It's been almost four years since Louisiana State University took over management of the state's public hospital system, pledging to revitalize it. Now the university is back in front of the state Legislature, asking for more leeway to run the system.
The university is pushing for structural reforms it says it needs to complete the job of improving access to care, strengthening medical education and bolstering the public system's finances. The reforms are contained in two bills introduced late last month.
"We ought to be running these hospitals not as an agency of state government but as a business unit," said James Brexler, chief executive officer of the LSU Health Care Services Division, which operates nine of the state's 10 public hospitals.
Brexler previously served as CEO of Oakwood Healthcare in Dearborn, Mich., and General Health System in Baton Rouge, La. He also is a former chairman of the Louisiana Hospital Association.
Specifically, the university wants to lift a state-imposed spending cap that it says discourages the public facilities from accepting Medicare and commercial patients. It also wants the ability to retain earnings from the public system to invest in capital improvements. Currently, excess revenue is returned to state coffers.
Yet although many acknowledge reform is necessary, bringing change to the historic statewide system could take time. Legislators must be convinced that the facilities will remain accountable to state government and that allowing the system to retain excess revenue won't disrupt the state budget process.
Andy Kopplin, assistant chief of staff to Gov. Mike Foster, gives the legislation "a decent chance" of passage this year. "There are a few obvious areas where consensus is going to have to be generated," he said. For example, Kopplin said, the measure to allow retained earnings might be phased in.
Introducing another hurdle, the hospital association's policy committee has recommended supporting the legislation, but only if it is amended. The association wants to include a provision to establish a single Medicaid payment methodology for all providers. Currently, only state-owned hospitals receive Medicaid uncompensated-care payments, said Lynn Nicholas, president of the association.
LSU officials are working hard to generate agreement. Brexler said he believes that ultimately the measure should make the system less dependent on state money by allowing it to operate more efficiently and tap new revenue sources. The existing budget cap discourages the addition of services that would attract more Medicare and commercial patients, he said. About 85% of the system's patients are uninsured or on Medicaid, compared with 50% to 60% in most other public hospitals in the nation, he said. He said the cap discourages initiatives that could enhance efficiency and quality, such as joint ventures with private providers.
Brexler also is trying to convince lawmakers that the structural overhaul would not diminish accountability. For example, he said, the legislation would not allow LSU to close a hospital or reduce services without legislative approval.
LSU claims medical education in the state is threatened by inadequate funding of the public hospital system, which is what prompted LSU's takeover in July 1997. The public system is a primary training ground for medical residents. Residency programs at two public hospitals are being watched by accrediting agencies because budget reductions have diminished the volume of patients at the facilities, LSU spokesman Don Buchanan said.
In March, LSU highlighted the point by issuing a news release that blamed weak financial support of the public hospitals for a decline in the number of graduating medical students who choose to stay in the state for their residencies. For the first time in 12 years, more students from LSU's medical school in New Orleans will leave the state than stay for their training.