Partnerships announced for three LSU hospitals

The Jindal administration announced potential public-private partnerships Monday for the operations of LSU hospitals in New Orleans, Lafayette and Houma, as well as the $1.1 billion academic medical center in New Orleans, which is under construction.

Each of the private partners agrees to make advance and nonrefundable lease or occupancy payments, which will help LSU close a $300 million-plus gap between revenues and costs in the hospital budget. The shortfall stems from Congress reducing the amount the federal government pays for its portion of Medicaid, leaving the state to pay more than anticipated.

In “memorandums of understanding,” or MOUs, released Monday the parties commit to continued care of the poor and uninsured as well as training the state’s future physicians.

Under the MOUs:

  • Louisiana Children’s Medical Center would operate the interim hospital and eventually the LSU affiliated academic medical center located on the same campus as a new Veterans Administration hospital near downtown New Orleans. Children’s owns Touro Infirmary.
  • Lafayette General Health System would align with the University Medical Center.
  • Ochsner Health System and Terrebonne General Medical Center would partner with Leonard J. Chabert Medical Center in Houma.

Together, the private hospitals made nearly $30 million in advance financial commitments, according to documents that include few details. The dollars will be used to draw down substantially more in federal matching funds.

The $30 million would be credited as advance lease or occupancy payments, including $13 million from Children’s for the New Orleans medical center that won’t be ready for occupancy until 2015.

Negotiations continue behind closed doors on financial arrangements that are key to the private entities taking over hospital operations.

The finances involve agreements to pay the private hospitals higher Medicaid payments as they take over traditionally public hospital services.

Those negotiations will result in cooperative endeavor agreements, called CEAs, which must be approved by a variety of private and governmental groups, including the Joint Legislative Committee on the Budget.

“We would like to get all of them done by the end of April,” said state Department of Health and Hospitals Secretary Bruce Greenstein.

Greenstein said the state will benefit from knowledge gained in a prior deal for Our Lady of the Lake Regional Medical Center in Baton Rouge to become home for LSU in-patient care and medical training programs.

The documents regarding Lafayette and Houma hospitals state that parties want to complete agreements on or before March 15, 20013, and have transactions closed on or before June 23.

The documents involving the current and future New Orleans hospitals state that the memorandum of understanding would remain in place until the effective date of the cooperative endeavor agreement or April 30, 2013, whichever is earlier.

The MOU also indicates that the administration would seek to alter the structure established to oversee the new academic medical center, which is run by University Medical Center Management Corp., an affiliate of LSU.

“We are stopping the (budget) cuts at each site and moving forward with expanded services and increasing our ability to keep local people in their communities for care,” said LSU System Executive Vice President Frank Opelka in a telephone interview.

The administration is gearing hospital takeovers for July 1, which is the start of the new budget year.

The LSU Board of Supervisors posted notice of a special Friday meeting to take up the “memorandums of understanding.”

Senate President John Alario, R-Westwego, said Children’s has “strong management experience ... I really think this is a win for everybody concerned. We have to do this in the most efficient way to save taxpayer dollars.”

House Speaker Pro tem Walt Leger, D-New Orleans, said Children’s and Touro “have a proven track record of patient-focused care, and a dedication to ensuring people of all socio-economic backgrounds can access world class health care.”

State Sen. Page Cortez, R-Lafayette, called the MOU with Lafayette General “a first step and it looks like its going to be a good deal for the Acadiana area.”

David Callecod, president and chief executive officer of Lafayette General Medical Center, said expansions of patient health services and graduate medical education are planned.

Callecod said training programs will remain at UMC, but will also expand to the main Lafayette General campus. “Residents get the experience of a 350 bed full-service tertiary facility in their training, which will make it that much more attractive for them as they’re looking at programs,” he said

In Houma, Ochsner’s “is a very natural partnership for us and we look forward to them operating at the hospital as they have done,” said state Sen. Norby Chabert. The partnership involving the Houma hospital, which bears his father’s name, should allow the hospital to operate “on a more sustainable footing and bring peace of mind,” said Chabert, R-Houma.

Marsha Sills of The Advocate’s Acadiana Bureau contributed to this report.