the Consolidated District Laboratory project. This new state-of-the-art laboratory will colocate the District’s public health, environmental, and forensic/criminal labs. The public health labs will have Bio-Level III capabilities for emergency preparedness, meaning that if any suspicious substance is discovered in the District, the lab personnel and lab physical facilities will be capable of safely evaluating the substance. The entire Consolidated Laboratory will be relocated away from Reservation 13. The District is considering several sites for the project.
A second set of health services will be relocated to a new District-government facility proposed to be on “Site L” of the Reservation 13 site plan, which is immediately in front of the existing jail building along the southern side of the extension of Massachusetts Avenue. This location is consistent with the Hill East Master Plan, which allows residential, health services, civic buildings, municipal offices, as well as correctional facilities along the Massachusetts Avenue corridor. It also meets the wishes of many community members that participated in the Hill East planning process, who preferred to locate government and institutional uses South of Massachusetts Avenue, on a site that mitigates the negative architectural impact of the jail facilities on the surrounding neighborhood.
This new building will house the Sexually Transmitted Disease and Tuberculosis Clinic, and key substance abuse and detox facilities (including the women’s methadone clinic), managed by the Department of Health. The size of the STD and TB clinics is estimated at 38,000 square feet and the substance abuse facilities at 60,000 square feet. There are no plans to transfer any additional public health services that do not already exist on the current site. The new facility will provide a setting more conducive to the provision of care. We estimate that these public health services will take up to about 98,000 square feet of space.
The total potential build-out of “Site L” is larger than the needed space for public health services. AWC has estimated a total development potential of up to 325,000 gross square feet, based upon the assumed size of the parcel being approximately 46,000 square feet and assuming a building design with seven floors in height. Because leases for approximately 1 million square feet of District government office space are expiring between now and 2008, there is an opportunity to relocate a number of government offices to a more cost-effective location. It is anticipated that District government office space, perhaps the Department of Health or the Department of Corrections, could be relocated to Site L, in addition to the public health services.
A likely project development scenario would be for the District’s Office of Property Management to enter into a lease with the AWC for this building. The AWC could utilize the lease agreement with the District to privately finance the building construction through private developer procurement. Given the intention to redevelop other adjacent parcels on the Reservation 13 site, the AWC might also be able to leverage this development action in concert with other office and residential development on the Reservation 13 site. The AWC, as sub-lessor, would sub-lease the land to a third party for the purpose of financing and constructing a municipal building. It is estimated that a 325,000 square foot municipal building would cost approximately $93 million. The District will agree to enter into a long-term lease for the entire building in order to provide security for the financing. The building lease will be structured in such a way that the District will own the building at the end of the lease term. The land lease will be structured in such a way that it will terminate when the District owns the building.
RESERVATION 13 MASTER PLAN
In addition, an urgent care clinic and a set of ambulatory care (specialty) clinics are currently operated on the Reservation 13 site by Greater Southeast Community Hospital as a provision of the DC Healthcare Alliance contract. Similar services will eventually be provided on the site by the new National Capital Medical Center and its adjoining medical office building. The District is currently undertaking an analysis of the cost and utilization of the existing clinics. The District is also holding discussions with Greater Southeast about how to continue these services on a different site once the Alliance contract expires and once the current facility must be demolished to make way for construction of the NCMC. The services may transition to a location on the east side of the Anacostia River. The District has agreed to sign a Memorandum of Understanding (MOU) with Greater Southeast Community Hospital to work on the master plan of their campus in Ward 8. Consistent with that MOU, the District will explore the option of locating some public health services on that site (See Chapter X and Appendix E).
In addition, Reservation 13 currently houses the District’s mental health crisis unit (CPEP), which evaluates patients thought to have mental illness to determine the most appropriate treatment setting. This facility will eventually be housed within the NCMC, adjacent to its emergency department, since many mentally ill patients must also be physically evaluated. The District is still working to identify an interim home for CPEP while the NCMC is constructed.
Greater Southeast Community Hospital experienced financial challenges over the past several years prior to any discussion of the NCMC, though it was once a thriving institution, even when both DC General and Capital Hill Hospital were in existence as competitors. Under the leadership of Joan Phillips, Greater Southeast has been able to regain its accreditation and significantly improve operations. The Administration has been assured that the facility now has a positive operating margin and is in no danger of shuttering.
In July, District officials met with the ownership of Greater Southeast and agreed to participate in the hospital’s campus master planning process. The District and Greater Southeast agreed to sign a Memorandum of Understanding (MOU), which states that the District will work cooperatively on the campus master planning effort. Under the terms of this MOU, the District and Greater Southeast will exchange information and data on the planning for the National Capital Medical Center and Greater Southeast’s strategic facility planning in order to avoid duplication of effort in addressing the healthcare needs of the community on the east side of the District. In addition, the District and Greater Southeast will coordinate planning for the opening of the National Capital Medical Center to provide adequate time for Greater Southeast to mitigate any impact of the NCMC on its programs and services. Finally, the District and Greater Southeast will explore opportunities to pursue public/private partnerships to provide public health services on the campus of Greater Southeast. (See Appendix E for draft MOU)
The Mayor is committed to working closely with Greater Southeast, its patients, and its employees. The District is in close communication with the leadership of Greater Southeast about issues such as the Alliance contract and the Corrections contract. The MOU establishes a Joint Planning Committee to review and coordinate plans for each facility to ensure that the health care needs of the community are met.
A positive side-effect of the National Capital Medical Center proposal is that it has raised awareness and concern about the high rates of chronic illness in the District of Columbia. Both supporters and critics of the hospital have pointed out that there is a significant need to expand access to primary care, especially in underserved areas. Currently, many neighborhoods in the District have a shortage of primary care providers. This lack of local private physicians and community health centers contributes to lower health status in the District because residents do not have adequate access to routine preventive services and care for their chronic conditions. As a result, they are more likely to delay medical care until they experience an emergency. This leads to worse health outcomes and higher costs for the District and Federal governments, which pay for the health coverage of roughly one-third of District residents. The Administration strongly supports the goals of expanding access to primary care in underserved areas and of improving the clinical quality of the primary care safety net.
The Medical Homes DC initiative was first proposed to the Mayor in late 2003 by the DC Primary Care Association (DCPCA) and the Brookings Institution. The Mayor embraced the Medical Homes proposal and committed $21 million to the effort. Since then, the District has been working closely with DCPCA and its partners to design and implement the initiative.
A Medical Home is a primary care community health center serving lower income people at which a patient’s health history is known, where he or she will be seen regardless of ability to pay, and where he or she routinely seeks non-emergency care. The goal of Medical Homes is to invest in the physical, clinical, and management infrastructure of the District’s nonprofit community health care centers so they can offer more high quality primary care, such as regular preventive check-ups and care for chronic conditions like diabetes and high blood pressure. The Medical Homes DC initiative offers grants to nonprofit community health providers to build new health centers or renovate existing facilities. In addition, Medical Homes has just started to offer significant training and technical assistance to health centers throughout the District to help them improve their clinical quality and management systems. District-based community health centers that meet key quality and management criteria will become “Certified Medical Homes”, a designation that will assure patients of high quality care, and may eventually be tied to higher reimbursements from District government health coverage programs.
According to the District’s grant agreement with DCPCA, the District has provided $1 million in FY05 capital dollars and will provide $7 million in FY06 and another $7 million in FY07. DCPCA has agreed to raise at least 50% matching dollars for this project from private sources. To date the Medical Homes initiative has experienced significant fundraising success with local foundations and is now seeking the support of national foundations. In addition to the capital contribution, the FY06 budget includes another $1.8 million grant to DCPCA to cover the operating costs of the program, specifically many of the technical assistance activities that will improve the quality of care delivered at DC health centers.
In October, the Mayor announced the first nine Medical Homes capital projects, which were chosen through a grant process managed by DCPCA. Nine grants were awarded to seven different community health centers for sites in Wards 1, 4, 5, 6, 7, and 8. The recipients of these grants are, as follows:
Most of these projects received relatively small preconstruction grants to plan for new facilities and renovation. Once all planning milestones have been met, these projects will be eligible for additional funding for construction. DCPCA will hold a second grant application process in Spring of 2006, and will accept applications for new projects. Within the next several years, District residents will begin to see new primary care clinics opening in their neighborhoods as a result of the Medical Homes initiative.
Questions have been raised about how the National Capital Medical Center will serve the uninsured population in DC and whether a significant number of uninsured patients will jeopardize its financial viability. We believe that the National Capital Medical Center, like most hospitals in the District, will be well-compensated for most patients that it sees, with few uncompensated patients. And we intent to propose legislation that will further reduce the number of uninsured patients in DC.
The District has made a stronger commitment than any other jurisdiction in this country to provide health coverage for its residents. The DC Medicaid program offers coverage to all Medicaid-eligible residents (children, parents, elderly, and disabled) up to 200% of the federal poverty level. In addition, the District offers coverage through the DC Alliance program to childless adults and undocumented residents under 200% of the federal poverty level. As a result, all DC residents under 200% of poverty are eligible for comprehensive health coverage.
