NCMC General Information
Last week, Howard University and the Office of the Mayor of the
District of Columbia successfully concluded on schedule negotiations of an
Exclusive Rights Agreement (ERA) to jointly develop the National Capital
Medical Center (NCMC), an independent non-profit medical facility in
Southeast Washington, D.C. A ceremonial signing of the ERA took place on
Thursday, January 5, at 10 a.m. in the Mayor’s office, at which point
the document was made public on www.howard.edu.
The NCMC will provide an integrated system of care – a Level 1 Trauma
hospital, medical office building, and medical research facility – to
meet the much needed emergency, specialty care, and medical/surgical needs
of the hospital’s surrounding neighborhoods and to improve the city’s
overall health care infrastructure.
The Exclusive Rights Agreement defines a shared vision and terms of
agreement between the District and Howard University to address the
city’s most immediate health care needs. Currently, some 140,000 people
in Washington are without adequate access to health care. The NCMC will
serve the cross-section of those living and working in the city’s
Southeast neighborhoods where the full range of medical care is severely
limited.
The NCMC will solve the city’s critical need to better distribute
medical services geographically and to better serve the Southeast
community. According to a study commissioned by the D.C. Primary Care
Association, Southeast neighborhoods have the highest concentration of
people needing health care services but the least amount of access to
primary care services. Currently, all the city’s trauma centers are
located within a one-mile radius in Northwest D.C., providing inadequate
trauma services to the rest of the city.
As City Administrator Robert C. Bobb states, “We cannot ignore the
extensive gaps in Washington’s health care delivery system. When we
identified the lack of health services in 2003 and sought a medical
partner, Howard University stepped up to the plate. I am confident that
this public-private partnership will prepare the city’s health care
delivery system to deal with today’s pressing health needs and
tomorrow’s medical challenges.”
Under the terms of the ERA, the development and construction of the
NCMC will be funded equally by Howard University and the city, with a cap
on spending set at $212 million for each partner. The NCMC is expected to
become a financially and operationally independent non-profit hospital
upon completion of its three-year start-up phase.
The City Council is expected to review and vote on the ERA within 90
days.
H. Patrick Swygert
Howard University President
A Primer on the National Capital Medical Center
1. What is The National Capital Medical Center?
A proposed public-private partnership between the Government of the
District of Columbia and Howard University to develop a first-rate
facility providing acute, inpatient, outpatient, emergency and trauma
services from community and University physicians using state-of-the-art
medical equipment and embedded patient safety and clinical information
systems. The Center will be specifically designed to be high quality and
very attractive to both patients and healthcare staff through its
ambience, efficiency, and use of technology.
The NCMC will be an important part of a community-based system of care
with a focus on prevention and wellness, and it will also have the
capacity to support the District’s new primary care network known as
Medical Homes. If approved, this significant project will serve as an
economic engine to enhance the transformation of U.S. Reservation 13 into
the planned mixed-use Hill East Neighborhood.
2. Background?
In November 2003, the Council of the District of Columbia passed
legislation to explore the development of a Memorandum of Understanding (MOU)
between Howard University and the District of Columbia to develop a new,
fullservice, world-class, Level 1 Trauma hospital on U.S. Reservation 13,
adjacent to the D.C. Armory.
In January 2004, the President of Howard University and the Mayor of
the District of Columbia signed the MOU.
In May 2004 after a public hearing, the Council of the District of
Columbia unanimously passed the MOU.
Since then, both the University and the District have engaged
healthcare experts, hospital facilities planners, leading general
contractors and other relevant professionals in a series of substantive
meetings with relevant governmental agencies to size the facility
properly, assess its development, construction and operational costs, and
structure the appropriate financial proposals to complete the project
successfully.
There were also additional public hearings of The Council of the
District of Columbia in February and October 2005 to ensure that
appropriate progress was being made.
