The three completed contracts for privatization of LSU hospitals eat up 94 percent of the dollars set aside in the state budget for all eight planned deals.
Senior fiscal analyst Shawn Hotstream told the state Senate Finance Committee that the commitments involving Baton Rouge, New Orleans and Lafayette will use $589 million of the $626 million in state dollars budgeted for privatization in the fiscal year that begins July 1.
“It would take in excess of $100 million to bring down the federal funds” needed to close the funding gap, Hotstream said. The federal government will send funds for some health care programs provided state government puts up money too.
The Jindal administration’s 2014 budget contemplates completing deals for public hospitals in Houma, Bogalusa, Lake Charles, Pineville and Monroe by the end of the fiscal year. The administration is working on finishing the agreements with private hospital partners in most of the areas by the June 30 end of the current budget year.
Department of Health and Hospitals Undersecretary Jerry Phillips agreed that more funding is needed to support the private takeovers.
“We are still identifying areas that are potential match (funds). We have not come to a firm number on that,” Phillips said.
One potential is using local hospital district funds to draw down federal funds, Phillips said, such as those available through Terrebonne General Medical Center. Another involves certified public expenditures available through LSU, he said.
“I’m extremely concerned. I’m very disturbed,” said state Sen. Norby Chabert, R-Houma, who represents an area where negotiations are taking place. He said he is unsure about the sustainability of the financing for the Houma deal.
Senate Finance Chairman Jack Donahue, R-Mandeville, said he was concerned “about the overall program and how much it’s going to cost.”
Donahue re-urged his request for a rundown of the costs of all the cooperative endeavor agreements along with budget requirements.
“We are now almost in June and somebody ought to have that ready,” agreed state Sen. Fred Mills, R-New Iberia. “We need to look to see if there are enough pots of money from the state and federal side to make things work.”
The proposed nearly $25 billion budget under Finance Committee review contains no funds for LSU to operate seven of the hospitals and only three months funding for another of them.
The financing has been moved to the state Department of Health and Hospitals, which would pay for Medicaid and uninsured care services billed by the hospitals private managers and operators.
The proposed budget includes appropriations to keep Lallie Kemp Medical Center in Independence open and three-fourths of a year funding for the LSU medical center in Shreveport, where another privatization effort is not as far along.
State Sens. Ronnie Johns, R-Sulphur, and Sherri Buffington, R-Keithville, said they were concerned about the rush to complete the deals and what would happen if they are not completed as contemplated.
“We are down to the deadline here,” Johns said. “Are you talking about some contingency plans if these agreements don’t come to pass?”
Phillips said the proposed agreements are supposed to be ready for review May 29 by the Joint Legislative Committee on the Budget.
“There is discussion how to address it if some of the hospitals are not ready to be presented,” Phillips said. The discussions include the hospitals involved and the governor’s Division of Administration, he said.
Buffington said the proposed budget strips more funds from operations of the Shreveport hospital, and the medical school is in jeopardy. The budget plight is occurring at the same time a private sector takeover is under discussion for Shreveport as well as related Monroe and Pineville hospitals.
She complained about the uncertainty of the situation.
“They are definitely working toward the finalization of that agreement. They still have work to be done,” Phillips said. He said talk is underway on “what kind of budget additions would need to be in place to allow those hospitals to continue” if the time frame is not met.
DHH interim Secretary Kathy Kliebert told Buffington that an answer should be forthcoming in the next week.
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