We have made an attempt to determine exactly how many uninsured residents reside in DC. While there are no perfect data sources, the best available data comes from a recent study by the Urban Institute (UI), which was completed as part of the District’s State Planning Grant for Coverage of the Uninsured. This study was based on federal government Current Population Survey data. In order to get enough data to achieve statistical significance, UI combined three years of data, from 2001-2003.
The study found that approximately 73,714 residents of the District of Columbia did not have health insurance over the years of 2001 to 2003. Of this total, 68% (50,026 people) had incomes between 0% and 200% of poverty. It is important to note that the study time period spans the initial start-up of the Alliance program, which began operation in 2001. The population of the Alliance program has grown significantly over the past few years, so this study likely overstates the number of uninsured below 200% of poverty.
Under the Medicaid and Alliance programs, no resident of the District of Columbia with an income under 200% of poverty should be without coverage. In practice, we know that some individuals within this income bracket do not proactively enroll in coverage programs. However, many of them actually become enrolled when they seek care in a District hospital or community health center. The management of those facilities has a very strong incentive to see that eligible patients enroll, so the facility can be paid for their services. As a result, most eligible uninsured individuals become enrolled at the time of service, ensuring payment for the healthcare provider. Thus, we can conclude that the National Capital Medical Center, like other hospitals in the District, will receive reimbursement for most patients who are DC residents with incomes below 200% of poverty.
The UI study also found that 14,455 District residents, about 2.5% of the total District population, are between 200% and 400% of poverty and uninsured. When these uninsured individuals seek care in District hospitals, they are frequently sent large medical bills, which they find very difficult to cover. As a result, health facilities frequently do not receive payment for those services. The District, through the federal Medicaid Disproportionate Share Hospital program (DSH), compensates hospitals for uninsured patients. Each DSH hospital receives a lump sum payment every year based on its reported uncompensated care costs. The District makes roughly $35M in DSH payments to District hospitals annually.
In addition, the study found 9,243 uninsured District residents over 400% of poverty. This category includes individuals who could likely afford health insurance, but have chosen not to purchase it for various reasons. Individuals in this category are likely to be disproportionately young and healthy, so they are unlikely to contribute significantly to hospital uncompensated care costs.
This Administration has a goal of continuing to expand health coverage in the District. Now that we offer coverage to all residents under 200% of poverty, we can address those who are between 200% and 400%. This population, though relatively small, is of concern because individuals in this income category probably earn too little to easily afford health insurance. In the next few years, our goal is to expand coverage for those who are 200-400% FPL, and this Fall the Mayor will propose legislation that will raise the funds to subsidize the health premiums of individuals in this category. The proposed legislation will increasing the gross premium tax on CareFirst Blue Cross Blue Shield up to 1.7%, the same level as other health insurers that operate in the District (See Appendix F for legislative language). This will generate roughly $5M in new revenues annually, and this amount will increase as health premiums rise over the years. Additionally, the District may be able to leverage additional federal dollars through the Medicaid program, potentially brining the total new revenues available for health coverage to $15M annually.
The District could implement various different programs to provide coverage to moderate income individuals. The Administration supports the expansion of free coverage to children up to 400% of poverty. In addition, we are evaluating different alternatives for subsidizing health coverage for adults in the 200% to 400% FPL income category. For example, we could allow residents with moderate incomes to buy into Medicaid or the Alliance. Alternatively, we could implement a reinsurance pool to help reduce the market price of private insurance, a successful program in New York State. Councilmember Catania has introduced such a proposal. The District’s State Planning Grant Advisory Committee on Coverage for the Uninsured will be making its recommendation by the end of the year. We look forward to the results of that committee’s work, and expect to introduce or support legislation to expand coverage in early 2006.
|Family Income as percent of FPL||Number of Uninsured||Percent of Uninsured population||Percent of District population|
The District and Howard University are working toward finalizing an Exclusive Rights Agreement (ERA), which will govern the terms of the partnership between the two parties. Appendix A includes a draft version of the ERA, which is still subject to negotiation. Appendix G includes a letter that was sent from the Mayor to the President of Howard University outlining key next steps. Once language has been finalized, and Howard University’s Board of Trustees has approved the agreement, the Mayor will introduce the ERA for Council Approval.
Any questions or comments on this supplemental document or the NCMC project in general should be directed to:
The District of Columbia
Gina M. Lagomarsino, Senior Policy Advisor
The Office of the City Administrator
Diane E. Kenney, Chief of Staff
The Office of the Senior Vice President
EXCLUSIVE RIGHTS AGREEMENT
THIS EXCLUSIVE RIGHTS AGREEMENT (“Agreement”) is made as of ____, 2005 between the District of Columbia, a municipal corporation (“District”), and Howard University, a non-profit corporation (“Howard”).
1. The District holds United States Reservation 13 (“Reservation 13”) in the District of Columbia pursuant to a Letter Transfer of Jurisdiction from the United States of America, acting through the General Services Administration, said Letter Transfer bearing date October 25, 2002, and filed of record in the Office of the Recorder of Deeds of the District of Columbia on October 30, 2002 as Instrument Number 2002125610.
2. Section 3 of the draft Master Plan for Public Reservation 13 Approval Act of 2002, effective April 11, 2003 (D.C. Law 14-300, D.C. Code § 10-1502), authorizes the construction of a hospital on a portion of Reservation 13.
3. Pursuant to the National Capital Medical Center Negotiation Emergency Resolution of 2003, Council Resolution No. 15-320, dated November 4, 2003, the Council declared the need to enter into discussions with Howard for the purpose of negotiating development of a new hospital on Reservation 13, and further declared that the District’s existing health care infrastructure is inadequate in part because of the uneven distribution of hospitals in the District.
4. The parties each believe that the development of a hospital and related facilities on a portion of Reservation 13 will result in efficiencies in, and expansion of, quality, cost-effective health care services to medically, underserved populations in the Southeast Community of the District.
5. As a result of the discussions between the District and Howard, the parties have negotiated this Exclusive Rights Agreement (“Agreement”) for the development of a hospital and related facilities on a portion of Reservation 13 identified as Sites B and C, consisting of approximately nine (9) acres (the “Property”).
Consequently, upon execution of this Agreement by Howard, the District is submitting this Agreement to the Council for its review and approval.
Now, therefore, in consideration of the foregoing premises and the mutual covenants set forth in this Agreement, the District and Howard agree as follows, intending to be legally bound:
Commencement Date: The later of October 1, 2005 or the date this Agreement is executed by the Mayor upon approval of the Council.
Council: The Council of the District of Columbia.
Development Agreement: as defined in Section 5.2
Grant Agreement: as defined in Section 5.1
Ground Lease: as defined in Section 5.3.
Improvements: as defined in Section 4.1.1.
Infrastructure Costs: as defined in Section 4.3.
Key Professionals: as defined in Section 2.1.5
Mayor: the Mayor of the District of Columbia.
National Capital Medical Center: as defined in Section 4.1.2
NCMC Hospital: as defined in Section 4.1.2.
Planning Process: as defined in Section 4.1.
Preliminary Plan: as defined in Section 4.11.
Project: as described in Section 4.1.1
Project Costs: as defined in Section 4.3.
Project Documents: the Agreement, Grant Agreement, Development agreement and Ground Lease
Project Steering Committee, as defined in Section 2.1.3
Property: as described in Recital 5
1.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the District of Columbia (without reference to conflicts of laws principles).
1.3 Captions, Numberings and Headings. Captions, numberings and headings of Articles, Sections, Schedules and Exhibits in this Agreement are for convenience of reference only and shall not be considered in the interpretation of this Agreement.
1.4 Number; Gender. Whenever required by the context, the singular shall include the plural, the neuter gender shall include the male gender and female gender, and vice versa.
1.5 Business Day. In the event that the date for performance of any obligation under this Agreement falls on other than a business day, then such obligation shall be performed on the next succeeding business day.
1.6 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which shall constitute one and the same agreement.
1.7 Severability. In the event that one or more of the provisions of this Agreement shall be held to be illegal, invalid or unenforceable, each such provision shall be deemed severable and the remaining provisions of this Agreement shall continue in full force and effect, unless this construction would operate as an undue hardship on the District or Developer or would constitute a substantial deviation from the general intent of the parties as reflected in this Agreement.
1.8 No Oral Modifications or Waivers. No modification of this Agreement shall be valid or effective unless the same is in writing and signed by the District and Howard. No purported waiver of any of the provisions of this Agreement shall be valid or effective unless the same is in writing and signed by the party against whom it is sought to be enforced.
1.9 Schedules and Exhibits. All Schedules and Exhibits referenced in this Agreement are incorporated by this reference as if fully set forth in this Agreement.
1.10 Including. The word “including,” and variations thereof, shall mean “including without limitation.”
1.11 Integration. This Agreement and the Schedule appended to this Agreement and the documents and agreements referenced in this Agreement contain the entire understanding between the District and Howard with respect to the development and disposition of the Property, and are intended to be a full integration of all prior or contemporaneous agreements, conditions, understandings or undertakings between them with respect thereto. There are no promises, agreements, conditions, undertakings, understandings, warranties or representations, whether oral, written, express or implied, between the District and Howard with respect to the development and disposition of the Property other than as are expressly set forth in this Agreement and the Schedule appended to this Agreement and the documents and agreements referenced in this Agreement.
