Hospital administrators already are putting the state on notice: If the Legislature allows the nearly $65 million in proposed cuts to their payments, they are prepared to terminate contracts and walk away from the deals that were created to provide health care for Louisiana’s poor.

“They would back out of these partnerships,” Department of Health and Hospitals Secretary Dr. Rebekah Gee told legislators this week. “These hospitals are not willing to sustain those kinds of cuts.”

As lawmakers continue to wrangle with solutions for the state’s $900 million deficit, the “best-case scenario” for cuts still includes a significant hit to the payments that will be made to the private administrators of the LSU charity hospital system through June 30. DHH defines the “best-case scenario” as the cuts necessary should the governor’s budget balancing plan be accepted by legislators.

The public-private partnership model was adopted under the Jindal administration as a way to privatize old charity hospital system and make it more efficient, but the contracts involving nine LSU hospitals contain early-out provisions if the state shortchanges them.

“These are private entities that have boards and business models,” Gee told the House Health and Welfare Committee this week. “They are not doing this for charity.”

Legislators have repeatedly heard from hospital administrators over the past three weeks, but nothing has been done to protect DHH funding from the cuts that would threaten the hospital deals. Much of DHH’s budget is tied to federal Medicaid funding, but health care remains one of the few areas of the budget that can be trimmed.

With a week left in the special session, legislators haven’t come up with enough money to stave off cuts.

“If we’re forced to take that (cut), they will be walking from the deal,” DHH undersecretary Jeff Reynolds said.

Under the privatization plan, outside administrators took over LSU hospitals in New Orleans, Lafayette, Bogalusa, Houma, Shreveport and Monroe; Our Lady of the Lake Regional Medical Center in Baton Rouge became the home for LSU medical education programs and patient care; and LSU hospitals in Lake Charles and Alexandria were taken over by private community partners under special reimbursement deals.

LSU is required under state statute to provide “charity” hospital care, so it’s unclear what would happen if the hospitals walk away. Under the privatization, Gee noted that staff has been reduced by more than half as many doctors have moved to the private sector.

Some hospital leaders warned that health care for the poor would revert back to the charity system that had people waiting weeks or months for appointments. Gee said hospital leaders in Lake Charles and New Orleans already have sent word to the state that large cuts would lead them to terminate their contracts.

LSU’s New Orleans partner, University Medical Center, would face a $16.6 million hit in state funding in the “best-case scenario” but because of federal funds tied to those dollars, the real hit would be about $44 million.

“Even under what they are terming the ‘best-case scenario,’ we would have to reconsider our ability to remain in the partnership,” Greg Feirn, the CEO of LCMC Health that runs UMC, said in a recent interview with The Advocate.

Feirn said the nonprofit entered into the public-private partnership expecting to increase access and improve health care.

“It wasn’t to put our organizations at risk,” he said. “Everyone understood that we weren’t in these partnerships to take on the state’s obligation.”

University Medical Center in New Orleans is the city’s only level-one trauma center, he noted.

“If the demand is there, but you are forced to limit access, all that does is unfortunately cut off the care that is vital to members of our community,” he said.

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