3. Why does the District need the NCMC?
- District hospital services are poorly distributed geographically
- There is a need for additional hospital capacity as the District
grows - 42% of the District’s population live in the Eastern quadrants;
and the District needs a hub for its new community health network,
where doctors can refer patients for diagnostic testing, specialty
care, and medical procedures - The current clustering of District hospitals could be problematic in
the event of a major disaster
4. Why did the City choose Howard University?
There are several reasons. First, the Chairman of the Council of the
District of Columbia held discussions with each of the major hospitals in
the District to assess their interests in partnering with the District of
Columbia to build a new facility in Southeast Washington, D.C. Only Howard
University expressed a willingness to move forward.
Second, Howard University has been providing leadership in medical
education and healthcare both nationally, and for residents of the
District of Columbia, for more than 140 years. It currently sponsors the
only university-owned, not-forprofit, hospital in the area.
Third, the University has a recent history of successful collaboration
with the Government of the District of Columbia to strengthen the
District. Several years ago, the University and the District joined forces
to create The LeDroit Park Initiative, an award-winning public-private
partnership that has helped to transform an important part of the District
and has become a national model. Howard is also the only area university
to have established a public charter school for District residents, the
Howard University Middle School of Mathematics and Science.
5. Will the National Capital Medical Center add any more
licensed beds to the District?
No. However, District hospital services are poorly distributed
geographically: all of the District’s trauma facilities are clustered in
the same Northwest quadrant. 42% of the District’s population live in
the eastern quadrants, where there are no trauma facilities of any kind.
In addition, the District currently needs a hub for its new community
health network where doctors can refer patients for diagnostic testing,
specialty care, and medical procedures. Under the NCMC proposal, Howard
University Hospital would transfer 230 of its existing 482 licensed beds
to the new facility. There would be no new net licensed beds required.
6. Who will operate the NCMC?
A new private, not-for-profit 501c3 healthcare corporation will be
established. The NCMC is the kind of project capable of attracting top
talent and, once approved, the Directors of the new corporation will
immediately begin to recruit nationally a first-rate team of professionals
with relevant experience and proven outstanding ability to implement the
project.
7. Who will the NCMC serve?
8. What services will the NCMC offer?
- 24 hours, 7 days-a-week emergency and trauma service
- Inpatient surgeries with a focus on minimally invasive procedures
- Outpatient services:
- Surgery
- Radiology
- Laboratory
- Wellness and prevention services including nutrition counseling,
support groups, and physical fitness classes - Specialty Services
- A medical office building housing University faculty and community
physicians - Other related services such as a community health club
9. How will NCMC relate to Howard University Hospital?
To enhance efficiency, both the NCMC and HUH will be controlled by the
same new healthcare corporation that the University will establish.
Project Cost And Funding
10. What is the cost of the NCMC hospital?
The estimate of the Project Costs (in 2007 dollars) is $382 million.
The District and the University will fund the construction of the hospital
on a 50-50 basis. Based on the current estimate, each party’s 50% share
of the Project Costs will be $191 million. The parties will also establish
a 20% contingency fund.
11. How will the University fund its contribution?
The University 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 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. 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 provides credit
enhancement for the bonds that will result in bond ratings in the highest
rating categories.
When approved, the 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.
12. How will the District fund its contribution?
Three sources of funding have been identified for the District’s
portion of the project costs:
- Tobacco Settlement Funds – The District will engage in an additional
Tobacco Settlement Securitization transaction with the potential to
generate funds of approximately $100 million based on current market
conditions. This securitization transaction could be completed within
a relatively short period of time and thus could yield revenues to be
used in early phases of the project. - Surplus Revenues – $100 million of surplus revenues will be
allocated and appropriated from the fund balance as “PayGo”
capital funding for the NCMC project. - New Market Tax Credits – Any balance of funding will be derived from
the sale of New Market Tax Credits, a federal program that provides
subsidies to institutions that invest in underserved areas.
13. How will any unforeseen or unexpected costs or cost
overruns at NCMC be funded?
Any unexpected costs or cost overruns (capital or operational) beyond
that which are covered by the joint contingency fund will be the
responsibility of the New Corporation.
14. What are the next steps?
As agreed, the District and the University completed their negotiations
on an Exclusive Rights Agreement on 30 December 2005. The parties intend
to complete work on the lease and the grant agreements and the certificate
of need exemption by 3 February 2006. This will allow the Council to
review all of the relevant agreements for the NCMC, and to act as early as
7 March 2006.