1.12 No Construction Against Drafter. This Agreement has been negotiated and prepared by the District, Developer and Guarantors and their respective attorneys and, should any provision of this Agreement require judicial interpretation, the court interpreting or construing such provision shall not apply the rule of construction that a document is to be construed more strictly against one party.
2.1.1 Howard acknowledges that its educational and health service qualifications and experience are a material consideration to the District in entering into this Agreement. Howard agrees that it shall not assign its rights in whole or in part under this Agreement, or delegate its obligations in whole or in part under this Agreement, without the approval of the District, except as provided herein or in the Project Documents..
2.1.2 Howard acknowledges that the qualifications and experience of a project management firm to assist Howard in the development of the Property are a material consideration to the District entering into this Agreement. Prior to execution of a development agreement by the District, Howard shall provide to the District the written commitment of a project management firm selected by Howard, with the approval of the District. The District’s approval shall not be unreasonably withheld. The project management firm’s services will include assistance in (i) development of financing and operating plans., (ii) selection of Project professionals, (iii) development of architectural and engineering plans and schematic drawings, (iv) scheduling, (v) development of governing documents, (vi) development of community participation and affirmative action programs, (vi) obtaining all necessary governmental permits and licenses and (vii) management of construction.
2.1.3 Howard acknowledges that Howard’s commitment to an open and transparent process for the development of the Project is a material consideration to the District in entering into this Agreement. Howard agrees that the personnel identified on Schedule 1 shall be Howard’s representatives to a joint project steering committee with representatives appointed by the District. (“Project Steering Committee”) that will be dedicated to the Project. The personnel identified on Schedule 2 shall be the District’s representatives to the Project Steering Committee. The Project Steering Committee shall meet every thirty (30) days during all three Phases of the Project, with the first meeting to be held thirty days after the Commencement Date of this Agreement. The purposes of the Project Steering Committee will be to discuss the progress of the Project, to provide any information relevant to the Project that jay be requested by a representative of the Project Steering Committee and generally to provide an open forum for discussion of any issues relevant to the Project. Howard and the District jay from time to time substitute new representatives for the representatives identified on Schedule 1 and Schedule 2.
2.1.4 Howard acknowledges that Howard’s commitment to develop a medical office building on the Property concurrently with development of a teaching hospital is a material consideration to the District in entering into this Agreement. Howard may itself develop the medical office building, or it may sub-lease a portion of the Property to a third-party developer to develop, operate and maintain the medical office building.
2.1.5 Howard acknowledges that Howard’s commitment to utilize certain key professionals and consultants in connection with the Project is a material consideration to the District in entering into this Agreement. Howard agrees that the professionals and consultants (“Key Professionals”) shall be identified and selected prior to execution of a Development Agreement between the District and Howard.
2.1.6 Howard acknowledges and agrees that Howard shall take all measures as shall be reasonably necessary to assure that all contracts entered into by Howard with respect to each major phase of the development and construction of the NCMC hospital, including contracts for architectural, engineering, and construction services, shall provide that at least 50% of the work in the aggregate under such contracts shall be awarded to local business enterprises, local small business enterprises, or local disadvantaged business enterprises, as such terms are defined in section 2 of the Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Act of 1998, effective April 27, 1998 (D.C. Law 12-268; D.C. Official Code § 2-217.01); provided, that of the percentage of the work required by this section to be awarded to local business enterprises, local small business enterprises, or local disadvantaged business enterprises, 35% of the work shall be awarded to local small business enterprises or local disadvantaged business enterprises, as such terms are defined in section 2 of the Equal Opportunity for Local, Small, and Disadvantaged Business Enterprises Act of 1998, effective April 27, 1998 (D.C. Law 12-268; D.C. Official Code § 2-217.01); provided further, that if the 35% requirement is unattainable, Howard shall report this to the District’s Council for reconsideration. Of the percentage of the work required by this section to be awarded to local small business enterprises or local disadvantaged business enterprises, not less than 20% of the work shall be awarded to local disadvantaged business enterprises.
2.1.7 Howard acknowledges that the District’s commitment to grant possession of the Property to Howard, as provided in this Agreement, is conditioned upon the District receiving written authority to convey such possession from the United States of America, through the General Services Administration (“GSA”). The District agrees to use this best efforts to endeavor to secure such written authority from GSA. Within the Exclusivity Period (as defined in Section 3.2 below.) The District shall commence such efforts and request such authority from GSA no later than thirty (30) days after the Commencement Date.
2.1.8 Howard acknowledges that its commitment to provide space and/or management services under contract for the District at the NCMC Hospital for key public health services, if requested by the District, is a material consideration for this Agreement. Such key public health services may include the following: (i) tuberculosis clinic, (ii) sexually transmitted disease clinic, (iii) Alliance pharmacy, (iv) HIV clinic, (v) mental health and substance abuse crisis unit, (vi) involuntary acute inpatient mental health services, (vii) inpatient and outpatient secure health services for the District’s Department of Corrections, and (viii) such other key public health services that may be mutually agreed upon by Howard and the District. 2.1.9 Howard acknowledges and agrees that except for the transfer of the Ground Lease, construction and installation of the Infrastructure, and the funds to be provided under the Grant Agreement as contemplated by this Agreement, no subsidy or incentive will be required by Howard from the District in connection with its development of the Property (including performance of all obligations of Howard under the Development Agreement) and construction of Improvements. Nothing set forth in this Section 2.1.9 shall be deemed to prohibit or restrict Howard or third party developers, contractors or assigns from (i) applying for tax exempt financing in accordance with the usual rules and procedures of the District or (ii) applying for or receiving any subsidy or incentive that is generally available to be applied for as a matter-of-right for the Property and other properties in the District of Columbia that are similarly situated; or (iii) otherwise qualifying for any economic development program of the District of Columbia or the Federal government.
2.1.10 Howard agrees to move 250 of its licensed beds from Howard University Hospital to the NCMC hospital and keep the combined bed total of both the NCMC and Howard University Hospital under 482, which is the current number of beds licensed at Howard University Hospital.
2.1.11 Howard agrees to provide 100% of all working capital required prior to starting operation of NCMC hospital, 100% of all working capital to cover deficits expected in the first three years after operation of NCMC hospital and 100% working capital covering any unexpected operating deficits thereafter.
2.1.12 Howard agrees that the Level 1 Trauma Center and all associated services will be transferred from Howard University Hospital to NCMC hospital.
2.2.1 The District shall have the right to assign this Agreement to any agency or instrumentality of the District or to any other Person.
2.2.2 All rights of the District under this Agreement shall be exercised by the Mayor or by such Persons (including the City Administrator) as the Mayor may designate from time to time.
2.2.3 The District acknowledges that its commitment to develop of new building in the area known as Square L of Reservation 13 to house key public health services for the District’s residents is a material consideration to Howard entering into this Agreement.
The District acknowledges that NCMC hospital shall not be the sole healthcare provider responsible for all uninsured and/or publicly insured patients in the District. However, NCMC hospital shall be obligated to provide re proportionate share of the public health services for the underserved of the District as such obligation shall remain the shared obligation of all health care facilities in the District through the D.C. Medicaid rend Healthcare Alliance Program, as amended..
2.2.4 The District further acknowledges rend agrees that its continuance of the D.C. Medicaid rend Healthcare Alliance Program or an equivalent comprehensive health coverage program for District residents under 200% of the Federal poverty level rend not otherwise eligible for Medicaid or Medicare coverage is critical to the long-term financial solvency of NCMC Hospital rend re material consideration to Howard entering into this Agreement rend undertaking the development of the Project.
3.1 Exclusivity. The District agrees that during the Exclusivity Period, the District shall negotiate exclusively with Howard with respect to (i) the development rend construction of all Improvements rend (ii) the disposition of the Property.
3.2 Exclusivity Period. The “Exclusivity Period” shall commence on the Commencement Date rend terminate on the earliest to occur of any of the following events:
3.2.1 One hundred eighty (180) calendar days after the Commencement Date of this Agreement unless extended in writing by mutual agreement of the District rend Howard;
3.2.2 Notice from party to other party that it is terminating this Agreement at any time after an Event of Default has occurred with respect to which the declaring party has given any notice expressly required under this Agreement rend the receiving party has failed to cure such Event of Default within any cure period expressly provided for in this Agreement; rend
3.2.3 Upon the occurrence of such other events as may be specifically provided for in this Agreement.
IV. PLANNING SUBMISSIONS AND FUNDING PHASES
4.1 Development rend funding of the Project will proceed in three phases, Planning, Pre-Construction rend Construction (“Phase” or collectively, “Phases”), in that order This Agreement will govern the first Phase, the Planning Process, as hereinafter described. Howard will be responsible for all submissions in the first Phase, except as may otherwise be provided in this Agreement. All submissions in this Agreement shall be subject to District approval. The District may, but is not required, to participate with Howard in the development of the submissions described below in the Planning Process. The parties agree to use good faith efforts to endeavor to complete the first Phase within six (6) months of the Commencement Date, the second Phase within twelve (12) months of the execution of Project Documents and the last Phase within thirty (30) months of the conclusion of the pre-Construction Phase.
