The third time may be the charm to replace a state hospital operator, in a political drama Byzantine even by Louisiana standards.
Last week, Gov. John Bel Edwards sent a breach-of-contract notice to the Biomedical Research Foundation, the nonprofit operating the state’s public-private partnership hospitals in Shreveport and Monroe. This means BRF must make corrective actions by the end of October or the state can remove the hospitals from BRF governance.
This wasn’t the first time. In 2015, the administration of former Gov. Bobby Jindal did the same, and the state in the course of that fight also went to court to remove BRF. But the effort fizzled as the driving force behind the move, Louisiana State University that operates a medical school in Shreveport, lost in state District Court. A judge ruled the lawsuit premature, because LSU did not adequately present reasons for termination premature before exhausting its administrative options.
A year later, the new Edwards administration threatened a repeat as part of its strategy to renegotiate hospital operators’ contracts. BRF held out longest but ultimately agreed to reduced compensation. Now, LSU leads the charge again with apparently stronger documentation against BRF, mainly complaining that management takes excessive time to make contracted payments and inadequately attends to medical education.
Dispute seemed inevitable for an organization in over its head. In 2013, with little warning, Congress yanked extra annual funding for Louisiana’s government health care costs. That aid had been given to the state in the wake of the 2005 hurricane disasters. Realizing that he had to squeeze efficiency savings out of the old charity hospital system immediately or face budgetary disaster, Jindal turned over administration of all but one facility to private or nonprofit concerns.
On short notice, the state found experienced operators for all but the two northern hospitals, which for years LSU had run together as a separate division. The Shreveport market’s insularity made it difficult to farm them out, and consolidation in the local health care market left only two operators that took all kinds of patients.
BRF stepped into the void, despite no experience running a hospital. Founded in 1986 with a mission to fund biomedical startup companies and later directing a positron emission tomography (PET) scanner, it had existed almost entirely on a Shreveport property tax. With past revenues only in the millions of dollars annually, suddenly that base exploded over 50 times with the addition of revenues to its subsidiary University Health to manage the hospitals.
As with the other hospitals that now have nongovernmental operators, unquestionably care has improved under BRF’s control. However, its inexperience and under-capitalization contributes to its bill-paying problems, a difficulty it claims comes from state underfunding. However, that excuse rings hollow because BRF accepted such financial terms last year voluntarily; if these seemed so onerous, why didn’t BRF walk away then?
Both Jindal and Edwards may have held back on termination because no other politically palatable option existed until now. In 2016, change proponents fought the perception that the dominant Shreveport player, Willis-Knighton Health System, eventually would get the contract, thereby creating a near-monopoly in Shreveport. This year, negotiations to bring in strong out-of-area competitor Ochsner Health System may solve that problem.
Adding further intrigue, the conflict highlights Shreveport political fault lines between an old-guard faction represented by state Sen. Greg Tarver and a newer Democratic phalanx led by state Rep. Cedric Glover. They have fought over things like a landfill and mayoral power to call tax elections, so Tarver’s support of replacing BRF and Glover’s opposition to that move come as no surprise.
Compared to much smoother relations with other operators, chronic issues about BRF stand out like a sore thumb. Too much smoke means fire; it’s time for the state to make a change in Shreveport and Monroe.
Jeff Sadow is an associate professor of political science at Louisiana State University-Shreveport, where he teaches Louisiana government. He is author of a blog about Louisiana politics at www.between-lines.com, where links to information in this column may be found. When the Louisiana Legislature is in session, he writes about legislation at www.laleglog.com. Follow him on Twitter, @jsadowadvocate. or email firstname.lastname@example.org. His views do not necessarily express those of his employer.