Jefferson IG suggests negotiations with more than one hospital operator

Jefferson Parish should open negotiations with multiple companies looking to take over the parish’s two public hospitals and also ask the state Attorney General’s Office whether the closed-door process of selecting among the firms vying for the contract complies with Louisiana’s Open Meetings Law, according to a confidential report from the parish’s Office of the Inspector General.

The content of the report, which also urges a more transparent process going forward, came to light as Parish Council Chairman Chris Roberts said a majority of council members are prepared to vote to allow Louisiana Children’s Medical Center to lease East Jefferson General Hospital and West Jefferson Medical Center. However, he said, a vote will be put off until the entire council is prepared to vote on the issue.

“I’m not going to continue scheduling meetings and have them canceled,” Roberts said Monday. “I’m telling (council members) to notify the clerk when they’re prepared to vote.”

A draft version of the inspector general’s report was hand-delivered to council members Friday, with instructions it be kept confidential for 30 days while comments were collected for a final version.

A copy of that report was viewed by WWL-TV and The New Orleans Advocate on Monday.

Inspector General David McClintock began monitoring the selection process in late August, watching over public and private meetings at which members of the hospital boards and the Parish Council have debated whether Children’s, HCA or Ochsner Health System should win a 30-year lease to operate the hospitals.

The report, the first McClintock has issued since taking office earlier this year, doesn’t directly recommend a company or address the deadlock between the boards of the two hospitals, which were unable to come to a consensus on which operator would be the best fit for the parish. The report suggests a final decision need not be made before the council enters into “simultaneous negotiations” with more than one of the companies.

After the boards of the two hospitals deadlocked on which company to recommend to the council earlier this month — the East Bank board favored HCA while the West Bank board recommended Children’s — some officials floated the idea of selecting a different firm to run each of the hospitals.

The inspector general’s report does not appear to recommend that course.

Instead, it suggests that negotiating with multiple companies would be a good way to make sure the parish retains leverage throughout the process.

Conducting simultaneous negotiations could ensure the council ends up with the best deal, since the companies would still need to compete with one another as they work through the details of the contract, according to the report.

The process would also ensure a fallback was available if one of the deals fell through, the report notes.

The report does not spell out exactly how such negotiations would work or how many of the companies the parish should open negotiations with.

McClintock’s report also raises concerns about the extent of closed-door discussions about the hospitals.

Both the hospital boards and the Parish Council have discussed the selection process during “executive sessions,” private meetings shielded from the public and the media.

Officials have justified those discussions under a provision of state law that allows hospital districts to keep discussions about a public hospital’s strategic plans or marketing out of the public view.

The report urges the council to seek an opinion from the Attorney General’s Office about the legality of the discussions that have been held in those sessions, and it recommends that no action be taken until that opinion is received.

“Based upon monitoring activity, the (Office of the Inspector General) has reason to question whether or not substantial portions of discussions and conduct engaged in by the Parish Council and the boards of the hospital service districts within executive session comports with the narrow exception to the open meetings law,” according to the report.

The report suggests that there are few precedents that could be used to determine whether the discussions that have already taken place fall within the exemption cited by parish officials, and it does not spell out any specific actions that may have conflicted with the law.

It singles out the hospital boards’ Sept. 9 meeting as being of “particular concern.” Board members took several votes behind closed doors during that meeting.

Those votes are not criticized in the report, and the boards have argued the exemption allows them to take action during executive sessions, potentially without disclosing the results of those votes.

The state Open Meetings Law typically does not permit boards to vote in private.

Overall, McClintock’s report calls for more transparency in the process as a whole.

“The future of the parish’s hospitals is a matter of substantial public interest,” it says. “However, the public has yet to be afforded the opportunities guaranteed to it by the open meetings law.”

The report also suggests the council should further consider the role that Kaufman Hall, a consulting firm hired by the hospital boards to aid in the selection process, plays in the decision.

Kaufman Hall has not publicly offered an opinion on which company the parish should choose, arguing that the hospital boards did not call for such an action.

Several council members, however, have urged the firm to offer a recommendation.

The report sides with those council members, arguing that failure to offer a recommendation would not be using the company’s assistance to the fullest extent.

“When public funds are utilized to retain an expert, the (Office of the Inspector General’s) position is that the expert’s resources should be fully utilized,” the report says. “It seems counter-intuitive that any decisions would be made to restrict the flow of objective information and recommendations from the paid expert.”

Councilman Ben Zahn and Councilwoman Cynthia Lee-Sheng have pushed for the council to learn more about the proposals before making a decision. Neither has publicly announced a preference, but both have sought a recommendation from Kaufman Hall.

In a news release on Saturday, Zahn praised the inspector general’s report and called for more transparency in the process.

At the same time, he argued the parish should seek a refund from Kaufman Hall, suggesting that the consultants had initially made a verbal recommendation for one of the companies before being pressured by one of the hospital boards to withdraw it.

“I strongly suggest that hospital board members unanimously request Kaufman Hall to rebate a significant percentage of the $1.3 million fee charged for their services, or lack thereof, and either confirm or deny that a recommendation was given; if so, a public statement must be forthcoming,” he said.

Roberts declined to comment specifically on the inspector general’s report Monday, citing the confidential nature of the document.

However, he said conversations with council members have convinced him that Children’s Hospital has enough support on the council to win if the issue were put to a vote.

“I’ve spoken with everyone on the council, and without naming names and specifically stating where they are, I’m confident that Children’s has a majority,” he said.

Roberts and Councilman Elton Lagasse last week released an open letter stating their preference for Children’s. Councilman Paul Johnston also said last week that he is leaning toward Children’s, though he urged the council to seek out more information and take its time with what he described as “the biggest decision we’ll be making in our public service careers.”

Roberts said he would wait to schedule a meeting until other council members are ready, but he urged them not to drag out the process.

“I don’t think this is going to get any easier the longer we wait,” he said.