Judge blocks LSU’s attempt to remove foundation from operation of its Shreveport and Monroe hospitals _lowres

Former LSU System Executive Vice President Dr. Frank Opelka

LSU’s president recently blamed a former employee for botching the commercialization of a promising medical computer program.

But the targeted former employee, Dr. Frank Opelka M.D., said Monday LSU administrators and lawyers, not he, came up with the public-private structure the Legislative Auditor called incompetent at best and bordering on improper.

“Well, it’s LSU. That’s the way Louisiana rolls. Somebody has to throw somebody under the bus for it to be a happy day,” said Opelka, who had been LSU’s Executive Vice President for Health Care and Medical Education Redesign until shortly after Gov. John Bel Edwards was elected in late 2015. He is now medical director for health policy at the American College of Surgeons in Washington, D.C.

After looking more closely at Opelka’s version of what happened, Legislative Auditor Daryl Purpera said Monday he’s reopening his investigation into how LSU went about setting up affiliated nonprofits and private companies – without the approval of the LSU Board of Supervisors – to profit from the sale of software developed by university employees.

President F. King Alexander, who is under fire by critics for his handling of this transaction, says it’s not his fault. He wrote Purpera on April 24, “It is unfortunate that the actions of one individual operating at various times outside the boundaries of his position led to a situation where LSU was placed at potential risk for conflicts of interest and other potential liabilities.”

“I’m a surgeon. What do I know about setting up nonprofits and public-private partnerships?” Opelka said, adding that he spoke directly to Alexander about what the administrators and lawyers had planned.

Alexander’s letter was included in Purpera’s initial June 6 audit. But Opelka’s version was left out and was only made public at the request of The Advocate. The omission leaves the impression that Opelka’s unilateral action was the key reason for the mistakes that kept a LSU intellectual property, called CLincial InQuiry, or CLIQ, from being marketed.

Usually that’s a job for the LSU Offices of Technology Management.

This time, however, LSU decided to form a nonprofit, called Louisiana Health Information Technology Foundation, or LaHIT to handle the project.

LaHIT cut a deal in February 2016 in which HarmonIQ, a for-profit company incorporated in December 2014, would pay 5% of the net sales proceeds, far below the going rate, plus the nonprofit would receive 40% of the money should HarmonIQ be sold to a bigger company, as many startup ventures are.

The deal was signed but the final license agreement didn’t include the 40%.

By March 2017, LSU terminated its agreement with LaHIT and started working directly with HarmonIQ. But the deal with HarmonIQ fell apart in October 2018.

The LaHIT board was chaired by Opelka and included Bobby Yarborough, a member of the LSU Board of Supervisors; Beverly Moore Haydel, daughter of LSU Supervisor James Moore; and Tim Barfield, who was secretary of the Department of Revenue under Gov. Bobby Jindal. All four resigned or were replaced by 2016.

Haydel, a lawyer, also was a founding director of HarmonIQ Health Systems Corp., according to the company’s articles of incorporation.

Computer personnel for the LSU Health Care Services Division, which at the time ran all the charity hospitals, put together a program that collected all the various bits of information, health status and treatments for tens of thousands of patients across the state. The information is invaluable, Opelka said. For instance, the analytics can identify which children are prone to respiratory crisis and put an inhaler in their hands prior to pollen seasons, thereby keeping the child out of the hospital. Or the information can identify which clinics are better at administering diabetes diagnostics by tracking how the patients fare.

Deploying these metrics helps treat a population of comparatively unhealthy and low-income patients earlier and more precisely, thereby saving the charity hospital system $20 million to $40 million annually from avoiding more costly care, Opelka said.

Opelka said "patient data clouds" are the next big thing in health care. And LSU was at the forefront with CLIQ. But he feared state government would take any profits earned by the commercialization of LSU’s intellectual property and use the money to balance other shortfalls in the state’s budget, as was its practice under Jindal when the deal was put together, instead of reinvesting in healthcare and higher education.

“That was the question I brought to the lawyers; 'How do I do that?'” Opelka recalled. The answer to keeping the money at LSU, instead of losing it to state government, was to create an affiliated nonprofit foundation.

Purpera said Opelka’s response contradicting Alexander's from the first draft was not included in the audit that was published June 6 because Opelka didn’t reply to a subsequent request for feedback on the second draft. When Alexander was asked for comment Monday, LSU issued a statement: “The Legislative Auditors considered Dr. Opelka’s version of events from the start. LSU did not ask that it (Opelka’s response) be excluded as an attachment. The audit report speaks for itself.”

Alexander, who had requested Purpera's investigation, agreed with the audit's findings and promised to make 10 policy changes that would ensure LSU retained control over its intellectual property in the future. The LSU Board already is at work revising policies.

LSU missed its window of opportunity to commercialize the software, Opelka said. Now, dozens of large companies and universities have developed their own software.

Email Mark Ballard at mballard@theadvocate.com.