4.1.1 General. Within one hundred twenty (120) days of the Commencement Date of this Agreement, or such longer period as may be mutually agreed upon, Howard shall prepare for review by the District in accordance with this Article IV a preliminary plan (“Preliminary Plan”) for the development of the Property and the design and construction of the hospital and medical office building for physician offices (the “Improvements”). The goal of the Preliminary Plan shall be to reach consensus on the primary aspects the development of a state-of-the-art teaching hospital and medical office building at the Property (the “Project”) for purpose of preparing the Project Documents to be executed upon conclusion of the Planning Phase. The Preliminary Plan shall include at a minimum the following materials:
4.1.2 A description of the proposed governance for the new non-profit corporation to be incorporated by Howard including the representation that the District may have on the board of directors The new non-profit corporation will bear the name, “National Capital Medical Center” (“NCMC”). The purposes of the NCMC will be to (i) succeed to the rights of Howard under this Agreement and subsequent agreements relating to the Project, (ii) own and manage the new hospital and related facilities to be developed pursuant to this Agreement and subsequent agreements (the new hospital and related facilities collectively the “NCMC Hospital”), and (iii) coordinate programs, services, staff and funding between Howard University Hospital and the NCMC Hospital, The governance description shall include Howard’s plan for NCMC Hospital becoming the primary teaching hospital for the Howard University School of Medicine.
4.1.3 A description of Howard’s plan for engaging project management firms and other professionals and consultants to assist Howard in the successful completion of all phases of the Project, including but not limited to pre-construction planning; coordination of all design, architectural services, and engineering services, including all drawings and specifications; and development of requests for proposals for all necessary professionals and consultants. The request for proposals and selection of a project management firm and Key Professionals shall be subject to competitive bidding and such other terms and conditions as the parties agree to in the Development Agreement. It is specifically understood and agreed that Howard shall inform the District in advance of any major partnerships in development, construction and management of the NCMC.
4.1.4 A business plan for the development of the Project, including but not limited to an inventory of the construction programs and services, staffing and operating budget, a five (5) year pro forma financial statement and all other cost budgets that the District may reasonably require.
4.1.5 A detailed financing plan for securing all funds necessary for the development of the Project, including sources of funding, and working capital for covering expected deficits prior to and in the first three years of operation of NCMC hospital, and any unexpected deficits thereafter.
4.1.6 A development schedule, including dates.
4.1.7 A functional space program, including a description of the general space required by department and size, location and dimensions of (i) the hospital building, (ii) the medical office building and (iii) parking requirements.
4.1.8 A description of the required uses and programs to be undertaken by the NCMC Hospital. Such required uses and programs will include (i) inpatient care, (ii) trauma care, (iii) twenty-four (24) hour emergency services with triage services and referral to primary care and/or urgent care, (iv) twenty-four (24) hour urgent care, with Emergency Department triage, for non-emergency patients, (v) mental health and substance abuse intake/crisis unit (co-located with emergency room), (vi) inpatient psychiatric unit, including acute involuntary commitments, (vii) primary care services directly or through contract, (viii) ambulatory surgery, (ix) outpatient specialty services for all major specialties, (x) outpatient diagnostic/radiology services, and (xi) outpatient laboratory services.
4.1.9 A description of the permitted uses and programs to be undertaken by the NCMC Hospital. Such uses will include (i) long term care/SNF, (ii) space for schools of public health and medicine, research facilities and (iii) such other uses and programs as proposed by Howard and approved by the District.
4.1.10 A description of a public health operating plan, including (i) a plan for a continuum of care for specialty and diagnostic services; (ii) effective processes for follow-up with primary care providers, (iii) emergency and trauma transport, (iv) an electronic information data system for communication with primary care providers, (v) a plan to reduce the number of unnecessary emergency room visits and ambulatory care sensitive admissions, (vi) a program to provide health care for the underserved, regardless of ability to pay. Specifically, the programs and policies for serving the underserved shall include the following:
A. NCMC hospital must not bill any District resident below 200% of poverty level for services
B. NCMC hospital must develop a financial assistance program for patients between 200% and 400% of poverty level on a sliding fee scale. Assistance shall also be available to patients above 400% of poverty, but whose medical expenses have, or will, deplete individual or family income and resources to the point where the individual cannot pay for medically necessary services. Charges to patients in the above circumstances should be based on a reasonable percentage of their income/assets, not merely a discounted fee.
C. Any amount owed by an individual who does not have 3rd party insurance, should be set based on costs or best negotiated rate, rather than “list price” or charges.
D. Financial assistance should be available for any
medically necessary service, not just those services obtained on an emergency
E. NCMC hospital must notify patients of the availability of financial assistance.
F. NCMC hospital must annually report to the Department of Health all uncompensated care and financial assistance as defined by hospital costs (not charges), not including bad debt, “shortfalls” from government programs, and contractual allowances from 3rd party payors.
G. The NCMC governing board is required to review and approve all collections policies, including the policies of collections agents. Collections actions such as foreclosures, liens, and wage garnishments will require board authorization.
4.1.11 A plan for relocation of programs and services currently provided by the Howard University Hospital to the NCMC Hospital and the operating relationship between Howard University Hospital and the NCMC Hospital, including the Level 1 Trauma center and all associated services to be transferred from Howard University Hospital to NCMC hospital.
4.1.12 A plan describing a Community Participation Program which shall set forth, among other things, the community organization(s) with whom Howard proposes to discuss the Development Plan, a schedule for such discussions and type of information to be provided the community. This Community Participation Program shall encompass the period from the submission of the Community Participation Program until the issuance of the certificate of completion for the project. Howard shall document all community organization meetings held so as to provide a narrative description of the events of each meeting, including the concerns raised by the community organizations, and Howard’s responses to those concerns. Howard’s documentation of these community organization meetings shall be made available to the District within five (5) business days after the end of each calendar month. Howard shall include a summary of each community organization meeting held during the preceding month with the documentation of each meeting. The documentation and summaries shall be made available to the public by the District.
4.1.13 An Affirmative Action Plan (as that term is defined by law) describing an Affirmative Action Program which includes, in appropriate detail, the following:
(i) The extent to which minorities are or will be represented as members of the development team, and the precise manner that such future representation shall be achieved.
(ii) The extent to which contracting or subcontracting arrangements for minority business in the development of the Property will be provided, including specific goals, a schedule for meeting such goals, and the specific manner in which such goals will be achieved.
(iii) The manner in which employment opportunities for lower income area residents as well as District residents and minorities will be provided in the development and operation of the Project to be built on the Property. This shall include specific goals and the specific manner in which area and District residents will be made aware of such job opportunities.
(v) Proposed remedies if Howard fails to meet the objectives of the Affirmative Action Plan.
4.1.14 Memorandum of Understanding (“LSDBE MOU”) with the Office of Local Business Development.
Pursuant to any LSDBE MOU, Howard will:
(i) publicize available opportunities through private and public agencies, organizations and LSDBE business associations;
(ii) solicit letters of interest through these agencies and organizations and from individual entrepreneurs and cooperate with public and privately funded business and technical assistance agencies and organizations, to assist in identifying potentially viable LSDBEs for contracting;
(iii) commit to use commercially reasonable efforts to achieve a subcontracting goal (including sub-subcontractors at every tier) of thirty-five percent (35%) of business enterprises that are currently certified by OLBD or any successor governmental entity, as LSDBEs, in each case as of the effective date of the subcontract.
The provision of this subsection shall be made applicable to corporations, limited liability companies, partnerships, sole proprietorships, trusts, individuals or other entities that operate, reside or conduct business in the District of Columbia.
4.1.15 A First Source Agreement with the District of Columbia Department of Employment Services reasonably satisfactory to the District.
4.1.16 Audited financial statements for Howard University Hospital for its last three (3) fiscal years.
4.1.17 Within thirty (30) business days of receipt of the foregoing Preliminary Plan, the District shall promptly review the materials described in sections 4.1.1 through 4.1.16, and forward to Howard such written comments as the District determines appropriate to establish the Project Documents.
4.1.18 Within thirty (30) business days after Howard’s receipt of the District’s written comments on the respective submissions, Howard shall complete revisions to the applicable portions to reflect the District’s comments and shall re-submit the revised materials to the District. The revised materials shall include such information as may be reasonably necessary to enable the District to evaluate the refinement of the revised materials, and such other information and materials as the District may reasonably request. Should the District approve the terms and conditions of the Preliminary Plan, the District shall issue a written notice to Howard stating that it has granted final approval of the Preliminary Plan.
4.1.19 The specific process described in Sections 4.1.1 through 4.1.18 is not intended by the District and Howard to be exclusive. The District and Howard agree to work cooperatively and in good faith to complete the Preliminary Plan within one hundred eighty (180) days of the Commencement Date, which may include submission by Howard of additional materials and information not specifically described in such sections, and the provision by the District of additional comments, guidance and approvals/disapprovals not specifically described in such sections. Without limiting the generality of the foregoing, the District and Howard agree to adhere generally to the schedule of submissions described in sections 4.1.1 through 4.1.19.
