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LSU hospital deals cost less than expected


By Associated Press
Posted: July 17, 2014 - 2:00 pm ET
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Louisiana spent $52 million less than was budgeted for Gov. Bobby Jindal's privatization deals for the LSU hospitals that provide care to the uninsured in the recently ended fiscal year, according to data provided by the state health department.

Jindal's health secretary, Kathy Kliebert, said the hospital's new managers are improving care while also running more efficient operations.

"We feel really comfortable that they are managing their budgets, that their new cost structures that they're setting in place are working, and at the same time we're getting really good quality care," Kliebert said in an interview.

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The Department of Health and Hospitals also says some of the reduced spending can be tied to a slower-than-expected restart of services that had been cut when LSU was operating the hospitals and their clinics.

But lawmakers in areas with the privatization deals have raised concerns that some of the uninsured patients are going to other private hospitals in the region that aren't getting reimbursed for the care.

In response to an Associated Press request, DHH released updated financial data showing the hospital deals cost the state just over $1 billion in the fiscal year that ended June 30, paid with state and federal Medicaid dollars. The budget assumed $52 million more than was spent.

Final accounting for the overall Medicaid program won't be complete until October, so it won't be clear until then if the health department has a surplus.

Privatization deals, completed through no-bid contracts, have taken effect for nine university hospitals and their clinics, with the earliest deal starting in April 2013. Kliebert said the management transfers have decreased wait times for clinics, specialty services and prescription fillings.

Most of the contracts had the management company of a nearby hospital taking over operations of the LSU facilities. Three contracts closed an LSU hospital and shifted its services to private facilities.

The hospitals are reimbursed for care provided to patients. LSU's Shreveport hospital — now managed by the Biomedical Research Foundation of Northwest Louisiana — came in most under budget, billing for $42 million less than projected.

That figure raised concerns with Sen. Sherri Smith Buffington, R-Keithville.

"I want to understand where did that savings come from specifically?" Buffington said. "I want to know if that's a true reduction in volume or if that's volume that went elsewhere for care."

Buffington is one of several state senators who have said that in areas where LSU hospitals have been privatized, nearby private hospitals have been inundated with uninsured patients — without the compensation the privatized facilities are getting.

"Patients don't evaporate," she said.

DHH Undersecretary Jeff Reynolds said LSU had ratcheted down services at its Shreveport hospital before the research foundation assumed management in October. He said some lower-than-expected spending for that contract was because the new hospital manager needed time to ramp up services that had been limited.

Reynolds acknowledged that private hospitals in the Baton Rouge, Monroe, Shreveport and Lake Charles markets had seen an uptick in uninsured patients since the LSU privatization deals took effect. But he added: "We're starting to see those costs come back down."

The current year budget planned for the hospitals is about $90 million more than was spent in the recently-ended fiscal year. Meanwhile, DHH still is negotiating for approval of the financing plans, after federal officials rejected arrangements proposed for six hospital deals.


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