LSU System officials have developed a plan to address the budget shortfall resulting from Congressional action to decrease Louisiana’s federal Medicaid funding. LSU’s plan will keep all LSU public hospitals open, protect and strengthen graduate medical education programs and maximize public-private partnerships.
This summer, the state's disaster-recovery Federal Medical Assistance Percentage (FMAP) rate was reduced by Congress from 71.92 percent to a projected 65.51 percent, the lowest federal match rate Louisiana has had in more than 25 years. For Fiscal Year 2013, the decrease equates to a total impact of approximately $859.2 million, which equates to approximately $287.1 million in state general funds (SGF). Of that, the LSU Health System is responsible for eliminating $126.9 million SGF from its budget, which amounts to a total reduction of $329.2 million when federal funds are considered.
Initial plans to meet this need included an across the board reduction of close to 35 percent for the system. LSU leaders have worked with hospital leaders to develop a plan to limit that cut to a less than 19 percent expense reduction that keeps hospitals operational and maintains critical services, including medical homes, which provide primary care and coordinate specialty care, a critical component since LSU provides the majority of its services in the outpatient clinic setting.
“LSU Health has long been on an unsustainable path that threatens the strength of our medical training programs,” said Dr. Frank Opelka, LSU System Executive Vice President for Health Care and Medical Education Redesign. “Decreasing inpatient volumes and continued isolation from the evolving health care market have resulted in a system in decline. This transformation helps us focus on our core competencies by maximizing public-private partnerships in local communities that will help cover critical services and strengthen our medical education programs.”
LSU’s plan protects and strengthens Louisiana’s graduate medical education (GME), ensuring there will be a continued supply of high quality health care professionals available to treat Louisiana residents. LSU has recently participated in national Association of American Medical Colleges (AAMC) efforts to transform GME programs to incorporate patient-centered quality programs. LSU will use national best practices to reorganize GME with a focus on enriching the experience for students and refreshing the program to reflect a 21st century health care market. This will include enhanced relationships with community partners and an increased focus on outpatient care, the primary setting of 21st century medicine.
Opelka added, “Our GME programs have struggled in the constraints of an arcane public hospital model of care. We will leverage private partner relationships to expand options for clinical care and offer our students a richer training experience.”
“In every instance, we have worked to maintain the most critical patient clinical services, especially our medical homes, and support graduate medical education,” said Dr. William Jenkins, President of the Louisiana State University System.
LSU leaders worked with hospital administrators to develop reductions plans that ensure the system ends the year with a balanced budget. Based on clinical volume, some GME programs will shift to community partners that can often offer higher volumes and more complex cases to improve the training experience. LSU also identified service efficiencies related to right-sizing inpatient operations and administrative functions. The plan prioritizes high-value clinical services and maximizes strategic partnerships with private hospitals and community providers to fill service gaps and protect access to critical services. LSU will work to establish relationships where natural partners exist while also exploring opportunities for additional partnerships in other markets.
Interim LSU Public Hospital (ILH) in New Orleans ($49,067,755 total; 423 T.O.): ILH will downsize to 90 medical/surgical beds. It will maintain all of its 36 intensive care unit bed and all of its 29 psychiatric beds. ILH is working with private partners to provide additional inpatient capacity. To achieve savings, it will consolidate its surgery schedule, which will enable it to reduce the number of operating rooms from 13 to 11. The ILH Level 1 Trauma Center will continue to remain open 24 hours a day, seven days a week. ILH will also enhance its prior authorization process to better manage high-cost surgeries.
ILH will also reduce administrative costs and professional service contracts and some clinic services, including closure of a mobile clinic and a reduction in some clinic hours. As LSU has experienced reduced volume for OB/GYN related services as patients have shifted to private providers, ILH will close or reduce clinics related to those services.
ILH will explore joint-ventures with private and community entities, which will enable the hospital to develop a financial partnership with private hospitals to support health services for the uninsured. Moreover, a new state-of-the-art academic medical center is under construction in New Orleans, which will transform the delivery of health care and medical training in the region.
