WASHINGTON -- Two months after Hurricane Katrina, Louisiana's public hospital system is on the verge of financial collapse unless federal aid is forthcoming quickly, the head of the system said Thursday.

"We're out of money, roughly after Thanksgiving," said Donald Smithburg, chief executive of the LSU Health Care Services Division told reporters. "We are running out of time."

Smithburg said the system, Louisiana's largest health care provider with 1.2 million patients annually before the storm, will have to furlough 2,900 of its 8,000 employees next week, the first step toward permanent layoffs on Dec. 17.

Two of the system's nine hospitals, Charity and University in New Orleans, have been closed since they were severely damaged in the storm. They are the system's two biggest hospitals and include one of only two trauma care units in the state.

Hospital system engineers have declared both Charity and University a total loss, but Smithburg said the system is awaiting a final decision from the Federal Emergency Management Agency on whether the two facilities will qualify under federal disaster law for full federal funding of replacements, about $750 million.

The more immediate problem, he said, is the system's need for $15 million a month for the next six months to meet its payroll, and $200 million in interim financial support for the other seven system hospitals that have taken on additional patients because of the closures of Charity and University.

Because those seven were not directly damaged by either Katrina or Hurricane Rita, they are not eligible for FEMA grants.

Smithburg said he's hoping both the payroll aid and the interim support will be included in a new hurricane relief spending bill being prepared by the Bush administration. He said he has pressed the issue with Louisiana's congressional delegation but has had little chance to plead his case with administration officials.

Congress passed emergency legislation earlier this month providing up to $1 billion in federal loans to local governments to enable them to continuing paying essential employees. Smithburg said the public hospitals are not eligible for loans under that legislation.

"We are seeing a domino effect as our Katrina and Rita related financial and personnel issues impact our other seven hospitals," he said. "With immediate help, we can keep the Charity system on its feet and continue to heal. Without it, Louisiana public health care will fall."

Smithburg was in Washington for a speech to a conference of the National Association of Public Hospitals.

(Copyright 2005 by The Associated Press. All Rights Reserved.)