Our Views: Cash shortage in new deals?

Advocate staff photo by RICHARD ALAN HANNON -- The LSU Earl K. Long Medical Center along Airline Highway in north Baton Rouge is reducing services because of employee attrition as the facility gets closer to its April 15 closure. Show caption
Advocate staff photo by RICHARD ALAN HANNON -- The LSU Earl K. Long Medical Center along Airline Highway in north Baton Rouge is reducing services because of employee attrition as the facility gets closer to its April 15 closure.

All is well, says the Jindal administration, but taxpayers still ought to be worried about the long-term costs of major privatization deals for the state’s former charity hospitals.

Maybe not this year, but later on.

The Legislative Fiscal Office reported that the state budget has set aside almost $14 million less than is needed to fund the health care needs of the state in this year’s budget, fiscal 2014. It’s also the first year of the widespread deals which turned over most state hospitals to private operators.

The gap is more than $14 million, as every state dollar is matched by federal funds.

Not to worry, says the state Department of Health and Hospitals, reporting that savings from privatization agreements should keep the program within its budget.

The details of this disagreement are complex, involving what expenses are reported on what forms sent from DHH to LFO, and then what the still-new contracts of the private hospital operators say. The bottom line is both simple and complex.

The simple part, as we said above, is that the taxpayer should be worried about the long-term prospects for the lease agreements. They were developed by the LSU Board of Supervisors in considerable secrecy, with board members approving far-reaching financial agreements that contained blank pages to be filled in later.

Not the best way to inspire confidence. Nor is the management of the shaky state budgets under Gov. Bobby Jindal adding to confidence.

Insiders at hospitals feel the contracts are generous to the private managers, to the point that raises questions about whether the negotiations — rushed through in an atmosphere of budget crisis — can be sustained as some of the sources of federal funding for the agreements dry up over time.

Simple, yes, but not the only question at issue.

Despite what can only be described as heroic efforts by health professionals at the old charity hospitals, treatment often left a lot to be desired in terms of waits and availability of medical services. As the governor has noted this year in his travels around the state, many of the public-private agreements are already resulting in expanded patient services at some of the sites, even as the old hospitals are shuttered. That is the positive side of the privatization agreements, along with any operating savings to the state.

The final judgment on the privatization agreements is thus a question that is not driven by relatively small budget gaps of the type that the LFO drew attention to. Rather, the more comprehensive question is about whether patients are better off and the financial sustainability of the deals in fiscal years 2015 and beyond.

Those future issues do worry us and should worry taxpayers. The LFO was right to call attention to the cash concerns now, but that is only the beginning of a deeper analysis that will have to be made over the next few years by lawmakers, but also by voters in the elections of fall 2015.