Healthcare Business News

AP Analysis: Questions linger about La. hospital deals

By Melinda Deslatte / Associated Press
Posted: April 13, 2014 - 7:45 pm ET

A year after Gov. Bobby Jindal started turning over the operations of Louisiana's university-run hospital system to outside companies, lawmakers are complaining that they have unanswered questions about the deals.

Over the past week, state senators have asked why federal officials haven't signed off on the financing arrangements, what happens if federal approval never comes, and how the state will compensate other hospitals now dealing with a rush of uninsured patients.

Jindal chose to impose most of the reduction of federal Medicaid financing on the LSU charity hospital system. Privatization contracts were pushed by the Republican governor as a way to cut state costs, improve care for the uninsured and bolster medical training.

Privatization deals have taken effect so far for eight university hospitals and their clinics, with a ninth and final deal in the works.

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Most of the arrangements involve the management company of a nearby hospital taking over operations of the LSU facilities. Three of the contracts involve the closure of an LSU hospital and the shifting of its services to private facilities.

Members of the Senate Finance Committee questioned state health care officials last week about continuing negotiations between state and federal officials over the financing plans.

Federal officials haven't decided yet whether they'll agree to the arrangements used to pay the new privatized hospital operators. But the contracts negotiated by the Jindal administration rely on hundreds of millions in federal Medicaid dollars the state receives annually.

Only one contractual arrangement has received federal approval so far, a deal that shuttered LSU's Earl K. Long Medical Center in Baton Rouge and transferred most of its inpatient services to Our Lady of the Lake Regional Medical Center.

The Jindal administration has requested approval of the remaining privatization arrangements, and state Health and Hospitals Secretary Kathy Kliebert said she's confident the federal Medicaid office will sign off on them.

"It takes a long time. There's lots of questions back and forth," Kliebert said.

Sen. Ed Murray, D-New Orleans, pressed health department and LSU officials on Monday about how they would handle financing of healthcare services at the now-privatized hospitals if the deals don't get federal approval.

"I understand you feel confident, but if they don't, what is plan B?" Murray asked.

Kliebert said the state is exploring other ways to get federal reimbursements for caring for the uninsured. "I wouldn't say there's no plan B. I would say we are looking at other options," she told Murray.

The New Orleans senator didn't feel reassured: "You all are good, but I'm going to say there really is no plan B."

Meanwhile, the state got a potentially disturbing warning on the same day Kliebert testified before the Senate Finance Committee.

The CMS notified the Jindal administration that it will withhold $307 million in Medicaid money from Louisiana if no approval is soon granted on the hospital privatization financing.

Just when the money will be shut off remains unclear. The health department says if any money is withheld, it would be a year or more away.

Kliebert downplayed the significance of the letter, saying the announcement was expected because of the continuing negotiations.

But lawmakers also have other worries about the hospital contracts.

Most notably, they're concerned that in areas where the LSU hospitals have been privatized, nearby private hospitals have been inundated with uninsured patients — without the compensation that the privatized facilities are getting.

"Those non-partner hospitals in those communities are clearly getting slammed," said Sen. Sherri Smith Buffington, R-Keithville.

Sen. Ronnie Johns, R-Sulphur, said uninsured patients are pouring into emergency rooms at two hospitals in the Lake Charles area that aren't part of the partnership arrangement with the state after the Jindal administration closed the LSU hospital there.

"Those hospitals are not being compensated one penny for those coming in," Johns said.

Buffington told Kliebert and LSU hospitals chief Frank Opelka: "I feel like we're just asking these hospitals to hold their breath and hope they don't drown."

The Jindal administration hasn't devised a response to that spillover effect so far.

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