BATON ROUGE, La. — Lawmakers scrutinizing plans to privatize LSU’s hospitals said last week they have not been given the complete financial terms, and they questioned the public’s access to hospital records and the long-term impact on the state budget and patient care.
Management of the university hospitals and clinics in New Orleans, Lafayette, Houma and Lake Charles will turn over to private operators next week, even though some financial details remain incomplete in the contract documents provided to lawmakers.
“I’m just wondering when we’re going to get a complete version of this,” said Rep. Helena Moreno, D-New Orleans, as she looked through the contract that will shutter LSU’s W.O. Moss Medical Center today and transfer its services to Lake Charles Memorial Hospital.
But besides asking for more information, lawmakers have little authority over the contracts, which are being negotiated and signed by Gov. Bobby Jindal’s administration.
The Republican governor is pushing to privatize operations for nine of the 10 LSU hospitals that care for the poor and uninsured and that provide training sites for many of the state’s medical students. The state operating budget for the fiscal year that begins July 1 assumes the management switch for the facilities.
The governor’s top budget adviser, Commissioner of Administration Kristy Nichols, assured lawmakers Thursday that the deals will save the state treasury money — though they are expected to use more federal financing to pay for the contractual arrangements.
“When we ask the very basic question of are we saving money, the answer is yes. But more importantly, we’ve been able to provide care at the level that both yourself and your local hospitals ... believe is necessary to adequately serve the communities,” Nichols told the Joint Legislative Committee on the Budget, which was holding two days of hearings about the deals.
Jindal turned to LSU hospital privatization after Louisiana faced a drop in its federal Medicaid financing rate, which meant the state gets fewer federal matching dollars for every state dollar it puts up.
The governor chose to levy most of the cut on the university-run hospitals, rather than on the private Medicaid providers.
Administration officials told lawmakers that the LSU hospitals budget was $955 million at the start of this year, before the federal funding drop. The budget set aside for the hospitals under the privatization contract tops $1.1 billion next year.
Despite the overall cost increase, Nichols said annual lease payments from the new hospital operators — expected to generate about $140 million a year — will be used to draw down more federal health care matching money to pay for the hospitals. The state general fund money paid for the hospitals, she said, will shrink by $100 million.
Sen. Francis Thompson, D-Delhi, said those were only estimates, and he questioned whether the state was focused too heavily on saving money rather than providing care to the uninsured.
“We’ve taken away a system that can’t be replaced, so we better replace it with something better,” he said.
Sens. Ed Murray, D-New Orleans, and Dan Claitor, R-Baton Rouge, raised continued concerns that the privatization deals allow records to be shielded from the public without language that ensures access to adequate information to review how tax dollars are spent.
Patrick Seiter, a lawyer for LSU, said all the public spending is subject to review by the legislative auditor.
Sen. Fred Mills, R-Breaux Bridge, wondered how the hospitals would be affected if the state needs to shrink financing for the contract deals because of budget troubles. He asked if the hospital managers could simply walk away from the deals.
Department of Health and Hospitals Undersecretary Jerry Phillips said if funding adjustments were needed, state officials and the hospital operators would return to the negotiating table.
Phillips didn’t say what happens, however, if the private companies refuse to take cuts and what, if any, role lawmakers who craft the budget would have in the process.
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