Louisiana Voice

LouisianaVoice has obtained a copy of the minutes of a meeting in Baton Rouge a little over a year ago which led to the firing of the head of the LSU Hospital System and the CEO of Interim Louisiana Public Hospital in New Orleans by the Jindal administration.

LSU Health Care System head Dr. Fred Cerise and Interim Louisiana Public Hospital CEO Dr. Roxanne Townsend were fired just days apart last year—Cerise in late August and Townsend in early September—following a July 17 meeting at which former Secretary of Health and Hospitals (DHH) Alan Levine pitched a plan to privatize the state’s system of LSU medical centers.

Levine was at the meeting on behalf of is firm, Health Management Associates (HMA) but was recently hired as president and CEO of Mountain States Health Alliance.

Present at that meeting, besides Cerise, Townsend and Levine were then-LSU President William Jenkins, DHH then-Secretary Bruce Greenstein, LSU Medical Center Shreveport Director Dr. Robert Barish, HMA CFO Kerry Curry, LSU Health Science Center Shreveport Vice Chancellor Hugh Mighty and LSU Board of Supervisors members Rolfe McCollister, Bobby Yarborough, John George and Scott Ballard. LSU Health Science Center New Orleans Chancellor Larry Hollier and Vice Chancellor for Clinical Affairs at LSU Health Sciences Center New Orleans Frank Opelka also participated by teleconference.

Opelka was promoted to Cerise’s position when Cerise was replaced.

The meeting was held in the LSU president’s conference room.

Both Cerise and Townsend expressed reservations about Levine’s proposal but several members of the LSU Board of Supervisors who were present at the meeting “indicated they want LSU’s management to pursue this strategy,” according to a summary of the meeting prepared for Jenkins by Cerise prior to his being replaced by Opelka.

Along with his two-page summation of the meeting, Cerise also submitted a third page containing a list of five concerns he had with the privatization plan pitched by Levine. It was that list that list of concerns which most likely got Cerise removed as head of the LSU Health System via an email from Jenkins.

HMA, headquartered in Naples, Florida, was the subject of a scathing report by CBS news magazine 60 Minutes less than six months after Levine and Curry met with LSU officials in Baton Rouge and Levine has since moved on to become the CEO of Mountain States Health Alliance.

The thrust of the 60 Minutes story which aired last Dec. 2, was that profits, not patient care, was the driving force behind HMA’s emergency room decisions and that emergency room doctors were pressured to admit emergency room patients “regardless of medical need” to boost the company’s bottom line.

Some speculation had HMA squarely in the mix insofar as the proposed privatization of LSU’s 10-hospital system but the 60 Minutes story apparently thwarted those plans.

Levine denied that in an interview with the Baton Rouge Advocate last October. “I have had no conversations with LSU about taking over any of the existing LSU hospitals,” he told the paper. “I was there (in Baton Rouge) as a former (DHH) secretary. I was not there to pitch my company.”

Little more than a month later, following the 60 Minutes story by CBS correspondent Steve Kroft, Levine found himself trying to salvage the HMA image.

HMA, which owns 70 hospitals in 15 states, was accused on camera by several former employees of setting admission targets and that doctors were coerced into admitting more patients. The former employees said doctors who did not meet quotas were threatened with their jobs.

Despite Levine’s denials that HMA was interested in managing the LSU hospitals, Jenkins seemed to think otherwise. “I would say he would be interested in business,” Jenkins said in the same story containing Levine’s denial. “You would be surprised how many companies across the country are interested in these hospitals.

Levine, according to Cerise’s notes, recommended as an initial step that LSU sell its hospital in Shreveport (LSU Medical Center) and use the proceeds to “offset budget cuts for the rest of the LSU system.”

He suggested that the buyers would form a joint venture with LSU, invest capital into the facility and develop a strategy for LSU “to more aggressively compete in the hospital market.”

“The LSU board members present indicated they want LSU’s management to pursue this strategy,” Cerise’s notes said. “Greenstein stated that LSU should look to generate two years of funding to address the state funds shortfall in the system through the sale of Shreveport’s hospital.”

It was at that point that Cerise indicated his concern that such a strategy would take time to develop and that LSU would likely need to go through a competitive public procurement process and “likely legislative approvals.”

It was subsequently determined that legislative approval was not legally required; all that was required was for the legislature to be informed of the administration’s actions.

“There appeared to be agreement that LSU develop a plan that would not result in closure of hospitals,” Cerise’s notes said. “When the question was posed to the group, ‘Will LSU close hospitals,” George responded, ‘We hope not.’ The clear message was that the board members did not want LSU to proceed with any hospital closures at this point.”

Since that meeting, Earl K. Long Medical Center in Baton Rouge and W.O. Moss Medical Center in Lake Charles have each closed.

“Cerise asked Greenstein if he would allow LSU to draw federal funds to try to fix part of our problem and he replied, ‘Yes.’”

Among the concerns expressed by Cerise in an addendum to the meeting meetings which he addressed to Jenkins:

• There is no commitment by DHH to mitigate the budget reduction while we work on the very complex Shreveport deal. Therefore, if later in the year, we realize that w cannot close a Shreveport sale by year end, we will run a deficit which is against the law and grounds for removal of those causing the deficit;

• There will be a significant community/political reaction to LSU assuming a competitive posture with a profit partner while receiving favorable Medicaid and uninsured financing from the state;

• We could see a significant negative community reaction to a plan that sells the Shreveport hospital and spends a large amount of the proceeds on hospitals in south Louisiana. There are also local contractual relationships which might be adversely affected and objected to;

• We need to be transparent with the legislature. If our plan is to spend as if we will complete a “joint venture” and secure funding later in the year, the board and the legislature need to realize that wer have no alternative solution if the plan fails later in this fiscal year. This will put Shreveport and New Orleans at risk as well as put LSU at risk of running a deficit;

• The only certain way for LSU is to live within its newly assigned budget is to close multiple facilities now. If we do not do this, we are running the risk of delaying and creating an unmanageable budget crisis later in the year that will put Shreveport and New Orleans at risk. That risk includes others blaming LSU for not taking actions earlier.

“I am asking that you share this memo or at least the substance of it with the full board to ensure they are informed and that their direction to us that we delay definitive budgetary action until the end of August to better assess the likelihood of a Shreveport sale with a statewide distribution of the proceeds is clear and unambiguous,” Cerise said in his memorandum to Jenkins.

At the conclusion of the meeting, Jenkins called for the creation of a task force to include then-Commissioner of Administration Paul Rainwater, Greenstein, George, Yarborough, McCollister, Ballard, Mighty, Barish, Hollier, Cerise and Townsend.

But in a matter of weeks, Cerise and Townsend were gone.

And a year later, a blank contract was agreed to which allows Biomedical Research Foundation of Northwest Louisiana (BRF), an organization with no appreciable cash flow and no experience in running a hospital, to assume control of LSU Medical Center in Shreveport and E.A. Conway Medical in Monroe—facilities with combined revenues of about $400,000.

Moreover, BRF will receive all the facilities’ assets with the state getting the liabilities.

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