4.2 Criteria for Submissions. All submissions to the District pursuant to Section 4.1 shall be in such form as the District may reasonably require, and include such number of copies as the District may reasonably require.
4.3 Project Costs.
4.3.1 The District will, subject to available appropriations, undertake responsibility, at its sole cost and expense through the Anacostia Waterfront Corporation (“AWC”), for demolition of existing improvements on the Property, clearing, construction and installation of public roads and utilities, and remediating or removing, transporting and disposing of soils and other materials from the Property containing hazardous substances (collectively, the “Infrastructure Costs”). Infrastructure Costs shall not be included in the Project Costs and shall be the sole responsibility of the District. Infrastructure Costs shall not include any special costs required for a hospital facility, but such costs will be included within the Project Costs, as hereinafter defined.
In addition to funding the Infrastructure Costs and undertaking to perform the Infrastructure development, the District, subject to available appropriations, will fund fifty per cent (50%) of Project Costs. Notwithstanding the foregoing, the District’s 50% contribution to the Project Costs will be $190,968,000. The District will also reserve a 10% contingency of $10,600,000. This contingency shall not be spent unless the total shared Project Costs exceed $381,936,000 and Howard contributes an equal amount of contingency funds. Thus, the District’s total contribution to the Project Costs shall not exceed $201,568,000. Howard will fund the entire remaining balance of the Project Costs.
“Project Costs” shall mean the reasonable and necessary costs approved by the District of all architectural, engineering, planning, permitting and construction work in connection with the NCMC Hospital, parking ad required by governmental authority related thereto, and all reasonable and necessary medical equipment related to the NCMC Hospital (but excluding any additional parking structures beyond the hospital parking or any other improvements that may be constructed on the Property), including without limitation all drawings, plans, specifications, permits or other approvals relating thereto, all insurance and bonds, all costs of construction, including supervision thereof, telecommunications cabling, and any changed, together with all related feed and expended, general conditions and contingencies, professionals and consultants, equipment and financing costs. Specifically, Project Costs shall include the following: the hospital facility; hospital parking garage; hospital medical equipment; architectural and engineering feed for the hospital and parking garage; furniture, fixtures and equipment for the hospital and parking garage; and owner administration for the hospital and parking garage.
It id specifically understood and agreed by the District and Howard that Project Costs shall not include any cost for the Medical Office Building or Research Building, including all soft costs such ad architectural and engineering feed, medical equipment, furniture, fixtures and equipment, and owner administration. Any cost associated with the development and construction of the Medical Office Building or Research Building shall be the dole responsibility of Howard.
V. COMPLETION AND EXECUTION OF PROJECT DOCUMENTATION
5.1 Grant Agreement.
5.1.1 The District will provide and disburse its share of funds for Project Costs through the terms of a grant agreement (“Grant Agreement”), which will shall be subject to Council approval. Howard and the District agree to negotiate in good faith the form of such Grant Agreement between the District and Howard. The Grant Agreement will include the following provisions: (i) the Project will be funded fifty per cent (50 %) by Howard and fifty per cent (50%) by the District, in accordance with the specific terms and conditions stated in Section 4.3.1, (ii) the District will release its share of funds for each Phase after Howard had made its share of funds readily available to the reasonable satisfaction of the District, and (iii) each party’s share of funds will be deposited in an escrow or trust account to be established through the Grant Agreement. The Grant Agreement shall acknowledge that a portion of Howard’s share of the funding may be contributed by third party and Howard donations of services, equipment and supplies. Further, the Grant Agreement shall specify that the value of such donations of services, equipment and supplies shall be determined and apportioned by mutual agreements between partied.
5.1.2 The District will use good faith efforts to provide Howard an initial draft Grant Agreement on or before one hundred twenty (120) days after the Commencement Date and the District shall endeavor in good faith to complete substantially the form grant agreement on or before the date that is one hundred eighty (180) days after the Commencement Date.
5.2 Development Agreement.
5.2.1 Howard and the District shall negotiate in good faith the form of a development agreement (“Development Agreement”) between the District and Howard, governing the design, development, funding and construction of the Improvements from Pre-Construction phase through the Construction phase. The Development Agreement shall (i) include such terms as may be required by this Agreement and the Grant Agreement, and (ii) include such other terms as may be reasonably necessary or appropriate for the design, development, funding and construction of the Project during the period that commences at Pre-Construction and expires upon completion of Construction, provided that such other terms are consistent with the terms required by this Agreement, the Grant Agreement and the Ground Lease.
5.2.2 The District shall use good faith efforts to provide to Howard an initial draft Development Agreement on or before the date that is one hundred twenty (120) days after execution of the Commencement Date of this Agreement. Howard and the District shall endeavor in good faith to complete the Development Agreement on or before the date that is one hundred eighty (180) days after the Commencement Date. The Development Agreement shall contain the following provisions:
Nondiscrimination. A prohibition of discrimination upon the basis of race, color, religion, sex, national origin, sexual orientation or any other factor which would constitute a violation of the D.C. Human Rights Act or any other applicable law, regulation or court order in the sale, lease or rental or in the use or occupancy of the Property or any improvements constructed thereon.
a. Equal Employment Opportunity. Howard, for itself, its successors, and assigns, agrees that in the development of the Property:
(i) Howard shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin or any other factor which would constitute a violation of the D.C. Human Rights Act or other applicable law, regulation or court order.
Howard will use commercially reasonable efforts to ensure that employees are treated during employment, without regard to their race, color, religion, sex or national origin, age, marital status, personal appearance, sexual orientation, family responsibilities, matriculation, political affiliation, or physical handicap. Howard will be expected to promote equality in the workplace through the following: (i) employment, upgrading or transfer; (ii) recruitment or recruitment advertising; (iii) demotion, layoff or termination; (iv) rates of pay or other forms of compensation; and (v) selection for training and apprenticeship. Howard agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the District of Columbia Department of Employment Services (“DOES”) setting forth the provisions of this non-discrimination clause.
(ii) Howard will, in all solicitations or advertisements for employees placed by or on behalf of Howard, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin or any other factor which would constitute a violation of the D.C. Human Rights Act or other applicable law, regulation or court order.
(iii) If Howard receives Federal financial assistance, if a union project, with respect to the Property, Howard shall:
(A) send to each labor union or representative of workers with which it has a collective bargaining agreement, or other contract or understanding, a notice, to be provided by the Department of Labor (“DOL”), advising the said labor union or worker’s representative of Purchaser’s commitments under Section 202 of the Executive Order 11246 of September 24, 1965, as amended, and shall post copies of the notice in conspicuous places available to employees and applicants for employment;
(B) comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended, and of the rules and regulations and relevant orders of DOL, including the goals and timetables for minority and female participation and the Standard Federal Equal Employment Opportunity Construction Contract Specifications to the extent applicable;
(C) furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, as amended, and by the rules, regulations, and orders of DOL and HUD, and will permit access to its books, records and accounts pertaining to its employment practices by DOL and HUD for purposes of investigation to ascertain compliance with such rules, regulations and orders;
(D) require the inclusion of the provisions of paragraph (i) through (iii) of this subsection in every contract, subcontract or purchase order, unless exempted by rules, regulations, or orders of DOL issued pursuant to Section 204 of Executive Order No. 11246 of September 24, 1965, as amended, so that such provisions will be binding upon each contractor, subcontractor and vendor. Howard will take such action with respect to any contract, subcontract or purchase order as DOES or DOL may direct as a means of enforcing such provisions, including sanctions for noncompliance.
(E) In the event of Howard’s non-compliance with the nondiscrimination clause of this Agreement or with any applicable rule, regulation, or order, prior to completion of the development of the Property pursuant to the Development Plan, DOES and/or DOL may take such enforcement against Howard, including, but not limited to, an action for injunctive relief and/or monetary damages, as may be provided by law.
(F) The provisions of this section shall be made applicable to corporations, limited liability companies, partnerships, sole proprietorships, trusts, individuals or other entities who operate, reside or conduct business in the District of Columbia.
In addition, a requirement that, if the Project is a union project:
(i) Howard will cause the general contractor to send to each labor organization or representative of workers with which it has a collective bargaining agreement or other contract or understanding; a notice advising said labor organization or worker’s representative of the general contractor’s commitments under this subsection and shall post copies of the notice in conspicuous places available to employees and applicants for employment or training.
(ii) Howard will cause the general contractor to include this subsection in every subcontract for work in connection with the construction of the improvements comprising part of the Project and will, at the direction of DOES, take appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of the provisions of this section. Howard will require that general contractor will not let any subcontract where the general contractor has notice or actual knowledge that the subcontractor has been found in violation of these requirements, and will not let any subcontract unless the subcontractor has first provided the general contractor with a preliminary statement of ability to comply with the requirements in this section. The provisions of this section shall be made applicable to corporations, limited liability companies, partnerships, sole proprietorships, trusts, individuals or other entities who operate, reside or conduct business in the District of Columbia.
