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Administration said in secret negotiations for Southeast Louisiana Hospital takeover by Magellan Health Services

Posted in Governor's Office, Health Care, Layoffs, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, RFP, Request for Proposals, Transparency on July 25, 2012| 13 Comments »

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.

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Is it us, or does announcement of Southeast Louisiana State Hospital closure carry certain familiar smell of incredulity?

Posted in ALEC, American Legislative Exchange Council, Campaign Contributions, Civil Service, Governor's Office, Health Care, Legislature, Legislators, OGB, Office of Group Benefits, Politicians, Privatization, Transparency on July 22, 2012| 3 Comments »

State Sen. Jack Donahue’s expressions of shock and surprise notwithstanding, the handwriting was on the wall more than a year ago as to the fate of the 60-year-old Southeast Louisiana State Hospital in Mandeville—thanks in part to a bill he authored four years ago.

It was in May of 2011 that then-parish president Kevin Davis revealed that he was working with the state to have St. Tammany Parish purchase 1,442 acres adjacent to the hospital in an effort to prevent the low-lying land from being developed in the future.

That sale was consummated last month at a price of $6.45 million. The land was appraised for $14.7 million in February 2011, according to records of the Office of State Lands. Davis, however, said in 2011 he felt the correct value of the land was nearer $10 million. He added that the Division of Administration had verbally agreed to the $10 million figure.

There was no explanation as to why the ultimate selling price was more than 35 percent lower than the reported agreed upon price and less than half the original appraised value.

Six months after the negotiations for the land were announced, Davis, who was term-limited and not eligible to seek re-election as parish president, was appointed by Jindal as director of the Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) at a salary of $165,000 per year.

He contributed $3,000 to Jindal election campaigns in 2003 and 2008 and Donahue gave $1,500 to the governor’s campaign in 2007 and 2011.

Jindal in turn, contributed $2,500 to Donahue’s campaign last year.

Both Donahue (R-Covington) and Rep. Scott Simon (R-Abita Springs) claimed that the announcement of the closure caught them off guard. Simon is chairman of the House Committee on Health and Welfare, making the decision not to inform him even more curious.

It was revealed during last year’s negotiations between the state and St. Tammany that the parish had been given first refusal on purchase of the 1,442 acres in a 2008 bill authored by Donahue.

Donahue’s bill also stipulated that proceeds from the sale of the land adjacent to the hospital must go toward the restoration, renovation, construction or maintenance of the hospital.

Davis said he had initially persuaded the state to construct a new hospital on parish-owned land north of I012 but those negotiations cratered when Bruce Greenstein was appointed secretary of the Department of Health and Hospitals (DHH).

He also said at that time that the state had decided not to close the hospital.

DHH issued an announcement late Friday, however, that the 348-bed hospital would be phased out of operation beginning in October despite those assurances of more than a year ago that it would remain open.

Patients at the facility will be transferred to East Louisiana State Hospital in Jackson with some possibly going to Central State Hospital in Pineville, placing a strain in terms of finances and logistics on families of patients who help care for the patients.

The move will also eliminate 300 positions at the hospital, one of the largest employers in St. Tammany Parish.

In addition to keeping the land free from development, Davis said he hoped to turn the property into a mitigation bank which would help pay the cost of acquiring the land.

St. Tammany is required to contribute matching funds for various state and federal road projects, Davis said. Some of the land used for those projects consists of wetlands and he said he wanted the parish’s financial contributions to go into the mitigation bank in exchange for credits that would allow wetlands construction.

The parish, he said, did not have available funds to purchase the land outright, so he had initiated negotiations with officials from the Trust for Public Land in and effort to get the trust to purchase the land on the parish’s behalf with the parish paying back the trust in a minimum of five years.

Now that the 1,442 acres adjacent to the hospital has been sold for less than half its appraised value and now that the official announcement of the hospital’s closure has been made, the question that remains is what now becomes of the remaining 500 acres and the hospital buildings?

Southeast Louisiana State Hospital, a psychiatric treatment facility, was established 60 years ago, in 1952, on 2,235 acres of land (later reduced to 1,900 acres). In 1959, it received international, if unwanted, attention as a brief stopping-off point for Gov. Earl K. Long in his odyssey across the southwestern U.S. during his celebrated mental breakdown.

Earl, still very much the state’s governor, fired state Hospital Board head Jesse H. Bankston and replaced him with Charles Rosenblum. Rosenblum subsequently persuaded the board to fire hospital head Dr. Charles Belcher and replace him with Dr. Jess McClendon. McClendon, a personal friend of Long, promptly ordered his release.

