After protracted negotiations, East Jefferson General Hospital’s board of directors announced Monday that, for the second time, efforts to reach a lease deal to have Hospital Corp. of America run the parish-owned medical center have failed.
Hospital officials gave few details about the reason for the collapse, other than that it involved HCA’s inability to restructure its current operating agreement with Tulane University Medical Center. However, a source familiar with the negotiations said HCA was unsuccessful in its efforts to buy out a noncompete clause in its deal with Tulane, which prevents the firm from working with competing health care systems in the New Orleans market.
HCA spent months exploring the possibility of restructuring the 99-year joint partnership agreement it signed with Tulane in 1995, to no avail, university spokesman Mike Strecker said.
The East Jefferson board said it “will not actively pursue (other) partnership opportunities at this time” as it ponders what to do next.
The statement did not specify whether the board would consider lease offers from other hospital operators, but none had come forward as of Monday, East Jefferson spokesman John Sartori said.
The Jefferson Parish Council has been trying to lease the parish’s two publicly owned hospitals since at least 2012. That year, the council began soliciting potential operators for East Jefferson in Metairie and West Jefferson Medical Center in Marrero as a package deal.
Like other small independent hospitals around the country, the two Jefferson hospitals were struggling financially, and parish leaders wanted to find a private operator who could make them part of a larger network.
But negotiations dragged on, and the hospitals’ boards and the Parish Council could not agree on a single operator for both facilities. A split council eventually agreed to let each hospital board select its own lease partner.
East Jefferson preferred HCA, which pulled out of preliminary lease talks in March 2014. The East Jefferson board, whose chairman is Sheriff Newell Normand, invited HCA to come back to the negotiating table about three months later. HCA didn’t immediately accept the invitation, but it did so by the end of the year. The firm had been in talks to lease East Jefferson ever since.
For its part, West Jefferson chose LCMC Health — formerly Louisiana Children’s Medical Center — to be its lease partner. In February, the Parish Council approved a 45-year agreement authorizing LCMC to operate West Jefferson in exchange for up to $245 million in lease payments and $340 million in capital improvements. As of Monday, the two sides were still working to finalize the contract for that agreement, an LCMC spokeswoman said.
A third health care company, Ochsner Health System, was interested in operating the two Jefferson hospitals, but it pulled itself from contention, citing the lengthy process.