A year after announcing it would consider taking over the troubled St. Bernard Parish Hospital, as some parish leaders had long hoped, Ochsner Health System has reached a long-term agreement to do so.
The deal, announced Monday, is initially for 10 years, with five-year renewal options. Both sides say it will help stabilize the hospital.
The financial terms were not disclosed.
Officials say the hospital can expand its services and operate more efficiently under the Ochsner umbrella, linking up with the state's biggest nonprofit health care system.
Ochsner plans to open a health center at the hospital in November. It will provide women's services and feature a multiple-specialty clinic with cardiology, general surgery and pain management.
Ochsner has expanded significantly since Hurricane Katrina, and some St. Bernard officials long hoped it would step in to manage the parish hospital, which has been beset by management issues since it opened in 2012, including problems with billings and collections that have led to millions of dollars in losses.
The 113,000-square-foot facility, which includes an adjacent building meant for medical offices, had accumulated about $59 million in long-term debt by late 2015.
Kim Keene, the hospital's interim CEO, will officially assume the role of CEO when the agreement is implemented in November.
Under the deal, the facility will continue to be owned and governed by the five-member St. Bernard Parish Hospital Service District, while Ochsner runs day-to-day operations.
State and local officials praised Monday's announcement.
It “marks the beginning of a new chapter for St. Bernard Parish Hospital and signifies a commitment to building a stronger and healthier Louisiana,” Gov. John Bel Edwards said in a statement. He said the hospital "is well-positioned to continue to provide critical primary and specialty care to the St. Bernard community.”
For Ochsner, the move helps further cement its position as the dominant health care provider in southeast Louisiana.
"We certainly found opportunities for improvement, but I think we find opportunities for improvement in most places that we go into," Warner Thomas, Ochsner Health System president and CEO, said in an interview. "The reality is an organization like this needs professional hospital management, and I think Ochsner is one of the best health care systems in the country, quite frankly, and we have the capacity and depth to help."
Ochsner began looking at taking over the hospital last year at the request of parish officials. That came after parish District Attorney Perry Nicosia convened a grand jury to investigate the hospital's operations.
In November, the panel's term ended without its handing up an indictment. Instead, jurors issued an unusual report accusing Wayne Landry, a former parish councilman who helped spearhead the hospital's development and played an active role in its management, and a former hospital board member, Jim DiFatta, of conspiring to take control of the hospital from the Parish Council while presiding over a "grossly mismanaged" operation that racked up significant losses.
By the time the grand jury issued its report, three of the board's five members had stepped down, including DiFatta, who criticized Nicosia's involvement as politically motivated. Two members resigned as part of an agreement reached with prosecutors to avoid potential criminal charges, The Advocate reported.
Since Ochsner stepped in last year, officials have found more than $2 million in operational savings at the facility, Thomas said.
"Some of the community leaders realized, 'Boy, we really could use help from a larger system and professional, household management,' and turned to us and asked us to help," Thomas said. "We're more than willing to assist."