5.3 Ground Lease.
5.3.1 Howard and the District shall negotiate in good faith the form of a ground lease (“Ground Lease”) of the Property between the District and Developer. The Ground Lease shall (i) have a term of ninety-nine (99) years, (ii) provide for annual rent of one dollar ($1.00) payable in advance for the entire ninety-nine (99) year term, (iii) provide for construction of improvements as may be required by this Agreement, the Development Agreement, and the Grant Agreement, (iv) have a provision requiring District consent for subleasing or assigning the Ground Lease, (v) have provisions regarding mortgaging Howard’s interest in the Ground Lease, (vi) have provisions regarding the District’s right of first refusal and Howard’s right of first refusal, (vii) have provisions regarding Howard’s use of the Property and services and programs Howard must provide consistent with this Agreement, the Development Agreement and the Grant Agreement, (viii) have provisions regarding Howard’s obligation to provide space, at no cost to the District, in the NCMC Hospital, for public health programs of the District, (ix) and (x) include such other terms and provisions as may be usual and customary for ground lease transactions in the District of Columbia, or reasonably necessary or appropriate for the Property, provided that such other terms and provisions are consistent with the terms as may be required by this Agreement, the Development Agreement and the Grant Agreement. In addition, the Ground Lease will include among the programs and uses for the Property (i) a description of a public health operating plan as described in Section 4.1.10, (ii) the required uses and programs to be undertaken by the NCMC Hospital as described in Section 4.1.8 and (iii) the permitted uses and programs to be undertaken by the NCMC Hospital as described in Section 4.1.9.
5.3.2 The District shall use good faith efforts to provide to Howard an initial draft Ground Lease on or before the date that is one hundred twenty (120) days after the Commencement Date of this Agreement. Howard and the District shall endeavor in good faith to complete substantially the form of the Ground Lease on or before the date that is one hundred eighty (180) days after the Commencement Date of this Agreement, subject to such additional modifications to such form as may be reasonably necessary or appropriate based upon the final Development Agreement and grant agreements.
VI. PRE-CONSTRUCTION PHASE
6.1 Pre-Construction. Each party’s obligation to proceed to the PreConstruction phase shall be conditioned on the satisfaction of each of the following conditions, any of which may be waived by each party in writing:
6.1.1 The Planning phase shall have been completed pursuant to this Agreement and the Project Documents executed by the District and Howard.
6.1.2 There shall exist no default on the part of either party of any of its material obligations under this Agreement.
6.1.3 All representations and warranties of the other party under this Agreement shall be correct in all material respects.
6.1.4 There shall exist no default on the part of the other party under the Development Agreement upon its execution.
6.1.5 There shall exist no order of any court that is binding upon the other party and that prohibits that party from consummating the Development Agreement.
6.1.6 The District’s interest in the Property shall be in substantially the same or greater than as of the Commencement Date of this Agreement.
VII REPRESENTATIONS AND WARRANTIES
7.1 Howard. Howard hereby represents and warrants to the District as follows:
7.1.1 Howard is a non-profit corporation duly organized, validly existing and in good standing under the laws of the District of Columbia, duly qualified to conduct business in the District of Columbia, and has the power and authority to conduct the business in which it is currently engaged.
7.1.2 Howard (i) has the power and authority to execute, deliver and perform its obligations under this Agreement, and (ii) has taken all necessary action to authorize the execution, delivery and performance of this Agreement.
7.1.3 No consent or authorization of, or filing with, any Person (including any governmental authority), which has not been obtained, is required in connection with the execution, delivery and performance of this Agreement by Howard,
7.1.4 This Agreement has been duly executed and delivered by each of Howard, and constitutes the legal, valid and binding obligation of Howard, enforceable against it in accordance with its terms.
7.1.5 The execution, delivery and performance by Howard of this Agreement will not violate any requirement of law or result in a breach of any contractual obligation to which Howard is a party.
7.1.6 No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the best knowledge of Howard, threatened by or against Howard which, if adversely determined, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Howard or its ability to perform its obligations under this Agreement.
7.1.7 The Financial Statements are complete and accurate as of the dates thereof. There has been no material adverse change in the financial condition of any Guarantor since the date of such Financial Statements.
7.2 The District. The District hereby represents and warrants to Howard as follows:
7.2.1 The District (i) has the power and authority to execute, deliver and perform its obligations under this Agreement, and (ii) has taken all necessary action to authorize the execution, delivery and performance of this Agreement.772
7.2.2 No consent or authorization of, or filing with, any Person (including any governmental authority), which has not been obtained, is required in connection with the execution, delivery and performance of this Agreement by the District.773
7.2.3 This Agreement has been duly executed and delivered by the District, and constitutes the legal, valid and binding obligation of the District, enforceable against it in accordance with its terms.
7.2.4 The execution, delivery and performance by the District of this Agreement will not violate any requirement of law or result in a breach of any contractual obligation to which the District is a party.
7.2.5 No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the best knowledge of the District, threatened by or against the District which, if adversely determined, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the District’s ability to perform its obligations under this Agreement.
8.1 Events of Default.
Each of the following shall constitute an “Event of Default”
8.1.1 Any party shall fail to perform any obligation required under this Agreement,
8.1.2 A party ceases to work on a good faith basis appropriate for the scale and type of Project and in a manner sufficient to accomplish completion of its obligations within the applicable times required under this Agreement; or
8.1.3 Any representation or warranty of Howard made in this Agreement shall fail to be correct in any material respect on the date made.
8.1.4 Upon the occurrence of any Event of Default specified in Section 9.1, and the failure of the defaulting party to cure such Event of Default within thirty (30) days of receipt of written notice of such Event of Default from the other party (or if such Event of Default cannot reasonably be cured within such thirty (30) day period, then within such additional period of time as may be reasonable necessary to cure such Event of Default, provided that the defaulting party commences such cure in the initial thirty (30) days and thereafter diligently pursues such cure), the other party shall have the right (a) to terminate the Exclusivity Period by written notice to defaulting party, in which event all obligations and liabilities of the other party under this Agreement shall thereupon terminate; and/or (b) to pursue such other rights and remedies as may be available under this Agreement and applicable law.
8.2 Recitals. The Recitals set forth above are incorporated herein by reference.
8.3 Binding Effect. Upon its execution by the parties, this Agreement shall be binding upon and inure to the benefit of the District and Howard and their permitted successors and assigns. All provisions of this Agreement shall survive completion of the Project.
8.4 Confidentiality. Except as set forth below, Howard shall maintain as confidential and shall not publicly disclose the terms of this Agreement and any Project Documents. The District shall maintain as confidential and shall not publicly disclose the financial information provided by Howard. The foregoing shall not prohibit (i) disclosure to the extent required under applicable law or valid legal process, (ii) disclosure, on a need-to-know basis, to the employees, architects, attorneys and other professionals and consultants providing services in connection with the Project, and to prospective lenders and investors, provided that such parties acknowledge the confidentiality of such terms and agree not to disclose such terms except as permitted under this Section 8.4, and (iii) recordation of a Memorandum of Ground Lease in the Land Records of the District of Columbia. Any press release or other public statement that Howard proposes to issue pursuant to the foregoing sentence shall be subject to the prior review and approval by the District, such approval not to be unreasonably withheld.
8.5 Waiver of Jury Trial; Jurisdiction. The District and Howard each hereby waive any right to jury trial in connection with any suit, action, proceeding or claim relating to this Agreement or to the transactions contemplated by this Agreement. Any suit, action, proceeding or claim relating to this Agreement or the transactions contemplated by this Agreement shall be brought exclusively in the United States District Court for the District of Columbia or the Superior Court for the District of Columbia, and the District and Howard agree that such courts are the most convenient forum for resolution of any such action and further agree to submit to the jurisdiction of such courts and waive any right to object to venue in such courts.
8.6 No Recordation. Howard shall not record this Agreement, or any memorandum or notice of this Agreement, in any public records.
8.7 Notices. Notices and other communications required or permitted under this Agreement shall be in writing and delivered by hand against receipt or sent by recognized overnight delivery service, by certified or registered mail, postage prepaid, with return receipt requested or by telecopy. All notices shall be addressed as follows:
If to the District:
The City Administrator
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20005
Attention: Robert C. Bobb
with a copy to:
Attention: Telecopy: 202/
If to Howard:
with a copy to:
Norman B. Leftwich, Esquire
Office of the General Counsel Howard University
2400 6th Street, N.W. Suite 321
Washington, D.C. 20059
Telecopy: (202) 806-6357
or to such other addresses as may be designated by proper notice. Notices shall be deemed to be effective upon receipt (or refusal thereof) if personally delivered, sent by recognized overnight delivery service, or sent by certified or registered mail, postage prepaid, with return receipt requested, or upon electronically verified transmission, if such delivery is by telecopy.
8.8 Time of Essence. Time is of the essence with respect to the performance by the District and Guarantors of their obligations under this Agreement.
