BATON ROUGE, La. (AP) — The operations of Louisiana State University's public hospitals in New Orleans, Houma and Lafayette will be turned over to nonprofit corporations that run private hospitals in the three cities under outsourcing plans unveiled Monday by Gov. Bobby Jindal's administration.
The lease arrangements were announced by Health and Hospitals Secretary Bruce Greenstein and LSU hospital chief Frank Opelka as part of an administration effort to cut state costs by turning over university-run health care services for the poor and uninsured to the private sector.
The hospitals will maintain their roles of providing safety net care for those without insurance and of training new doctors and other health care professionals, Greenstein said.
Cuts in services and hundreds of layoffs planned for January will be stalled, according to initial documents released by the LSU System, though future staffing decisions and service plans will be left to the hospital operators.
"By partnering our responsibilities with local resources and providers, we are able to protect patient care, provide more training opportunities for students and operate a more efficient and integrated health system," Opelka said in a statement.
The Louisiana Children's Medical Center, which operates Children's Hospital and Touro Infirmary, will lease the Interim LSU Public Hospital in New Orleans and the new $1 billion, 424-bed medical training and research center set to open in two years.
Ochsner Health System and Terrebonne General Medical Center will manage the LSU hospital in Houma, the L.J. Chabert Medical Center and its outpatient clinics. Lafayette General Health System will operate the LSU hospital in Lafayette, the University Medical Center and its clinics, according to LSU System documents.
"We are going to be executing this before the end of the fiscal year," Greenstein said. "This is what has allowed us to not make significant reductions at these hospitals."
It was not yet clear how much the private health care operators will pay the state annually to manage the hospitals, though the nonprofit corporations agreed to put up about $30 million in initial "milestone payments" as part of the deals.
The privatization plans need approval from the LSU Board of Supervisors, which scheduled a special meeting Friday. The agreements also go to lawmakers on the joint House and Senate budget committee for review. Opelka said the leases didn't need to be put out through a public bid process.
The lease agreements are designed to help fill budget gaps at the hospitals. Jindal stripped more than $300 million in state and federal funding for the LSU health system after Louisiana's Medicaid financing was reduced by Congress.
Greenstein said the lease money and milestone payments will be used to draw down federal matching dollars through the Medicaid program for health care services to keep existing beds and services open.
Final cooperative endeavor agreements will iron out the details of the annual lease payments and length of the lease terms, but those agreements haven't been completed, Greenstein said.
In New Orleans, the milestone payment from the Louisiana Children's Medical Center will be $17 million over three installments. In Houma, Ochsner will pay $5.1 million for the milestone payment. In Lafayette, the payment will be $7.8 million.
The transactions are expected to be complete before the budget year ends June 30.
LSU's Baton Rouge-based hospital already has an agreement in place to shift operations in the coming months to Our Lady of the Lake Regional Medical Center, rather than build a replacement hospital for Earl K. Long Medical Center.
Opelka said DHH and LSU are working on similar "public/private partnerships" for three other university-run hospitals in south Louisiana. A separate foundation is negotiating possible lease agreements for the three public hospitals in north and central Louisiana.