BATON ROUGE, La. (AP) - State-owned hospitals that care for the poor and uninsured in north Louisiana will shift to new, more expensive management Oct. 1, after Louisiana State University’s governing board Friday approved the deal.
A new company jointly controlled by LSU and Ochsner Health System will take charge of the Shreveport and Monroe hospitals and clinics, medical teaching facilities currently being operated as the University Health System.
Gov. John Bel Edwards’ administration brokered the years-long, multibillion-dollar deal, seeking to end years of contention about current hospital manager BRF’s oversight of the facilities. Commissioner of Administration Jay Dardenne, the Democratic governor’s chief budget adviser, said the new agreement with Ochsner represents “a true 50/50 partnership” between the hospitals and the university medical school in Shreveport.
Without objection Friday, the LSU Board of Supervisors agreed to a complex package of 20 contracts creating the joint venture, piecing together agreement terms and ending the state’s deal with BRF. Lawmakers on the joint House and Senate budget committee intend to review the contract terms this month but don’t have an up-or-down vote on the arrangement.
LSU board members, the Shreveport medical school’s chancellor and LSU President F. King Alexander praised the deal.
“We look forward to decades-long growth and expansion,” Alexander said.
Ochsner Health System President and CEO Warner Thomas told the university board: “We will be a good partner to LSU and we won’t let you down.”
The contract arrangement reverses course from Gov. Bobby Jindal’s bid to get the university system out of the business of day-to-day facility operations. Through a series of no-bid contracts, Jindal privatized nine LSU-run charity hospitals and clinics, with the earliest deal started in April 2013. Only one remained under university management, Lallie Kemp Regional Medical Center in Tangipahoa Parish.
With Friday’s approval, a nonprofit corporation called Ochsner LSU Health System of North Louisiana will be created to run the Shreveport and Monroe hospitals, with a management board split evenly between appointees of the university system and Ochsner.
The hospitals’ CEO is chosen by Ochsner, while the chief medical officer is selected by LSU. The management contract runs for 10 years, with two possible extensions of five years each.
The management deal’s price tag will grow to $294 million annually, up from $251 million earmarked for the BRF contract. Edwards executive counsel Matthew Block said the increase won’t require additional state tax dollars, but will use other health financing sources, including federal money. Details of the financing sources remain unclear.
Yearly financing for all hospital privatization deals requires approval from lawmakers.
Under terms outlined by Block, BRF will receive $13 million as part of the management transfer, paid by the company controlled by Ochsner and LSU. In exchange, contract documents show BRF must pay $80 million to LSU for back-owed debts, for services that university doctors provided to patients.
Like BRF, the new company will lease the hospitals and equipment from the state, with rates subject to inflationary increases. Those payments run about $48 million this budget year.
The management transfer aims to end years of discord between LSU, whose doctors work at the hospitals and whose medical students train there, and BRF, a biomedical research foundation that had never previously run a patient-care facility. Disputes over payment amounts, contract terms and their implications on graduate medical education were constant.
“We’re real excited in Shreveport and north Louisiana,” said LSU board member Wayne Brown, of Bossier City. “This is such an important entity for our area and for the state.”
Southeast Louisiana-based Ochsner owns, manages or is affiliated with more than two dozen hospitals in Louisiana. The company helps to manage the state-owned, safety-net hospital in Terrebonne Parish.
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