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Notable Quotables (in their own words)

Posted in Campaign Contributions, Civil Service, Governor's Office, Health Care, Layoffs, Legislature, Legislators, Notable Quotables, OGB, Office of Group Benefits, Politicians, Privatization, Transparency on July 20, 2012| 4 Comments »

“The selection of a third-party is an important step toward providing quality care and service…”

–Commissioner of Administration Paul Rainwater, defending the awarding of a contract to Blue Cross/Blue Shield to administer the state health care insurance plans. Announcement of the award was held off until near the close of business on Friday.

“It really is a shame that we will have to face the real cost of Bobby’s ambition for a very long time.”

–Former State Sen. Butch Gautreaux, responding to the awarding of the BCBS contract that will abolish 177 OGB positions.

“This is an opportunity to reform and modernize.”

–DHH Secretary Bruce Greenstein, explaining how the federal cut of $859 million to the state’s Medicaid program is “doable.”

“I was surprised to see this on the table. I was told 15 minutes before the announcement was made.”

–State Sen. Jack Donahue (R-Mandeville), reacting to the administration’s announcement late Friday that Southeast Louisiana Hospital in Mandeville would begin closing down operations effective Oct. 1, resulting in the loss of 300 positions.

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Louisiana is following trend of taking ‘State’ out of state colleges in slow move to privatization of higher education

Posted in Governor's Office, Higher Education, OGB, Office of Group Benefits, ORM, Office of Risk Management on May 31, 2012| 13 Comments »

All but lost in the brouhaha over Gov. Piyush Jindal’s overt moves to privatize the Louisiana Office of Risk Management, Office of Group Benefits, state prisons, Medicaid, the Louisiana Office of Student Financial Assistance and K-12 public education is the quiet but steady erosion of state financial support for state colleges and universities that is pushing higher education toward that same precipice.

Once considered sacrosanct, Louisiana’s state colleges and universities no longer are considered untouchable by legislators. Accordingly, administrators find themselves having to seek funding more and more from private endowments and from tuition increases that threaten to push student costs to a prohibitive level for all but the wealthiest.

And Louisiana is by no means the exception. The trend toward pseudo- and outright privatization is becoming more prevalent in all 50 states as state colleges fall victim to cuts in state aid, the depletion of federal stimulus dollars, tuition increases, caps in enrollment and the elimination of positions. Throw in billions upon billions of dollars in corporate tax exemptions and it’s easy to comprehend the fiscal disaster Louisiana has been courting for decades.

Even as this perfect storm gathers momentum, conservative legislators, led by the American Legislative Exchange Council (ALEC) are pushing to recast state universities in the mold of private corporations.

If this sounds somewhat familiar, it is because state colleges across the country are following the same track as K-12 public education in the conversions to charter schools—another of ALEC’s model legislative crown jewels.

In fact, the plan for higher ed was presented at ALEC’s national convention in New Orleans last August. That meeting was hosted by then-State Rep. Noble Ellington (R-Winnsboro), ALEC’s 2011 national president. Ellington, who did not seek re-election, eased from his House seat to a more comfortable position as second in command at the State Department of Insurance at a salary of $150,000 per year.

ALEC, which purportedly espouses increased transparency in government, restricted access to its New Orleans meeting and specifically barred the media.

And, considering Jindal’s dogged determination to privatize everything public and his penchant for secrecy, it must be no coincidence that ALEC bestowed upon him its Thomas Jefferson Freedom Award at last August’s New Orleans closed-door convention.

Alarming examples of this slow trip down Privatization Lane abound in practically any state one chooses to observe.

In Texas, for example, Gov. Rick Perry, whom Jindal backed in his bid for the Republican presidential nomination, has packed the board of regents at all six state college systems with political allies who, like Perry, adhere to the Republican mantra that colleges should be run like businesses whose “customers are students.”

In Arizona, voters in 2010 approved a state referendum banning affirmative action in state universities, replicating the same action taken in Florida in 1999.

At the University of Virginia, the first public college in America and founded by Thomas Jefferson, the state provides less than 8 percent of the school’s operating budget, down from 28 percent 25 years ago. Things are no better at William & Mary and Virginia Tech, prompting Virginia’s three flagship universities to ask the General Assembly to make them “chartered” universities, which would give them freedom to set tuition and to run themselves.

Of the $1.8 billion cost to operate all 27 of Louisiana’s state universities, colleges, junior colleges and technical colleges, only $734.2 million, or 40.2 percent, came from state appropriations but even that figure is deceiving because Jindal has ordered an additional cut of $50 million.

