Gov. Piyush Jindal has apparently produced more smoke and mirrors in the unveiling of the administration’s plans to lease four LSU Health System hospitals in South Louisiana to private medical facilities.
Bruce Greenstein, Jindal’s Secretary of Health and Hospitals, and LSU Executive Vice President Frank Opelka made major productions of the announcement on Monday that Louisiana Children’s Medical Center (LCMC) would take over operations of the LSU Interim Hospital in New Orleans and eventually the as-yet unfinished $1.1 billion new academic medical center.
At the same time, it was announced that Lafayette General Health System would assume operations of University Medical Center in Lafayette and that Ochsner Health System and Terrebonne General Medical Center would partner to run Leonard J. Chabert Medical Center in Houma.
Jindal and DHH officials are calling the deals “partnerships,” but a closer look into the arrangements reveals that the administration may well simply be shuffling Medicaid dollars in a circuitous route in an effort to secure more federal Medicaid matching dollars, a practice that could be frowned upon by the Center for Medicare and Medicaid Services (CMS).
Another problem may arise when the University Medical Center Medical Corp. Board is supplanted by the LCMC which will run the academic medical center as the “sole member” of the University Medical Center’s management board.
That’s because when private property was expropriated for the construction of the academic medical center, it was for a “public purpose,” the operation of a state-run hospital to serve as a safety net for New Orleans’s indigent population. Because the facility will no longer be a state-run hospital under the auspices of LSU, the legality of the expropriations could be called into question.
Opelka, however, said the plan is for LCMC, which already operates Touro Infirmary, to be the parent corporation over Touro, LCMC and the UMC boards.
Monday’s memorandums of understanding (MOU) announced by the administration commit the private hospitals to continue care of the poor and uninsured and to train the state’s future physicians.
As recently as September, the LSU Board of Supervisors approved a plan to lay off 600 personnel at the Interim LSU Public Hospital in New Orleans.
Now, suddenly, the MOUs are announced that miraculously, will make all the planned layoffs unnecessary.
It’s enough to make one wonder what transpired in the three months between September and the first week in December—especially since no official explanation has been given for the sudden reversal. It seems unlikely that such a complex agreement involving the transfer of upwards of $2 billion—or more—in buildings and equipment could be worked out in such a short time.
Negotiations, in fact, will continue in secret on financial arrangements that will be instrumental in any final agreement for the private entities to take over operations of the state hospitals.
The agreements, in addition to requiring nearly $30 million in payments from the private hospitals, call for the state to make higher Medicaid payments to those same facilities.
Hospitals are paid the same rate for Medicaid patients but there are avenues by which additional payments may be made for higher volumes of Medicaid patients. These are Disproportionate Share Hospital (DSH) allotments and the state’s relative new Low-Income and Needy Care Collaboration Agreement (LINCCA).
Additionally, a supplemental Upper Payment Limit (UPL) program for physicians was developed by the state to pay physicians the difference between the average commercial rate and the Medicaid rate.
Under terms of the agreement, the three private hospitals will pay the state almost $30 million in advance financial committees, according to documents provided by Opelka and DHH. Those documents provided little additional information about how the lease agreements will be structured.
So, why would these private medical facilities agree to pay the state to take over state hospitals that are losing money?
The answer to that could lie in those DSH and LINCCA payments made by the state to the hospitals.
If that is the case, the hospitals would be using Medicaid money received from the state to pay back to the state the so-called Milestone lease payments and the state, in turn, would use the lease payments—that same Medicaid money—to leverage more federal Medicaid money with which Jindal would plug a $300 million hole in the state’s Medicaid budget.
Smoke and mirrors.
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