The private operator of the state-owned, safety-net hospitals in north Louisiana is violating its contract, according to Gov. John Bel Edwards' administration, which has started a legal process that could lead to the ouster of the hospital manager.
The Edwards administration and LSU, which previously managed the hospitals in Shreveport and Monroe, sent "notice of breach" letters Monday night to BRF, starting a 45-day period for the company to correct the problems outlined.
"BRF has failed to work collaboratively and in alignment with LSU and the state to develop and maintain a sustainable business model with adequate funding levels" for the university's medical school and training programs in Shreveport, as required by the contract, LSU President F. King Alexander wrote in his letter.
The governor's chief budget adviser, Commissioner of Administration Jay Dardenne, said the administration is talking to Ochsner Health System and other entities that could either come in to help BRF run the hospitals or replace them if needed.
"We are proceeding in good faith to see if the deficiencies can be cured and to see if another partner can be brought in," Dardenne said Tuesday. He said the administration will give BRF "every opportunity" to stay involved with the hospitals.
BRF, which operates the Monroe and Shreveport hospitals as the University Health System, said it expects to resolve the contract disagreement without being ousted — and is prepared to fight in court any attempt to remove the company as hospital manager.
"We will resist any effort to interfere with our successful effort to improve patient care and access for the residents of north Louisiana," Steve Skrivanos, chairman of University Health, said in a statement.
Alexander offered a litany of complaints against BRF. He said the hospital manager doesn't work with LSU to ensure high-quality graduate medical education; doesn't pay its bills on time, jeopardizing hospital operations and the financial stability of the LSU medical school; and doesn't meet acceptable patient care quality and safety standards.
BRF operates the hospitals to further its own "private interests to the detriment of the public interests of the state and LSU," Alexander wrote in his 13-page letter.
The company, which started as a biomedical research foundation, is operating the Monroe and Shreveport hospitals under a 2013 no-bid contract struck by former Gov. Bobby Jindal. The privatization deal has been contentious since it began, with repeated clashes over payment amounts and contract terms.
BRF disagreed with the criticisms in Alexander's letter and said the state is underfunding the north Louisiana facilities. Skrivanos said the Edwards administration and LSU want the hospitals to prioritize paying the medical school ahead of the needs of patients. He also questioned the debts the university claims it is owed.
"We are not going to pay LSU for services that they cannot document or that are based on faulty invoices and cannot be supported as reflecting true fair market value," Skrivanos said.
LSU earlier tried to oust its north Louisiana hospital operator in 2015. But a state district judge threw out the lawsuit, calling the breach-of-contract filing premature.
The Jindal administration took a different approach to privatization of the safety-net hospitals in south Louisiana, where LSU's facilities are being overseen by companies that run other private hospitals in the area.
BRF had never previously run a patient care facility before operating the north Louisiana hospitals, and Alexander said the company had no money to manage the hospitals.
"Despite its public representations to the contrary, apparently BRF is virtually 100 percent dependent on the receipt of state money to pay its debts and has no working capital of its own with which to cover debts that arise during the months between state payments," he wrote.