In February, not long after Jindal submitted his executive budget, then-LSU Systems President John Lombardi, no doubt at Jindal’s behest, sent an email to his administrators asking that they not complain about Jindal’s proposed elimination of 2,837 positions in higher education. Lombardi said that Jindal would appreciate it if the administration acknowledged that the budget “gives higher ed special treatment…”

That “special treatment,” it turned out, was a carrot that Jindal dangled before university presidents in the form of a promise of $100 million for higher education should the governor’s retirement package pass.

It didn’t.

Goodbye $100 million.

And on April 27, goodbye Lombardi as the LSU Board of Supervisors, acquiescing to Jindal’s wishes, unceremoniously fired the LSU president.

A spokesperson for the Board of Regents said that the state only a few years ago provided 70 percent of the funding for state colleges and universities with tuition making up most of the balance. That formula is virtually reversed today with the state providing 40 percent and tuition and other resources providing 60 percent.

This trend toward privatization is not new; it has been taking place for more than a decade, but the implications are only now becoming clear.

As state financial support dwindles and colleges begin implementing double-digit tuition increases, the result is that the school’s mission to provide access to higher education for all suddenly becomes a mission more akin to a private university that caters only to those who can afford it.

Sometimes, even that doesn’t work. When Virginia Commonwealth University bumped its tuition by 24 percent to make up for previous cuts in state appropriations, Republican Gov. Robert McDonnell cut the school’s appropriation even more.

Consequently, as flagships gravitate toward the elitism of privatization, poor and middle-class students are priced out of their institutions and into second-tier schools. This then creates the social stratification of higher education in which the elite colleges are filled with kids from upper income families while kids from poorer backgrounds are relegated to less prestigious schools.

What was it again that Romney said about class warfare? Oh, yes, he said that the Occupy Wall Street protests represented class warfare.

So, when state colleges privatize and their tuition, which currently averages around $7,500 a year (not including room and board), escalates to the private college levels of $25,000 to $40,000 a year, many students who do manage get into those schools will do so only by taking out ever-larger student loans and just who will profit from that?

A few clues:

• Sallie Mae currently has $21 billion in student loans on its books;

• Citi Student Loans, part of Citibank: $5.9 billion;

• Wachovia Education Finance: $5.5 billion;

• Bank of America: $4.9 billion;

• JP Morgan Chase (yes, the one that just reported the $2 billion trading loss): $3.5 billion.

And those loans are guaranteed by the federal government so the lenders are betting on a sure thing, which is more than be said of the students. Even taking the low end of $25,000 tuition plus room and board, a student graduating in four years would exit as a 21- or 22-year-old college graduate, possibly with no job, and with a $150,000 debt (Don’t forget the room and board). Add two years of graduate study and presto! His debt is now $200,000. No wonder he moves back home.

ALEC was ostensibly founded to promote the “Jeffersonian principles of free markets, limited government, federalism and individual liberty.”

One has to wonder if this is what Thomas Jefferson had in mind for his school.

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Irony: Holding Civil Service hearings on the privatization of the Office of Group Benefits in the Louisiana Purchase Room

Posted in Auditor, Civil Service, Governor's Office, House, Senate, Legislature, Legislators, Louisiana Purchase, OGB, Office of Group Benefits, ORM, Office of Risk Management, Privatization, Teague on April 3, 2012| 3 Comments »

If you like irony (and who doesn’t?), you should like this little item:

The State Civil Service Commission will meet Wednesday at 9 a.m. to discuss the proposed outsourcing of the Office of Group Benefits (OGB) plan.

Don’t see the irony yet? Well, consider this: the meeting will be held in the Claiborne Building’s Louisiana Purchase Room.

What could possible be more appropriate—and ironic—than for the administration’s proposal to be held in the Louisiana Purchase Room? The governor, after all, is attempting to sell out 60,000 state employees in general and about 170 employees of OGB in particular who would lose their jobs.

In other developments in and around the Capitol, the governor’s office has been awfully defensive about a report critical of Jindal’s retirement reform legislative package.

A 38-page report by the Dallas law firm of Strasburger & Price cited legal cases in 18 different states as well as seven Louisiana legal cases in concluding that virtually all of the provisions sought by Gov. Bobby Jindal would not stand up to constitutional challenges.

The analysis and subsequent study was commissioned by Legislative Auditor Daryl Purpera and was originally posted on the agency’s web page.

In ordering the report, Purpera must know that he placed his career in jeopardy; Jindal does not take criticism or even mild disagreement lightly.

The governor’s office initially pooh-poohed the report, intimating that the law firm with offices in Houston, San Antonio, Austin, New York and Washington, D.C., in addition to its Dallas office, was unqualified to interpret the intent of the House bills 53, 55 and 56 and Senate bills 51, 52, 42, 47.

