Hospital system faces $29 million in cuts
The Jindal administration’s latest budget balancing will trigger more than $29 million in cuts throughout the LSU public hospital system before the June 30 end of the current state budget year.
LSU System Vice President Fred Cerise said Tuesday the reductions will mean employee layoffs, as well as fewer available hospital beds and program eliminations at the seven hospitals in LSU’s Health Care Services Division. The HCSD hospitals, located in Baton Rouge, Lafayette, New Orleans, Houma, Bogalusa, Independence and Lake Charles, are bracing for $29 million in cuts, he said.
Other cuts are on the way for the LSU Health Care Sciences Center in Shreveport which includes hospitals in Monroe and Pineville, Cerise said. “They are still working through the impact,” he said.
The Jindal administration made no mention of cuts to the hospitals as officials announced plans for closing a $251 million state budget hole last month.
State Senate Finance Committee Chairman Sen. Mike Michot, R-Lafayette, specifically asked about the impact on the LSU hospitals and was told by administration officials that the hospitals would get their budgeted amount.
The problem occurs as a result of the administration shifting $50 million in federal health-care funds from the LSU hospital system to state Department of Health and Hospitals operations, Cerise said.
On Tuesday, DHH Undersecretary Jerry Phillips said DHH is “making every effort” to fund the LSU hospitals up to the budgeted amount. “First, we have to make LSU whole then what’s in excess of budget is being used to fill (DHH) midyear cuts,” he said.
“I don’t really know why they would be short,” Phillips said. “What they are saying is they are going to be short funding … even though we are going to pay them the budgeted amount.”
Phillips said the difference could be in the way the hospitals are using various pots of federal funds that are available.
In December, DHH Secretary Bruce Greenstein said the LSU hospitals are generating extra federal dollars from providing patient care that exceeds their budgeted amounts, so DHH was using the excess cash to offset cuts.
Cerise said that plan won’t work because the hospitals are generating the extra cash by providing patient care and needs the federal funds to cover costs.
“We cannot incur the whole cost and get reimbursed only a portion of it and that’s what’s being proposed,” Cerise said.
“They are telling us what they intend to do is to draw down the federal share of what we earn above budget and backfill us only $35 million, which does not work for us because we had to increase the cost,” Cerise said. “We incur the full costs and get only a portion of those costs back.”
The HCSD cuts will be dramatic because they come late in the state budget year with little time left to absorb them in the seven hospital system’s $780 million budget, Cerise said.
Cerise said LSU will announce specific cuts to the hospitals within a couple of weeks. He said an employee layoff plan will be submitted to state Civil Service for approval.
As the administration announced the latest cuts, state Commissioner of Administration Paul Rainwater said efforts had been made to protect funding for higher education and health care.
Higher education took the biggest cut — $50 million out of $144 million in reductions called for in the Jindal plan.
The administration used the federal health-care dollars generated by LSU and $66.2 million generated as a result of recent passage of a constitutional amendment dealing with TOPS college scholarship funding to finish closing the $251 million revenue hole.
Downward revision of state tax revenue estimates and the need for additional dollars
in the program that funds public schools created the budget gap.