Federal officials deny state's public-private partnership with LSU hospital



Posted on May 5, 2014 at 5:19 AM

Updated Thursday, May 8 at 6:07 PM

Jaclyn Kelley / Eyewitness News
Email: jkelley@wwltv.com | Twitter: @jkelleyWWL

NEW ORLEANS -- It is a decision that impacts the future of several hospitals in the metro area and a decision Gov. Bobby Jindal plans to fight.

The federal government recently shot down Jindal's plan to privatize six state-owned hospitals, including the LSU Interim Hospital and the new University Medical Center under construction now.    
Last June, the Louisiana Children's Medical Center took over operations of the Interim LSU Hospital and the soon to be University Medical Center.

It was a move by Gov. Jindal to stop looming layoffs and increase access to health care, but now a decision by federal officials threatens to derail Jindal's plans for the public-private partnership.

"At question was always the concern of the upfront lease payments, would CMS allow that or would they not?" says state Senator David Heitmeier. "That's what's in question right now."

On Friday, the U.S. Centers for Medicare and Medicaid Services, or CMS, denied the remaining state amendments that would allow the state to privatize six of its charity hospitals.

The reason? Any payments made to the state by a private company, in order to manage a state hospital, is considered a provider donation.

"If a private entity sends dollars to the state, it can not gain in any way from the dollars it would send to the state," says Heitmeier.

What it would be gaining are federal dollars. Federal funding is allocated to the state to cover health care costs for the poor and uninsured and without that money the state will have to cover the hospitals costs itself.

"What is at question is about $265 million and again when you start talking about the federal match the total dollars is somewhere around $800 million that we are talking about," says Heitmeier.

That is simply money the state does not have in it's already financially strapped budget. Officials say, for now, the decision will not affect hospital operations or the state budget.

"Financing behind the public private partnership will not be interrupted, so it will be business as usual," Says CEO and President of LCMC Health, parent company for Louisiana Children's Medical Center and the LSU Interim Hospital, Gregory Feirn. "Clearly the state is behind the public-private partnership and is fully committed as is LCMC, so I believe there will be a resolution.

Heitmeier says state lawmakers are in active talks with CMS and says he is confident they will work something out with federal officials.

"We will not allow that to fail, we will not allow that to happen," says Heitmeier. "To many good things have been happening with the public-private partnerships."

Right now officials are looking at all other options if the decision stands. Meantime, Gov. Jindal issued a written statement saying, "CMS has no legal basis for this decision and we will appeal it".