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Lafayette General threatens to cut ties with State over UHC funding

Posted: 10:18 AM, Apr 03, 2018
Updated: 2018-04-03 11:18:46-04

Lafayette General Health has taken the first formal step toward the closure of University Hospital and Clinics.

LGH announced today that a letter had been sent to the state, promising LGH will pull out of its agreement with the state if funding is cut on July 1. 

LGH operates the hospital system under an agreement with LSU and the state. The letter was sent to Governor John Bel Edwards and LSU’s governing board. 

It is not a surprise. See our story about prior developments here

If you have received treatment at UHC, Lafayette General has issued the following statement for you: 

Patients who receive care at UHC are calling the hospital and asking about future appointments and whether or not they should pick up their medical records. We want patients to be assured that there are no changes to the services we provide them at this time. The hospital will remain open and be fully operational until June 30. And we are hopeful that the State will ensure full funding by that date in order for there to be no interruption in services.

This afternoon, LGH President David Callecod said he’s "hopeful the funding will be found."

"We’re hopeful cooler heads will prevail. We’re hopeful the state will continue to see the value of this partnership," he said. 

Callecod said he’s not casting blame, but this is not the way to run anything. 

"This is absolutely not the way to run a state. It’s not the way to run a hospital. It’s not the way to try to improve health outcomes," he said. "Heck, it’s not even the way you would want to run your own household. We need to fix these fundamental issues, whether it’s revenue or spending, because at the end of the day we will not ever be able to change this state’s ranking of 49th or 50th in health outcomes."

Louisiana Commissioner of Administration Jay Dardenne told KATC TV3 today that he expected the letter. He said he’s been in communication with Callecod, but also no one can expect these hospitals to provide care with no funding. 

"These partner hospitals are facing the reality of not being funded and they have no alternative, really, other than to put us on notice that if they don’t get paid we can’t expect them to continue to provide services at the level that they’ve provided," Dardenne said. 

The "fiscal cliff" problem stands at about $994 million today. That should improve this week to about $700 million, he said, but that’s still a huge issue – especially on the heels of years of devastating cuts to health care and higher education. 

"This problem is real, we’ve been talking about it for more than a year, and now that the cliff date is fast approaching we’re starting to see the consequences of inaction," he said. "The legislature has to face the reality that the cliff is real. A lot of them don’t seem to want to face that reality, but the numbers don’t lie, the REC doesn’t lie and you have to rely those numbers as to what our revenue is going to be." 

Dardenne said the administration still is optimistic and hopeful that the problem can be solved. He said the governor has been urging the legislature to close the regular session early so that a special session can be held during the usual session timeframe. That way, the special session won’t cost the state any extra money, Dardenne explained. The special session held earlier this year, during which the legislature accomplished very little, cost Louisiana $643,000. Most of that, about $325,000, was paid to legislators for per diem and mileage. 

Earlier today, LGH issued a press release about the letter, with formal comments from Callecod. 

“Such a decision is not taken lightly given Lafayette General Health’s commitment to care for its community, including the indigent and uninsured population; however, the continued reduction in funding for UHC makes its operation untenable and creates systemic risk for our not-for-profit, community-owned health system,” Callecod said of the letter.

If the State appropriates full funding by the end of the anticipated second Special Session, LGH will rescind its notice of termination and continue UHC’s operations. If such funding is not provided, the termination will be effective June 30, 2018.

If UHC is not funded by June 30, as part of the termination and withdrawal process, either LSU must take over UHC’s operations or LGH will be forced to implement the following:

  • Termination of over 800 local employees;
  • Termination of Graduate Medical Education (GME) training programs, disrupting the training process of hundreds of medical students and residents;
  • Cessation of all services at University Hospital and Clinics.

Under the terms of the CEA and the lease agreement for the UHC facility, the lease will automatically terminate upon the termination of the CEA, as will other agreements related to the CEA.

“It is unfortunate that the budget impasse the State finds itself in could lead to devastating, unrecoverable instability for thousands of employees, physicians, learners and patients who rely on the critical healthcare services UHC provides,” Callecod continued.

Prior to its partnership with LGH, LSU operated the state charity hospitals as training sites for medical students and residents.  This included substantial training in Lafayette at UHC.  In an effort to improve training programs and community access to health care, in 2013, the State approached LGH and requested that it assume operations for UHC.  LGH entered into the CEA with LSU and the State pursuant to which LGH assumed the operations of UHC. 

“LGH and UHC have invested massive time, energy and resources to improving access and the quality of care while supporting the CEA implementation with critical operational infrastructure to ensure patients have the very best outcomes and experiences.  This has resulted in better healthcare for the uninsured and Medicaid patients served by UHC,” Callecod continued.  

Last year UHC saw 54,064 patients.  In 2017 UHC conducted more than 149,000 clinic visits (a 106% increase as compared to 2013), 2,733 surgery cases (achieved by opening a third and fourth OR) and 48,816 emergency department (ED) visits (by expanding the ED from 10 to 20 beds).  UHC has more than doubled oncology infusion visits, opened a Medicaid Urgent Care Clinic and implemented strategies to increase access to primary and specialty care providers.  All of this and more has been accomplished by LGH’s investment of over $11.5 million in capital improvements ranging from the installation of an electronic medical record system, pharmacy renovation, construction of new facilities and equipment purchases.

UHC creates revenue for the State in the form of large lease payments. It also alleviates significant expenses through the required provision of charity care and support of LSU. Almost all of the funds that are being eliminated are federal dollars or revenue contributed by UHC’s lease payment. 

“While this process unfolds, UHC and LGH will continue to provide care for patients who count on us for critical, life-saving healthcare services. We will continue to care for the most needy and provide training for the future health care providers in Louisiana. We hope the State will see the benefit our partnership provides and appropriate the necessary funding to support UHC’s continuing operations,” Callecod said.

In response to LGH’s decision Commissioner of Administration Jay Dardenne said, "We agree wholeheartedly. That’s why the Governor called special sessions and encouraged the legislature to act before we reached this point. " 

He added, "It’s the unfortunate reality that we’re dealing with . These partner hospitals are facing the reality of not being funded and they have no alternative really other than putting us on notice that if they don’t get paid we can’t expect them to continue to providing the services at the level that they provide .  I hope it brings home the reality of the legislature of what we’re dealing with."