The Jindal administration’s experiment in privatizing Louisiana’s charity hospitals is running into some troubled financial waters.
The House Appropriations Committee learned Wednesday that $332 million of the funding to keep the hospitals operating at a stand-still level relies on the uncertain legislative approval of some tax law changes.
Committee chairman Rep. Jim Fannin said there should be no assumption that the dollars will materialize. “That takes a lot of action by this body to get there,” said Fannin, R-Jonesboro.
“If we don’t have legislation that generates revenues that goes through the process from the House to the Senate on to the governor’s desk for signature, we will have to make the cuts because our responsibility is to pass a balanced budget,” Fannin said. “Otherwise, it will be a contingency bill and not a balanced House Bill 1 (the budget).”
Gov. Bobby Jindal’s health agency budget proposal is already $142 million shy of the funding the private partners say is needed for operations in the fiscal year that begins July 1. The bulk of the additional funding request is associated with the opening of the state-of-the-art $1 billion University Medical Center in New Orleans. Its opening has been delayed until Aug. 1.
State Department of Health and Hospitals Secretary Kathy Kliebert said absent the base-line funding, the privatization deals are undermined.
“You would have partners coming back and saying I want out, terminate my agreement or significantly reduce services,” said Kliebert.
State Rep. Patricia Smith said the state is already “in a very detrimental place when it comes to health outcomes.”
“That would even be more detrimental to us as a state,” said Smith, D-Baton Rouge.
The public-private partnership deal involving nine LSU hospitals contains early-out provisions in the event of financial problems. The pacts also allow the hospital operators to scale back their medical services.
Private entities have taken over LSU hospitals in New Orleans, Lafayette, Bogalusa, Houma, Shreveport and Monroe. Our Lady of the Lake Regional Medical Center in Baton Rouge has become the home for LSU medical education programs and patient care. LSU hospitals in Lake Charles and Alexandria have closed and private community partners have taken over under special reimbursement deals.
Lallie Kemp Regional Medical Center in Independence is the only public hospital remaining under LSU operation. Dr. Frank Opelka, an LSU system executive vice president, told the panel that two current private partners have expressed interest in operating the rural hospital but those talks have been put on the “backburner because of budget issues.”
The discussion came as the Appropriations panel considered the Department of Health and Hospitals’ proposed $9.5 billion budget — more than one-third of the total proposed $24 billion state budget. Of DHH’s proposed budget, $8.2 billion is earmarked for Medicaid. The government health insurance program for the poor and uninsured, Medicaid provides care for 30 percent of Louisiana residents — most of them pregnant women, children, the elderly and disabled people.
DHH’s budget is propped up with $407 million in revenues from tax law changes that have not yet been approved.
DHH Undersecretary Jeff Reynolds listed the health agency cuts that would occur absent legislative passage of the limit on refundable tax credits — the largest tied to the public-private partnerships.
In addition, Reynolds said there would be a 2 percent cut in Medicaid reimbursements to hospitals, physicians and other providers — total $38.6 million; reductions in Bayou Health managed care health plan payments; cuts to rural hospital special funding, graduate medical education supplemental payments and LSU’s Lallie Kemp appropriation.
House Fiscal Division deputy director Chris Keaton warned the panel that besides the contingency funding related to taxes, the health care budget also does not provide funds for normal projected growth.
That computes to another $100 million to $200 million, he said.
“If we don’t address this now we will be addressing this in October” after the start of the new fiscal year when DHH presents its financial status statement, Keaton said.