The new UMC will operate under a new model with governance by a private non-profit board, which is working now to develop strategic partnerships to be a catalyst for biomedical innovation and promote long-term financial success of the enterprise.
Earl K. Long Hospital (EKL) in Baton Rouge ($38,690,407; 341 positions): As it begins to shift services to Our Lady of the Lake (OLOL) through an accelerated implementation of the EKL/Lake partnership agreement, EKL will consolidate operations to one floor and 15 beds. EKL will align ancillary, administrative and clinic functions to meet the needs of a 15-bed hospital, including a reduction in emergency department beds from 17 to six and closure of the Intensive Care Unit (ICU).
The transition to OLOL provides an example of the flexibility offered by developing private hospital partnerships, where OLOL will offer Baton Rouge area residents access to more specialized services, including the Baton Rouge’s first level one trauma center. LSU will focus on delivering outpatient care, including the construction of a state-of-the-art urgent care center in north Baton Rouge. By maximizing the resources of a local partner, medical training will be enriched and the state will avoid over $400 million in capital and operational costs.
Walter O. Moss Regional Medical Center (WOM) in Lake Charles ($10,880,729 total; 64 positions): WOM will maintain inpatient services with 10 staffed beds. WOM will align emergency room security, administrative, surgical, ancillary, and administrative and support services to meet the needs of a 10-bed hospital. WOM will explore joint-ventures with private and community entities, which will enable the hospital to develop a financial partnership with private hospitals to support health services for the uninsured. The LSU system is working with WOM to mitigate the impact of the reductions on patient services by pursuing public-private partnerships in the community.
Leonard J. Chabert Medical Center (LJC) in Houma ($14,384,483 total; 245 positions): LJC will downsize inpatient bed operations to 58 staffed beds and emergency room capacity to 12 staffed beds. It will also align clinical, surgical, ancillary and administrative services to meet the needs of a 58-bed hospital. This will include some clinic-specific capacity reductions and some service-line closures. LJC will work with a community partner to sustain residency programs. The LSU system is working with LJC to mitigate the impact of the reductions on patient services by pursuing public-private partnerships in the community.
Lallie A. Kemp Regional Medical Center (LAK) in Independence ($5,206,627 total; 95 positions): LAK will downsize inpatient bed operations to 10 staffed beds and end ICU services. It will also close some specialized clinical services while reducing clinical, surgical, ancillary and administrative services to meet the needs of a 10-bed hospital. It will also annualize savings from FY 2012. The LSU system is working with LAK to mitigate the impact of the reductions on patient services by pursuing public-private partnerships in the community.
University Medical Center (UMC) in Lafayette ($22,414,394 total; 173 positions): UMC will downsize inpatient bed operations to 10 staffed beds and end ICU services. It will eliminate medical student apartments, some contract services and some specialized clinical services. UMC will align other clinical, surgical, ancillary and administrative services to meet the needs of a 10-bed hospital. UMC will participate in LINCCA for LSU HSC physicians and annualize FY 2012 reductions. The LSU system is working with the UMC to mitigate the impact of the reductions on patient services by pursuing public-private partnerships in the community.
Bogalusa Medical Center (BMC) in Bogalusa ($11,121,098 total; 146 positions): BMC will downsize inpatient operations to 28 staffed beds and will close its 18-bed psychiatric unit. Maintaining behavioral health services has remained a top priority for the state. With nearly 2,100 psychiatric beds, Louisiana is ranked 10th in the country for total number of psychiatric beds. There are more than 100 psychiatric beds that remain in the region. It will reduce contracted services, ancillary services, some specialized clinic services, and administrative and support services. It will align surgical and intensive care capacity to meet the needs of a 28-bed hospital. It will also annualize FY 12 savings and participate in LINCCA for obstetric physicians and certified registered nurse anesthetists to realize FY 13 savings. The LSU system is working with BMC to mitigate the impact of the reductions on patient services by pursuing public-private partnerships in the community.