8.9 Anti-Deficiency Provision.
8.9.1 The District and Howard acknowledge and agree that the obligations of the District to fulfill financial obligations of any kind pursuant to any and all provisions of this Agreement, or any subsequent agreement entered into pursuant to this Agreement or referenced herein to which the District is a party, are and shall remain subject to the provisions of (i) the federal Anti-Deficiency Act, 31 U.S.C. §§1341, 1342, 1349, 1351, (ii) the D.C. Official Code 47-105, (iii) the District of Columbia Anti-Deficiency Act, D.C. Official Code §§ 47-355.01 - 355.08, as the foregoing statutes may be amended from time to time, and (iv) Section 446 of the District of Columbia Home Rule Act, regardless of whether a particular obligation has been expressly so conditioned. The District agrees to exercise all lawful and available authority to satisfy any financial obligations of the District that may arise under this Agreement; however, since funds are appropriated annually by Congress on a fiscal year basis, and since funds have not yet been appropriated for the undertakings contemplated herein, the District’s legal liability for the payment of any costs shall not arise unless and until appropriations for such costs are approved for the applicable fiscal year by Congress (nor shall such liability arise if, despite the District's compliance with Section 11.17.2, a request for such appropriations is excluded from the budget submitted by the Council to Congress for the applicable fiscal year). The District makes no representation or assurance that Congress will grant the authorizations and appropriations necessary for the District to perform its financial obligations under this Agreement.860
8.9.2 During the term of this Agreement, the Mayor or other appropriate official shall for each fiscal period include in the budget application submitted to the Council the amount necessary to fund the District’s obligations hereunder for such fiscal period. Notwithstanding the foregoing, no officer, employee, director, member or other natural person or agent of the District shall have any personal liability in connection with the breach of the provisions of this Section 8.9.2 or in the event of a default by the District under this Section 8.9.2
8.9.3 This Agreement shall not constitute an indebtedness of the District nor shall it constitute an obligation for which the District is obligated to levy or pledge any form of taxation or for which the District has levied or pledged any form of taxation.
IN ACCORDANCE WITH §446 OF THE HOME RULE ACT, D.C. OFFICIAL CODE §1-204.46, NO DISTRICT OFFICIAL IS AUTHORIZED TO OBLIGATE OR EXPEND ANY AMOUNT UNDER THIS AGREEMENT UNLESS SUCH AMOUNT HAS BEEN APPROVED AND APPROPRIATED BY ACT OF CONGRESS.
8.10 Agents and Representatives. No person other than the parties to this Agreement, and the permitted assignees of such parties, shall have any liability or obligation under this Agreement. Without limiting the generality of the foregoing, Howard agrees that no consultant, contractor, agent or attorney engaged by the District in connection with this Agreement or the transactions contemplated by this Agreement shall have any liability or obligation to Howard under this Agreement.
IN WITNESS WHEREOF, the District and Howard have executed this Agreement.
DISTRICT OF COLUMBIA
Approved for legal sufficiency:
Schedules and Exhibits:
Schedule 1: Howard representatives to
Project Steering Committee
Schedule 2: District representatives to Project Steering Committee
GOVERNMENT OF THE DISTRICT OF COLUMBIA
Executive Office of the Mayor
The John A. Wilson Building · 1350 Pennsylvania Ave NW · Suite 310 · Washington DC 20004 · (202) 727-6053
Robert C. Bobb
Deputy Mayor and City Administrator
September 30, 2005
Mark H. Tuohey III
DC Sports & Entertainment Commission
2400 East Capitol Street, SE
Washington, DC 20003
Dear Mr. Tuohey,
We are working on a joint proposal with Howard University to build a new hospital facility, the National Capital Medical Center on the site of the former DC General Hospital at Reservation 13. The goal of this project is to build a full-service hospital on the East side of the District in order to equalize the distribution of hospital services and create a hub for the community health network on that side of the city. The District is also trying to meet the capacity needs as the population grows and be more prepared in the event of a major disaster.
Based on a recent traffic study conducted by Parsons Brinckerhoff for the District Department of Transportation, the proposed hospital would require approximately 1,500 parking spaces. The current proposal includes plans for an underground parking facility; however, there are parking and traffic constraints against an underground parking lots on the proposed site. We are trying to find alternative sites for parking.
We would like to request the use of approximately 525,000 sq. ft. to construct a parking lot for the National Capital Medical Center, on the site south of Independence Avenue and east of Water Street, which currently serves an overflow parking lot for RFK stadium. I welcome the opportunity to discuss this with you in further detail.
Robert C. Bobb
Deputy Mayor / City Administrator
Chairman Linda W. Cropp, at the request of the Mayor
A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
Chairman Linda W. Cropp, at the request of the Mayor, introduced the following bill, which was referred to the Committee on ______.
To amend the Health Services Planning Program Act of 1997 to exempt the National Capitol Medical Center from the certificate of need process.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "Health Services Planning and Development Amendment Act of 2005".
Sec. 2. Section 8 of the Health Services Planning Program Act of 1997, effective April 9, 1997 (D.C. Law 11-191; D.C. Official Code § 44-407) as follows:
A new subparagraph (h) is added to read as follows:
“(h) A proposal to develop the new institutional health service known as National Capital Medical Center to be located on Reservation No. 13, Washington, D.C. 20003, to authorize the relocation of existing health care services from Howard University Hospital located at 2041 Georgia Avenue, N.W., Washington, D.C. 20060 to the National Capital Medical Center, or make any associated capital expenditure that would otherwise be subject to certificate of needs requirements by a health care entity shall be exempt from certificate of need requirements as long as both of the following conditions are satisfied:
(1) The sum of the number of licensed beds for Howard University Hospital and National Capitol Medical Center shall not exceed a total of four hundred eighty-two (482) licensed beds as the term “licensed beds” is defined for purposes of the Health-Care 4 and Community Residence Facility, Hospice and Home Care Licensing Act of 1983, effective February 24, 1984 (D.C. Law 5-48; D.C. Official Code § 44-501 et seq.), as amended; and,
(2) Not more than one (1) year beginning on the day after that the health care entity obtains a certificate of licensure, pursuant to the Health-Care and Community Residence Facility, Hospice ad Home Care Licensing Act of 1983, effective February 24, 1984 (D.C. Law 5-48; D.C. Official Code §44-501 et seq.), as amended, to operate the National Capital Medical Center has passed.”
Sec. 3. Fiscal impact statement.
The Council adopts the fiscal impact statement of the Chief Financial Officer as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code §1-206(c)(3)).
Sec. 4. Effective date.
This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council to override the veto), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code §1-206(c)(1)) and publication in the District of Columbia Register.
Memorandum of Understanding Between The District of Columbia And Greater Southeast Community Hospital
September __, 2005
This Memorandum of Understanding sets forth the agreement between the District of Columbia (“The District”) and Greater Southeast Community Hospital (“Greater Southeast”) to cooperate and coordinate the planning for the National Capital Medical Center and Greater Southeast to best serve the healthcare needs of the citizens of the District, particularly in Wards 6,7 and 8.
WHEREAS, the District government is dedicated to providing access to quality healthcare services to all its citizens;
WHEREAS, Greater Southeast is the primary source of inpatient and outpatient services to residents of Ward 8 and contiguous areas;
WHEREAS, the District and Greater Southeast have historically cooperated in providing services to the residents of Wards 6, 7 and 8;
WHEREAS, it is in the best interests of the District and its citizens to ensure that Greater Southeast continues to provide vitally needed services to this service area;
WHEREAS, the District, in partnership with Howard University, is proceeding with the development of the National Capital Medical Center as a tertiary, teaching hospital to fill a gap in needed services in Wards 5, 6 and 7 and to provide the District with a state of the art teaching and research facility;
WHEREAS, Greater Southeast is initiating a strategic and facility planning process to determine how best to serve the community;
WHEREAS, the District and Greater Southeast are desirous of coordinating the planning of both institutions to best serve the citizens of the District:
Therefore, it is agreed that:
1. The District and Greater Southeast will exchange information and data as developed on the planning for the National Capital Medical Center and Greater Southeast’s strategic facility planning in order to avoid duplication of effort and to provide for a common basis for addressing the healthcare needs of the community.
a. The District will provide Greater Southeast the demographic, market, physician and other data used in planning the National Capital Medical Center to date.
b. Greater Southeast will provide the District operating and financial data on Greater Southeast and planning assumptions, when available, for the strategic facilities plan.
2. Representatives of the District, Greater Southeast and their consultants will meet regularly, but not less than bi-monthly, in a Joint Planning Committee to review and coordinate the plans for each facility.
3. The District and Greater Southeast will explore opportunities to pursue a public/private partnership to provide public health services on the campus of Greater Southeast and in the District.
a. Consideration will be given to building facilities or leasing space for public health services provided by the District on the Greater Southeast campus
b. Consideration will also be given to contracting with Greater Southeast to provide certain health services for the District.
4. The District and Greater Southeast will coordinate planning for the opening of the National Capital Medical Center to provide adequate time for Greater Southeast to mitigate any impact of the NCMC on its programs and services.
Agreed to by:
|FOR THE DISTRICT
|FOR GREATER SOUTHEAST
Chairman Linda W. Cropp at the request of the Mayor
A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
Chairman Linda W. Cropp, at the request of the Mayor, introduced the following bill, which was referred to the Committee on ________.
