Public documents show that the Jindal administration is relying on deals with private hospitals and one-time money to fill much of a $300 million gap needed to balance spending with lost federal revenues.
A sudden, congressionally mandated drop in federal Medicaid funding support carved a nearly $860 million hole in the state’s $25 billion budget soon after the July 1 start of the fiscal year. The LSU hospitals got about two-thirds of the cuts when the administration announced its plan to fill $522.5 million of the hole.
Administration officials said at the time that they hoped $94 million in state surplus funds would materialize to match federal funds and close the remaining $300 million-plus gap.
State Department of Health and Hospitals documents, recently made public, show that LSU hopes to cover $135.6 million with public-private partnerships involving its seven south Louisiana hospitals.
Exactly where and how the savings would occur is not spelled out in the records. No deals have been struck, yet. Discussions with private providers continue behind the scenes.
Recently, the administration took emergency steps to financially entice the hospitals to take on more of the care that had been handled by the public facilities, often called charity hospitals. Selected private hospitals could be reimbursed from the program that pays for uninsured care, as well as receive higher payments for care through the federal/state Medicaid health insurance program for the poor.
Meanwhile, LSU’s three north Louisiana hospitals used one-time revenues to bridge $89 million of shortfall during the fiscal year, the DHH-released documents show.
A note in the report states: “It will not be able to do so in the next fiscal year, thus highlighting the need for public-private partnerships.”
The Shreveport operation is in the process of soliciting proposals for cooperative endeavors with a private partner. It is unclear what form that development will take.
The $328 million funding gap must be filled by June 30 — the end of the fiscal year.
DHH documents put the budget number at $340 million, when all activities are combined.
Commissioner of Administration Kristy Nichols said the administration expects no problem in meeting the budget goal.
The LSU official overseeing the restructuring, Dr. Frank Opelka, described the situation as “fluid by the day” with “a lot of moving targets.”
As the private hospital deals are being crafted behind the scenes, LSU hospitals are proceeding with a plan to make $115.6 million in cuts, including the layoff of about 1,500 employees, reductions in emergency, intensive care, surgery and inpatient beds as well as elimination of some services.
“There are changes happening at each hospital,” Opelka said. “We are coordinating with them making sure that every day we are on target.”
Opelka said the service reductions are on track. If revenue opportunities arise in working with private partners, there’s a chance that some cuts could be reversed, he said.
Employees at LSU hospitals across south Louisiana including those in Baton Rouge, New Orleans, Lafayette, Houma, Bogalusa, Independence and Lake Charles have received notice of impending layoffs effective the beginning of business Jan. 21.
State Civil Service, which requires its signoff, has started receiving hospital-by-hospital layoff plans.
In LSU’s three north Louisiana hospitals the cuts are much less severe, particularly in Shreveport, with a decision made to use dollars from the physician practice plan and other surplus dollars to cushion the blow, said Dr. Hugh Mighty, vice chancellor for clinical affairs of the LSU Health Sciences Center. The Shreveport hospital has no layoffs planned, but is eliminating 224 vacant positions.
Administration officials initially said they hoped to fill the gap between revenues and spending with $94 million in state surplus funds that would materialize to match federal fund.
Commissioner of Administration Nichols said use of surplus dollars remains in the budget-balancing plan even though key lawmakers said the initial claim on any surplus is to replenish the state’s rainy day fund.
“Obviously, our desire is to use the surplus, so that we could mitigate the additional cuts that would have to be made to health care and higher education. We feel very strongly about that decision,” Nichols said. “I’m certain there’s going to be some debate about it.”