Our Views: New doubts on a rush job

No one wants major surgery performed in a rush, but that’s what happened to Louisiana’s old system of charity hospitals. In an atmosphere of financial crisis, Gov. Bobby Jindal and the LSU Board of Supervisors pushed through major lease-purchase deals that privatized most of the network of hospitals and clinics that Louisiana’s working poor have depended on for decades.

The good news is that the deals seem to be workable financially for the present, and there have been some improvements, sometimes significantly better services, in care to patients of the privatized facilities.

The bad news is that it is not clear whether the deals are as sustainable for the future as the Jindal administration says they are.

The Public Affairs Research Council puts the deals in perspective in a report from Don Gregory, a former state Medicaid director, and PAR research director Alison Neustrom.

From the short-term point of view, the deals provided the administration lease payments from private operators, so that the hospital assets are basically subsidizing the state’s rickety budget.

The question is whether the deals can be sustained, at a time of turmoil for health financing the likes of which hasn’t been seen in a generation. PAR said the contracts might not be sustainable because a sizable portion of the money comes from federal uninsured care funding scheduled to shrink nationwide, starting in 2018 — two years after Jindal’s term ends.

The state Department of Health and Hospitals argues the deals are workable in the future.

In part, this disagreement is based on the thorny political issue of expanding Medicaid, the principal health insurance for the very poor in Louisiana. Jindal has rejected the Medicaid expansion, unreasonably in our view. But it is upon the availability of expanded Medicaid that the U.S. government bases its plan to reduce the uninsured care money for the states. If that money from Washington goes down, and Louisiana doesn’t have expanded Medicaid coverage, will the costs of caring for the uninsured break the financial back of the contracts?

Not likely, says DHH, arguing the contracts have spending caps and other guarantees. But the contracts were waved through their approval process before the LSU board, often with dozens of blank pages filled in later. It did not breed confidence in the administration’s process.

On the financial terms, it seems from the PAR report that we’re a few years away from finding out who’s right in the differing prognoses of PAR and DHH. But in at least one scenario in the PAR report, the state could end up $350 million short of the money needed for the hospitals’ operators from 2018 through 2020 to cover uninsured care, and most of that will be at the privatized LSU hospitals.

The PAR report is going to be required reading, we think, as legislators and community leaders in health care grapple with the aftermath of emergency surgery on the charity hospital system. But if the surgery was rushed, the contracts with blank pages were executed, it’s reasonably clear that the state is not likely to go back to the charity care system of the past.