The news that Grady is closing two neighborhood clinics and raising prescription co-pays shows how cutbacks in government funding can squeeze front-line medical services.

Grady Memorial Hospital has come back from the financial brink in just four years, aided by corporate and foundation support and new management. The safety-net hospital is an indispensable part of Georgia’s medical landscape, providing about $220 million annually in indigent care.

Uninsured patients stream into its doors every day.

Grady also has operated Atlanta’s only Level 1 trauma center for years, runs the largest publicly funded infectious disease clinic on the East Coast and trains one in four Georgia doctors.

Now Fulton and DeKalb counties are lowering their funding to Grady by $3 million each, on top of a $27  million decrease in Indigent Care Trust Fund dollars from the federal government.

The reduction in Grady’s government funding coincides with an uptick in uninsured patients and the constant increase in medical costs, said Matt Gove, a Grady spokesman.

So it’s not surprising that two of the Grady satellite clinics – one in Decatur, the other in Southwest Atlanta – are closing. The two have the lowest patient volume among Grady’s satellite clinics, and patients will be directed to centers that have more specialty services, Gove said.

Grady will be left with six clinics after the consolidation. Earlier, the system announced it  is cutting 100 jobs. None of those positions is in direct patient care, Gove said.

The cutbacks stem from the reduced government dollars, said Michael Young, the Grady system’s  CEO and president. “We will not sacrifice our high quality of care, but these funding cuts mean we will have to adjust how much care we can deliver.’’

The lowest co-pays for prescriptions at Grady’s outpatient pharmacy will rise to $3 from $2. Homeless patients will now be asked to pay $1 per prescription, and those medications dispensed in the Emergency Department will cost $10.

Total savings from the various operational changes: About $10 million.

Grady hopes to get a little more of the Indigent Care Trust Fund dollars than are now projected, Gove said.

Still, the cutbacks at Grady may not be over.

Here’s the AJC’s recap of the Grady situation, and a 2009 article on the hospital’s transformation in Kaiser Health News.