Legislators review charity hospital contracts

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Adam Lau /
Advocate staff photo by ADAM LAU -- State Sen. Ed Murray, D-New Orleans, said during a Joint Budget hearing Friday that for purposes of state deals, private entities should be subject to public records and open meetings laws as their management boards would deal with decisions that affect patient care and medical education.

Two state senators complained Friday that lucrative deals for private operation of LSU public hospitals lack provisions that guarantee public accountability.

State Sens. Ed Murray and Dan Claitor made their comments as the Joint Legislative Committee on the Budget reviewed not-yet-finalized agreements for private operation of LSU hospitals in Lafayette and New Orleans as well as the $1.2 billion academic medical center under construction.

The deals help the state close a LSU hospital budget gap in the current budget year with the private entities providing $125 million in up-front payments for lease on the facilities they are taking over June 24 — most related to the New Orleans takeover.

Meanwhile, committee Chairman Sen. Jack Donahue, R-Mandeville, pressed the Jindal administration for details on the short- and long-term state financial obligation for all LSU hospital takeovers including another six that are still in the works.

Louisiana’s Medicaid program earmarks a maximum of $286 million to the Louisiana Children’s Medical Center for New Orleans hospital patient care during the fiscal year that begins July 1. Another $126 million is reserved for Lafayette General Medical Center takeover of the University Medical Center.

The first cooperative endeavor involving Our Lady of the Lake Regional Medical Center in Baton Rouge involved a potential $198 million in Medicaid dollars.

“You are a private enterprise taking over a major public purpose,” Murray, D-New Orleans, told hospital executives. “How do we audit those dollars?”

Division of Administration executive counsel Liz Murrill said language will be added to provide for legislative auditors’ access for financial review purposes. She said the legislative auditor noticed the omission.

“All public audit functions will be accomplished,” Murrill said.

Murray said the entities for purposes of the state deals should be considered public bodies and as such subject to public records and open meetings laws as their management boards deal with decisions that affect patient care and medical education.

Murray reminded officials that an LSU-affiliated nonprofit board once scheduled to operate the New Orleans medical development operated under public records and open meetings laws.

Claitor, R-Baton Rouge, said the administration could have avoided a lot of dissatisfaction over the public-private partnership move “if there had been more communication and more information.”

“In this scheme I don’t see that there’s going to be any additional access as we go along,” Claitor said, noting that the agreements spell out confidentiality.

Lafayette General chief executive officer David Callecod said the nonprofit had agreed to legislative audit and the contract ensures that LSU monitors that the “public purpose” is being met.

Callecod said a community advisory board would be set up for the hospital.

But Murray said the advisory board wouldn’t have decision-making authority like the Lafayette General Health Systems board over University Medical Center matters.

“No, sir,” Callecod said.

Greg Feirn, chief financial officer of Louisiana Children’s Medical Center, said entities’ board meetings that tackle New Orleans hospital operations would not be public.

Feirn said the public accountability will come through patients and teaching programs. If the public purpose is not met, “we will have breached” the agreement and stand to lose $250 million in up-front payments., he said.

Callecod and Feirn assured committee members that efforts are being made to hire state employees who work at the LSU Lafayette and New Orleans hospitals.

“We believe a little over 600 employees are there now. We would like to retain as many of them who would want to stay,” Lafayette General’s Callecod said. “We have opportunities for them.”

Callecod said the hospital has a daily census of 30 to 35 patients now. “We want to see it comfortably running between 50 and 60,” he said. Also planned is a doubling to four emergency room beds and out-patient clinic expansions.

Children’s Feirn said there are some 2,100 employees at LSU’s Interim Hospital and 97 percent of them have filled out employment applications. “We have every intent to hire as many of them as we can.”

Both Callecod and Feirn said their organizations will be ready to take over the LSU hospitals on June 24.