Gov. John Bel Edwards' administration announced Wednesday that a deal is done to transfer oversight of the state-owned safety-net hospitals in north Louisiana to a new manager, with boosted costs and more direct involvement from Louisiana State University.
After months of negotiations, Edwards' chief lawyer Matthew Block said contract terms have been reached to shift day-to-day oversight of the Shreveport and Monroe hospitals to a new company jointly operated by southeast Louisiana-based Ochsner Health System and LSU.
The new company's takeover of the facilities is planned for Oct. 1, barring any unexpected disruptions, Block said. The contract is planned for 10 years, with two possible extensions of up to five years each.
The deal will cost $294 million this budget year, Block said, about $40 million more than the previous management contract. But he said federal financing will cover the increased price tag.
"We believe that is the needed amount to support these partner hospitals and the medical school in total funding," Block said in an interview Wednesday evening.
LSU's governing board still must approve the contract, and lawmakers also will review it.
The move aims to end years of strife over how BRF has managed the hospitals under its 2013 contract. BRF has repeatedly clashed with LSU leaders, whose doctors work at the hospitals and whose medical students train there.
LSU previously ran the hospitals and their clinics, but then-Gov. Bobby Jindal stripped the university system of the management duties, as part of a wider effort to privatize the state-owned charity hospital system. Of 10 hospitals previously managed by LSU, the university system only currently oversees one, in Tangipahoa Parish.
The Edwards administration deal will return LSU to more direct management of the hospitals in Shreveport and Monroe as well. Block said appointments to the hospitals' governing board that will choose the CEO and make decisions will be split evenly between the university system and Ochsner.
"It absolutely puts LSU in having a very significant say in the operations of these hospitals," he said.
BRF will receive $13 million as part of the management transfer, Block said, paid by the joint company controlled by Ochsner and LSU.
The Edwards administration announced the planned management transfer to Ochsner in December and has been working on the terms of the arrangement ever since.
The Democratic governor said in a statement Wednesday that partnership with Ochsner will "strengthen the medical school, grow it over time and enable us to have better facilities."
BRF, which started as a biomedical research foundation, is running the Monroe and Shreveport hospitals under a no-bid contract struck by Jindal five years ago. The privatization deal has been contentious since it began, with repeated clashes over payment amounts and contract terms. BRF had never previously run a patient-care facility.
The Edwards administration and LSU, which previously oversaw the safety-net hospitals, sent breach-of-contract notification letters to BRF that claimed the manager, among many charges, was harming graduate medical education at the hospitals.
BRF, which manages the two hospitals as University Health System, responded by saying the facilities suffered from inadequate state funding, financing discrimination against north Louisiana and unreasonable demands from LSU.
Ochsner owns, manages or is affiliated with more than two dozen hospitals in Louisiana. The company helps to manage the state-owned, safety-net hospital in Terrebonne Parish, an operating agreement that has generated no widespread criticism.
