Without new money or some deep cuts elsewhere in the state budget, Louisiana only has enough dollars to support two of the nine public-private partnership hospital contracts next fiscal year.
Gov. John Bel Edwards said Tuesday at a health care summit that as the 2016-2017 budget stands with a $750 million shortfall, there was only enough to fund the public hospitals in New Orleans and Shreveport, which are being prioritized because they house the LSU medical schools.
That means the state could come up short in paying its management contracts for charity services provided at Baton Rouge’s Our Lady of the Lake Regional Medical Center, Lafayette General Health Center and other hospitals in Lake Charles, Alexandria, Bogalusa, Monroe and Houma. Breaching these contracts means the partners could walk away, eliminating services for the poor at public hospitals, clinics and urgent care centers. In some cases, the facilities would close.
“With that level of cuts, we are going to struggle to keep our safety net hospital system alive,” Edwards said. “We’re going to prioritize the hospitals that are important for private medical education, those being in Shreveport and in New Orleans.”
The state budget shortfall started at $2 billion but was reduced to about $750 million because of taxes raised and budgets cut in the three-week special session. The Legislature is taking up the budget now in the regular session but is unable to address fiscal matters, so it will likely continue to work on the budget shortfall in another special session expected to be called in June.
Jeff Reynolds, undersecretary of the Department of Health and Hospitals, detailed the department’s funding prioritization at a House budget committee on Tuesday.
The 2016-2017 state budget, with its $750 million shortfall, provides for a reduction of 10 percent state funds for DHH, or $283 million. That number grows to $750 million in lost dollars when the federal matching dollars are accounted for.
At this level, New Orleans and Shreveport largely are shielded from the cuts. Lafayette General Health Center is ranked third in priority, and Baton Rouge’s partnership with Our Lady of the Lake is given fourth-place priority based on the number of medical students they house in their respective programs, Reynolds said.
Our Lady of the Lake would require $58.4 million in state funds and Lafayette would require $51.2 million to fully fund the partnerships.
“If there’s an across the board cut for all of them, then there’s not enough money for any of them to stay open,” Reynolds told the committee, explaining the methodology.
DHH has calculated saving $124 million because of the Medicaid expansion, which has not yet been realized in the budget.
Reynolds said it’s unclear if those dollars will go back toward plugging DHH’s $283 million shortfall or if they will be moved to higher education or somewhere else in the budget.
But if DHH does get to keep the Medicaid expansion savings next year, it would be applied toward paying the Baton Rouge and Lafayette hospitals and part of Monroe. As more funding comes on line from the Legislature, the order in which hospitals would be funded is Alexandria, Houma, Bogalusa and then Lake Charles, Reynolds said.
He said the priority list is open to negotiations.
Dr. Larry Hollier, chancellor of the LSU Health Sciences Center, said he was concerned by the prospect of the public-private partnerships dissolving.
He noted that Our Lady of the Lake in Baton Rouge has 150 residents in training, and Lafayette has 82. LSU has about 800 residents in total across the state.
“If they disappear, then I have nowhere else to put the students,” he said.
Baton Rouge Rep. Ted James, a Democrat, said he was frustrated to see Baton Rouge’s hospital prioritized so low by DHH, considering a recent string of blows to health care access in the parish.
“It seems the people of Baton Rouge, especially north Baton Rouge, have gone through a lot because of the decisions of previous administrations, DHH and this Legislature,” James said, noting that the inner communities lost both the LSU Earl K. Long Medical Center and the Baton Rouge General emergency room.
James said priority should be given to the hospitals that serve the highest number of uninsured patients, which would put Our Lady of the Lake higher on the list.
“In my mind, the education piece should be secondary to the number of lives saved,” he said.
State Rep. Bob Hensgens, R-Abbeville, took note of the unfortunate timing of discussing closing hospitals when the state is about to expand Medicaid to 175,000 more people.
“If we expand Medicaid and shutter these hospitals, we’re pretty much selling 100,000 tickets to a 10,000 seat arena,” he said.
Editor’s Note: This story has been updated from the original version to include the individual required costs to pay the Baton Rouge and Lafayette hospital partners.
Elizabeth Crisp of The Advocate Capitol news bureau contributed to this report. Follow Rebekah Allen on Twitter, @rebekahallen. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politics blog/.