To amend the Hospital and Medical Services Corporation Regulatory Act of 1996 to modify the requirement that hospital service corporations and medical service corporations maintain open enrollment programs, to impose a tax upon premium payments received by hospital service corporations and medical service corporations, to establish a fund to provide basic health insurance coverage, and to make conforming changes.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the “Hospital and Medical Services Corporation Regulatory Amendment Act of 2005”.
Sec. 2. The Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code §31-3501 et seq.), is amended as follows:
(a) Section 15 (D.C. Official Code § 31-3514) is amended as follows:
(1) Subsection (f) is repealed.
(2) Subsection (j) is amended to read as follows:
“(j)(1) Pursuant to section 15A, a corporation shall contribute to a separately established Rate Stabilization Fund, each year, an amount necessary and appropriate to maintain the open enrollment program of the corporation required by this section, but not greater than $550,000.00. The Fund shall be used solely to subsidize open enrollment subscriber contracts to promote affordable rates for individual subscribers eligible to enroll in the program pursuant to subsections (c) and (d) of this section. The Fund shall not be used to pay overhead, administrative, marketing, promotional, or other ancillary expenses associated with the program. The corporation may carry over unspent monies in the Fund from year to year.
“(2) In the rate filings for the open enrollment program required by section 9, the corporation shall provide documentation to the Department of Insurance, Securities, and Banking, confirming the existence of the Fund, identifying the amount actually paid out from the Fund to subsidize open enrollment rates, and specifying the Fund balance at year end and as of the date of the corporation’s filing. The Department of Insurance, Securities, and Banking may direct an independent audit of the Fund, the expenses of which shall be paid by the corporation. If the Department of Insurance, Securities and Banking determines, with or without an audit, that all or any portion of the money in the Fund is neither being used to subsidize open enrollment rates nor being reasonably set aside in anticipation of projected subsidies of open enrollment rates in future years, the Department shall so advise the Mayor, who may direct the corporation to pay over the revenue not being so used or set aside to the Affordable Health Coverage Fund established by section 15B.
“(3) Within 10 days after the effective date of the Hospital and Medical Services Corporation Regulatory Amendment Act of 2005, a hospital or medical service corporation shall transfer all uncommitted funds held in the Rate Stabilization Fund, except for any funds necessary to maintain the open enrollment program for the current year, not to exceed $550,000.00, to the D.C. Treasurer, and the D.C. Treasurer shall credit such funds to the Affordable Health Coverage Fund.
“(4) If a corporation is chartered as a charitable and benevolent organization, the contributions prescribed by paragraph (1) of this subsection shall not be deemed to constitute the complete satisfaction of the corporation’s obligation as a charitable and benevolent organization.”
(3) Subsection (k) is amended to read as follows:
“(k)(1) A corporation shall maintain its open enrollment program for subscribers who are enrolled in the program as of the effective date of the Hospital and Medical Services Corporation Regulatory Amendment Act of 2005 and shall continue to offer the program to each such subscriber for so long as the subscriber renews his or her coverage under the program upon the terms and conditions prescribed by the corporation.
“(2) The corporation shall be under no legal obligation to offer or maintain an open enrollment program for persons who are not subscribers enrolled in the program as of the effective date of the Hospital and Medical Services Corporation Regulatory Amendment Act of 2005. The corporation shall not use any revenue in the Rate Stabilization Fund to subsidize the open enrollment rate of any person who was not a subscriber to the open enrollment program as of the effective date of the Hospital and Medical Services Corporation Regulatory Amendment Act of 2005.
“(3) When all persons eligible to subscribe to the open enrollment program under paragraph (1) of this subsection cease to do so:
(A) The obligation of the corporation to maintain an open enrollment program shall terminate; and
(B) The corporation shall promptly pay to the D.C. Treasurer, as a payment otherwise due under section 15A, any funds remaining in the Rate Stabilization Fund, and such funds shall be credited to the Affordable Health Coverage Fund .”
(4) A new section 15A is added to read as follows:
“Section 15A. Tax and related payments.
“A health or medical services corporation shall make those payments prescribed by section 47-2608 of the D.C. Official Code, or any successor statute..”
(5) A new section 15B is added to read as follows:
“Section 15B. Establishment of the Affordable Health Coverage Fund; purposes 14 of the Fund; administration of the Fund; implementing rules.
“(a) There is established a nonlapsing, revolving fund to be designated as the Affordable Health Coverage Fund, which shall be a segregated account within the General Fund of the District of Columbia and shall be used for the purposes set forth in subsection (e) of this section.
“(b) All tax revenue derived from hospital and medical services corporations pursuant to section 15A, except for taxes upon real estate and fees and charges provided for by the insurance laws of the District, shall be deposited into the Fund.
“(c) The Fund shall be administered by the Mayor.
“(d) No amounts deposited in the Fund shall revert to the General Fund at the end of any fiscal year or at any other time. All such funds shall be continually available, without fiscal year limitation, for the purposes described in this section, subject to authorization by Congress in an appropriations act.
“(e) The Fund shall be used to provide basic health insurance coverage options to District of Columbia residents, to the extent of availability of funds, in the following order of priority:
(1) District of Columbia residents in households at 200% to 249% of the federal poverty level;
(2) District of Columbia residents in households at 250% to 299% of the federal poverty level;
(3) District of Columbia residents in households at 300% to 349% of the federal poverty level; and
(4) District of Columbia residents in households at 350% to 399% of the federal poverty level.
“(d) For purposes of this section, the term:
(1) “Basic health insurance coverage” means comprehensive inpatient, outpatient, and preventative care.
(2) “Federal poverty level” means -
“(e) The Mayor, pursuant to Title I of the District of Columbia Administrative Act, approved October 21, 1968 (82 Stat. 1204; D.C Official Code § 2-501 et seq.), may issue rules to implement the provisions of this section .
“(f) The Mayor shall report annually to the Council on the revenues and activities of the Fund.”.
Sec. 3. Conforming amendments.
(a) Section 650(b) of the Life Insurance Act, approved March 3, 1901 (31 Stat. 1291; D.C. Official Code § 31-205(b)), is amended by inserting the phrase “(which shall make the payments required by section 15A of the Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code § 31-3514A))” after the phrase “nonprofit hospital and medical service corporations”.
(b) Section 47-2608 of the D.C. Official Code is amended as follows:
(1) Subsection (a) is amended by inserting the phrase “; provided, a hospital service corporation or medical service corporation may deduct from this sum the amount authorized under subsection (b-1) of this section” after the phrase “risks in the District of Columbia”.
(2) A new subsection (b-1) is added to read as follows:
“(b-1) A hospital service corporation or medical service corporation may deduct the corporation’s payment to the Rate Stabilization Fund under section 15 of the Hospital and Medical Services Corporation Regulatory Act of 1996, effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code §31-3514), if any, from the amount otherwise due by the corporation under subsection (a) of this section..”
(c) Section 47-2608.01 of the D.C. Official Code is repealed.
Sec. 4. Fiscal impact statement.
The Council adopts the fiscal impact statement in the committee report as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code §1-206.02(c)(3)).
Sec. 5. Effective date.
This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council to override the veto), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code §1-206.02(c)(1)), and publication in the District of Columbia Register.
ANTHONY A. WILLIAMS
September 8, 2005
H. Patrick Swygert
2400 6th Street, NW
Washington, DC 20059
Dear President Swygert,
I am pleased with the progress that the District government has made in its joint project with Howard University to develop the National Capital Medical Center (NCMC). The new hospital is a crucial part of our effort to create a strong healthcare delivery system that is equitably distributed across the District, and it will also support the University's important mission of academic medicine.
As you know, I have made a personal commitment to the Council and the public to introduce NCMC legislation by October 1, 2005. A number of questions have been posed by members of the Council and public, and our joint team is charged with developing thoughtful responses to all of these questions. I understand that senior staff from Howard University and the District Government, as well as consultants representing Howard and the District, have been hard at work to finish the details of the proposal. As our date of legislative introduction approaches, I want to reiterate several of the key items the Council expects to receive from our team. We need to complete these items by September 16th in order to prepare the legislative package and accompanying materials.
By the end of this month, I am confident that we will have an exciting proposal to share with the Council. Ultimately, residents of the District, especially those on the east side of the city, will benefit from the new, world-class NCMC.
Anthony A. Williams
Cc: Robert C. Bobb, City Administrator
Hassan Minor, PhD, Senior Vice President
The NCMC will be a world-class, high quality, comprehensive medical center serving the National Capital region, and beyond. NCMC will:
The NCMC will differentiate itself as:
Acute-care services will serve the community and draw patients from surrounding regions:
Outstanding ambulatory services will provide emergency interventions, preventive services and chronic conditions management
The governance structure will foster regional control and coordination
1. McGinley, Patrick J. Beyond Health Care Reform: Reconsidering Certificate of Need Laws in a Managed Competition System 1995 Florida State University Law Review. http://www.law.fsu.edu/journal/lawreview/issues/231/mcginley.html
2. American Health Planning Association. 2005 National Directory of Health Planning, Policy, and Regulatory Agencies, 15th Edition.
3. Federal Trade Commission and Department of Justice Antitrust Division. Improving Health Care: A Dose of Competition. July 2004.
4. District of Columbia, Department of Health State Health Planning and Development Agency Certificate of Need Review Division.
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