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AP Analysis: LSU getting back in the hospital biz

Posted at 8:04 PM, Sep 02, 2018
and last updated 2018-09-02 21:04:57-04

Associated Press

BATON ROUGE, La. (AP) – Louisiana State University is getting more entrenched in the hospital business again, partially reversing a course plotted by former Gov. Bobby Jindal to get the state out of hospital management.

A new plan unveiled by Gov. John Bel Edwards’ administration will have LSU and Ochsner Health System jointly operating safety-net hospitals in Shreveport and Monroe that the university system administered only a few years ago.

It’s a different vision than when Jindal privatized nearly all the state-run charity hospitals and their clinics during his second term as governor, saying no other state managed its safety-net health system in the same fashion.

The Edwards administration says the new arrangement in Shreveport and Monroe is the best approach after the prior hospital manager chosen by Jindal, a company called BRF, rankled state officials, lawmakers and LSU leaders with unpaid debts and oversight complaints. LSU’s doctors work at the safety-net hospitals and its medical students train there.

“There needs to be more of a true partnership between LSU and Ochsner,” said Edwards’ top lawyer, Matthew Block. “They need to both have a say in a strategic plan and vision together. The medical school in Shreveport and the hospitals are interdependent on each other.”

But the plan to have southeast Louisiana-based Ochsner and LSU Health Shreveport together run the operations of the north Louisiana hospitals comes with a higher price tag, about $40 million more a year. Block said federal financing will cover that increase.

BRF regularly said the hospitals needed more money than they received from the state.

The LSU Board of Supervisors is expected to vote Friday on the contract proposal for Ochsner and the university’s Shreveport health sciences center to take over day-to-day operations of the two hospitals.

A university system spokesman didn’t immediately respond to questions from The Associated Press as to whether LSU had any reticence about returning to direct management of the hospitals.

Through a series of hastily pieced together no-bid contracts, Jindal privatized nine LSU-run hospitals and clinics that cared for Louisiana’s poor and uninsured. The earliest deal started in April 2013.

In most instances, the management company of a nearby hospital took over operations. Three hospitals – in Baton Rouge, Lake Charles and Pineville – closed and their services were shifted to private hospitals. Ochsner helps to manage the state-owned hospital in Terrebonne Parish under one of the deals.

Louisiana is spending more than $1.1 billion in state and federal funds on the hospital contracts this year, according to the state health department.

The Jindal administration took a different approach to privatization of the safety-net hospitals in north Louisiana, where the facilities were turned over to BRF, a foundation that had never run a patient care facility. BRF manages the two hospitals as University Health System.

The deal was contentious from the start, with clashes over payment amounts and contract terms. LSU and BRF traded claims of financial mismanagement. The Edwards administration and LSU claimed, among many charges, that the hospital manager was harming graduate medical education at the facilities. BRF said the facilities suffered from inadequate state funding, financing discrimination against north Louisiana and unreasonable demands from LSU.

The privatization deals left LSU overseeing only one of the 10 hospitals that made up the old charity hospital system: Lallie Kemp Regional Medical Center, a small hospital in Tangipahoa Parish.

If the management transfer plan settled last week doesn’t get unexpectedly derailed, the university system is about to greatly expand that hospital oversight role, with more direct involvement over larger facilities with far more patients and thousands of employees.

Takeover of the Shreveport and Monroe hospitals is set for Oct. 1.

Ochsner and LSU Health Shreveport will create a new company that they jointly operate. The contract is planned for 10 years, with two possible extensions of up to five years each. Block said appointments to the hospitals’ governing board that will choose the CEO and make decisions will be split evenly between LSU and Ochsner.

“It is very different in structure,” he said. “It absolutely puts LSU in having a very significant say in the operations of these hospitals.”


EDITOR’S NOTE: Melinda Deslatte has covered Louisiana politics for The Associated Press since 2000. Follow her at

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