$1.2 billion for health care in budget; future governor faces hospital funding challenges _lowres

Updated renderings of tentative designs for the new University Medical Center at New Orleans, released by the Louisiana Office of Facility Planning and Control, LSU, and NBBJ of Seattle, lead architects for the hospital project. The computer-generated day and night views reflect developing architectural perspectives for the projected $1.2 billion facility, which is expected to form the core of a medical and biosciences district that includes the new United States Department of Veterans Affairs Medical Center, currently under design. (Photo provided by NBBJ of Seattle)

Health care officials are digging through the dollars the Louisiana Legislature coughed up in the final moments of the 2015 session and are finding some relief.

“We were facing cuts of colossal magnitude, but I’m thrilled that our legislators found a way to preserve funding,” Lafayette General Health Chief Executive Officer David Callecod said.

The $24.5 billion operating budget bill sitting on Gov. Bobby Jindal’s desk appropriates $1.26 billion for health care, which is a bit more than the private partners running the state-owned charity hospitals had requested.

A 50-cent increase in the tax on a pack of cigarettes will help provide those dollars for the fiscal year that begins July 1.

Initially, state budget architects’ plan for eliminating a $1.6 billion deficit fell largely on the health care system.

But that’s the way every year because so much of the state’s revenue legally must be spent a certain way. Colleges and health care are just about the only areas where spending can be reduced to match lower revenue. Even Jindal’s highly touted, 2-year-old effort to hire private firms and foundations to operate the state’s charity hospital system had to take a hit.

Back in February, Jindal proposed $1.1 billion for the hospital deals in the coming fiscal year. It was standstill funding, hospital managers say, and left hospitals $159 million short of the dollars necessary to provide the improved patient care and wider services that Jindal had bragged would be the result of his privatization efforts.

Throughout the legislative session, which ended Thursday, the amount of money that would be available for health care remained up in the air.

The private partners reminded legislators that their contracts allowed them to walk away from the charity hospital deals if the state didn’t come up with enough money. Medical school officials talked bankruptcy.

The LSU medical schools in New Orleans and Shreveport were stuck with millions of dollars of what are called annual “legacy costs” — insurance, pensions and other benefits — owed to former and retired workers.

In Baton Rouge, the closure of the Earl K. Long Medical Center in north Baton Rouge and the privatization of charity services at Our Lady of the Lake Regional Medical Center in south Baton Rouge led to an overflow of uninsured patients at a Mid City emergency room. The private hospital said it could not afford to provide those services for free and closed the emergency room.

LCMC Health CEO Gregory C. Feirn said the administration and Legislature faced “significant challenges” yet found a way “to support the future of health care in Louisiana.”

One-third of the state appropriation — $438.78 million — will go to LCMC Health, which will operate the new $1.1 billion state-of-the-art University Medical Center in New Orleans.

Another $230.5 million is earmarked for operations of LSU Health Sciences Center in Shreveport; $157.27 million for LSU’s Baton Rouge partner, Our Lady of the Lake Regional Medical Center; and $131.9 million for University Hospital and Clinics in Lafayette. Allocations for the other LSU deals include $86.6 million for Houma; $47.7 million for Bogalusa; $58 million for Lake Charles; $53.67 million for Alexandria; and $49.88 million for Monroe.

The Baton Rouge funding does not include $19 million sought by Our Lady of the Lake for increased costs for expanded services and extra patients in the wake of the closure of the Baton Rouge General Medical Center Mid City’s emergency room. State health officials have said they will work with Our Lady of the Lake on additional funding if the patient numbers materialize as projected.

All of the public-private partnership deals will cost the state more in the budget year that starts July 1.

Most of the Medicaid funding increase is associated with the opening of the University Medical Center in New Orleans, which is scheduled to start operations Aug. 1. Patient care and medical education programs will move there from the much smaller Interim LSU Hospital.

“It’s the cost of capitalizing a much bigger enterprise,” said LSU System Executive Vice President Dr. Frank Opelka, who orchestrated the public-private partnerships. “The closer you get to opening, the more they are finding more resource needs.”

Other factors contributing to the higher costs include medical inflation and restoration of some medical services that were cut pre-privatization as LSU struggled to operate the hospitals with fewer and fewer dollars.

“It’s nothing other than you would expect to see,” said Don Gregory, a former state Medicaid director who now monitors health care issues for the Public Affairs Research Council of Louisiana.

“They pumped a good amount of money into these partnerships last year. They are reinvesting as resources have become available,” he said.

Gregory said the next governor and Legislature will be faced with serious hospital funding issues as Medicaid uncompensated care dollars — which are key to the partnership deals — are reduced at the federal level.

“It will put pressure on some of these partnerships,” he said. “Eventually, the state will have to start covering part of those costs.”

Callecod said a resolution the 2015 Legislature approved could help with hospital financing in the future by providing a funding source for Medicaid expansion coverage. He said the “financing tool ... would offer a way for the state to draw down millions more in federal health care dollars.”

Under House Concurrent Resolution 75, hospitals would assess a fee on themselves, with the money used as the state match to bring in federal dollars.

The resolution gives the next governor a funding source should he decide to participate in some type of Medicaid expansion provided for under the federal Affordable Care Act. Jindal has refused to allow expanded Medicaid during his administration.

Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog.