Louisiana Voice

LouisianaVoice has learned that the recent $651 million cut to the state’s healthcare system may have had nothing to do with the decision by Gov. Bobby Jindal to close down Southeast Louisiana Hospital in Mandeville and in fact the move may have been in the works for months.

In fact, secret negotiations have apparently been ongoing for some time between the state and Magellan Health Services of Avon, Connecticut, to take over the hospital after the hospital is closed and subsequently privatized.

Department of Health and Hospitals Secretary Bruce Greenstein announced late last Friday that the 348-bed hospital would be closed down beginning Oct. 1, putting about 300 employees out of work.

Southeast Louisiana Hospital is one of three state hospitals offering treatment for mental illness, including depression and attempted suicide. Early word is Southeast Louisiana Hospital’s patients will be transferred to the remaining two facilities—Central Louisiana State Hospital in Pineville and East Louisiana State Hospital in Jackson.

Only last month, the state sold 1,442 acres of hospital property to St. Tammany Parish for $6.45 million, far below the $14.7 million the property (including $200,000 in timber assessed valuation) was appraised for in February 2011.

The total 1,900-acre tract, including the remaining area of approximately 500 acres on which the hospital is situated and a park area leased to St. Tammany Parish, was appraised at $67.865 million only last week, according to the web page of the Office of State Lands.

LouisianaVoice has also learned from DHH sources that Greenstein is prepared to sign forms to officially declare the hospital as surplus property preparatory to its being put up for auction.

Early speculation had the hospital property being sold for the development of a high-end residential subdivision.

But LouisianaVoice learned that Greenstein had recently confided in Reps. Paul Hollis (R-Covington) and Tim Burns (R-Mandeville) that he had been in negotiations with Magellan about taking over the operation of the hospital once it is privatized.

Moreover, a New Orleans doctor reportedly was approached several weeks ago—before news of the loss of the $651 million in Medicaid funds by the state—about becoming the chief of staff of the Mandeville facility.

The unidentified doctor initially thought he was being recruited for an existing private hospital or for a private hospital’s expansion into the Northshore area because nothing had been said at that point about Southeast Louisiana’s closure. “It all makes sense now,” he told a colleague after learning of the impending closure of East Louisiana Hospital.

Once the hospital is declared surplus property and the facility closed, a request for proposals would have to be issued by DHH and private companies would be required to bid on contracting for either purchasing the hospital or running it as a contractor.

Magellan already has a connection with the state and Jindal, including three lucrative contracts.

The company, in addition to contributing $5,000 to Jindal’s campaign in 2008 and another $5,000 to the Louisiana Republican Party last September, currently has separate multi-million dollar contracts with three separate state agencies totaling more than $392 million. All three contracts run for two years, from March 1, 2012 through Feb. 28, 2014, records show.

The first contract, for $357.6 million, is with DHH through the Office of Behavioral Health. That contract calls for the firm to run a statewide management organization for a prepaid inpatient health plan for behavioral health services.

A $22.4 million contract with the Department of children and Family Services calls for Magellan to provide an array of coordinated community based services and support for children and youth with behavioral health disorders.

The third contract, for $12 million, is with the Department of Public Safety and Corrections and calls for Magellan to provide coordinated community-based services and supports for incarcerated youths with serious behavioral health disorders.

The larger, $357.6 million contract was approved in January but the two smaller ones were each approved in April, retroactive to March 1.

The recent appearance at the Capitol of former DHH Secretary Alan Levine only serves to fuel speculation swirling around the Mandeville hospital.

Levine, who came to DHH from Florida in January 2008, resigned in August 2010 to return to Florida where he currently serves as the Division 3 President of Health Management Associates where he is responsible for the administration of for-profit hospitals in Florida, Georgia, Oklahoma, Kentucky and West Virginia.

Greenstein to a legislative committee last week that Levine was in town to discuss Florida’s setup. He said Florida is one of several models for ways in which to increase revenues for state hospitals.

All the latest developments—Greenstein’s meeting with the legislators, the informal recruitment of the New Orleans doctor, last month’s sale of 1900 acres of adjoining hospital property and the impending declaration of the remainder of the property, including the hospital itself, as surplus, and the administrations reported secret negotiations with Magellan—all point to a covert plan by Jindal and Greenstein to close the hospital that dates back well beyond the news of the loss of the Medicaid funds.

All of which leaves unanswered the question of how indigent patients needing mental health treatment will be able to afford that treatment when the state hospital in Mandeville becomes a private, for-profit facility.

Besides the question of continued treatment for patients, employees of the hospital, like the 177 employees of the Office of Group Benefits, will lose retirement and medical benefits when the hospital makes the transition from public to private provider.