In a formal statement, Jindal’s office denied that the additional 3 percent in employee contributions called for in HB 56 and SB 52 would go into the state’s general fund and denying that the additional 3 percent would constitute a tax on state employees.

Under provisions of the Louisiana Constitution, the legislature is prohibited from initiating any tax legislation during even-numbered years.

The governor’s denial was the first indication by his office or any other source that the money from the 3 percent would not be diverted into the general fund.

Everything that has been said up to the time of the governor’s response to the report indicated that the 3 percent would go neither to additional retirement benefits nor to reduce the Louisiana State Employees’ Retirement System (LASERS), but to the general fund.

It is strange that the governor would remain silent for so long on that particular issue and his sudden defensive posture as a result of an independent study should raise more question than answers.

Is Jindal, like Rep. Stephen Carter (R-Baton Rouge) was with the education bills he authored, completely oblivious to his own proposed legislation? [Or should that be the proposed legislation of the American Legislative Exchange Council? ALEC)]

The observation that Gov. Jindal cannot stand criticism is steeped in the reality of what happens when a subordinate differs with the governor.

Jim Champagne was fired when he disagreed with Jindal’s repeal of the state’s motorcycle helmet law. Board of Elementary and Secondary Education member Tammie McDaniel was forced off the board when she resisted the governor. Melody Teague testified against Jindal’s plan to streamline government during a hearing to accept public comment. She was fired the next day and it took her six months to get her job back. Her husband, Tommy Teague, was fired as director of the Office of Group Benefits when he was not enthusiastic enough on the administration’s plan to privatize the agency despite the fact that he took OGB from a $30 million deficit to a $500 million surplus in five years. Then, Martha Manuel was “Teagued” from her position as executive director of the Office of Elderly Affairs after she testified that she had not been informed in advance of the governor’s plans to move her agency from the governor’s office to the Department of Health and Hospitals (DHH).

There are those who would be quick to point out that the legislative auditor does not work for the governor, but for the legislature, and they would be correct.

But there are also those who have observed how this governor works and they understand that he has complete control of a weak and submissive legislature and it would be a small matter for Jindal to come down hard on Purpera through House Speaker Charles “Chuckie” Kleckley (R-Lake Charles).

But if it’s real irony you want, then there is the faint hope that the Civil Service Board might take the same action it die with the proposal to privatize the Information Technology (IT) section of the DHH, which would have put about 60 IT workers on the street.

In that case, back in February, the Civil Service Board simply said no. Board members said there was not nearly sufficient information provided on which they base an informed decision. One member said he had been in banking for most of his adult life and still could not interpret the figures provided by DHH. In short, they just didn’t buy the numbers.

The Civil Service Board is another of those agencies the governor can’t touch—theoretically, at least. The president’s of the state’s private colleges and universities submit nominees to the board and it is from those nominees that the governor is constitutionally bound to make the appointments. And since the private colleges and universities are unfettered by state appropriations and appointments, the image of independence prevails, or should.

Of course, one member of the board is a state classified employee elected by state employees and there could be reprisals for a wrong vote.

The Civil Service board, back in 2010, approved the governor’s proposal to privatize the Office of Risk Management based on projections that such a move would save the state millions of dollars. The results have been questionable at best.

First, the state paid F.A. Richard and Associates (FARA) of Mandeville $68 millions to take over the administration of the state’s agency that insures against loss. Then, less than eight months into its contract, FARA was back seeking a 10 percent increase in its contract, to almost $75 million.

Three weeks after the amendment was approved, FARA sold its contract to an Ohio firm which in turn sold the contract to a New York firm only a few months later.

The contract with FARA contained a clause that written consent was required from the state before any transfer of the contract could be executed. When LouisianaVoice made a public request for copies of the written consent, the Division of Administration (DOA) admitted there were no such documents in existence, meaning the contract was violated not once, but twice.

Traditionally, ORM released its annual report that showed expenditures and other financial data around September of each year.

In an effort to determine how much has been saved by the privatization, LouisianaVoice requested a copy of the agency’s annual report from ORM and DOA only to be told the annual report has not been released as yet.

It would seem reasonable to assume if there were major savings as projected a few years back, the administration would be eager to roll out such supporting documentation.

On the other hand….?

If the Civil Service Board, employing the adage “fool me once, shame on you; fool me twice, shame on me,” takes into account the sloppy manner in which the ORM contract has been handled and the conspicuous absence of that agency’s annual report supporting claims of major savings, opts to dig its heels in on the OGM issue? If the board balks at the governor’s attempts to manipulate the system in order to consolidate his power base?

Now that would be ironic.

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