Deals to privatize nine of the state’s public hospitals are nearing completion, carrying a larger price tag than initially envisioned, an official in Gov. Bobby Jindal’s administration said Thursday. Overall, the plan will involve spending more than $1 billion on hospital services in the next year, more than was budgeted for the hospitals this year.
That money comes from a mix of state and federal funds and will be supplemented with the lease payments made by the private hospitals that will take over the state facilities. When all those savings and payments are tallied, the state will wind up freeing up about $100 million in the budget, Commissioner of Administration Kristy Nichols said.
In a conference call with reporters Thursday, Nichols said officials had plans to move forward with the privatizations — some ahead of schedule — and were working on the necessary budget amendments. That comes in the wake of concerns that most of the money in the existing budget for those privatizations had already been committed to the first three proposals to go through.
“We’re clear on what the needs are and we’ll move through the process; obviously, the budget is a process, but I believe our leadership is on board,” Nichols said.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
The Jindal administration began the process of establishing public-private partnerships for the hospitals last year, after a reduction in the amount the state receives as a match from the federal government for Medicaid spending.
The agreement dealing with the public hospital in New Orleans has already been finalized. Under that deal, Children’s Hospital will take over the Interim LSU Public Hospital and its successor, the University Medical Center in Mid-City, once that facility opens.
Agreements to privatize nine hospitals across the state will be in place by the end of the state’s fiscal year on June 30, and the official transfers will occur over the course of this year, Nichols said.
The plan will leave the hospitals with a budget of about $1.03 billion, including about $370 million in money from the state general fund. That’s more than the $955 million that was budgeted for the hospitals in this year’s budget.
“We’ve been able through the public private partnerships to be able to leverage the private hospitals investments into the public infrastructure,” Nichols said. The state will also see savings from laying off the state workers at those hospitals and no longer paying for their retirement benefits, she said. Additional savings will come from not having to pay for maintenance to the facilities.
The deals now working their way through the process include a proposal to shut down the Huey P. Long Medical Center in Pine and replace it with a facility in Alexandria. Jindal administration officials said they could go ahead with that plan despite a state law requiring legislative approval to close a public hospital.
Nichols argued that the privatization of Huey P. Long wouldn’t constitute a closure, because the services the medical center is now providing would still be available. Division of Administration officials have also noted that the Legislature passed resolutions three years ago allowing for such a plan.
“You’re not closing the public hospital, you’re transitioning it,” Nichols said.
It’s not clear whether legislators will agree with that sentiment. Lawmakers have passed resolutions this year requiring legislative approval for the privatization of hospitals, but administration officials have said that those do not carry the force of law.
The plans could also include turning W.O. Moss Regional Medical Center in Lake Charles into an outpatient facility.
A resolution is now making its way through the Legislature that would allow the administration to turn Moss into such a facility. Nichols said the administration will decide how to handle that hospital once it’s clear how the Legislature handles that resolution.
As it now stands, the state budget does not include the total cost of the privatizations.
Senators raised questions about the privatization plans last week after legislative analysts testified that the first three proposals had already tied up 94 percent of the funding set aside for the entire effort. However, Nichols said the administration would be offering several budget amendments aimed at directing about $100 million to pay for the remaining hospital privatizations.
Some of that money will come from the deal involving the Shreveport hospitals, which was not expected to go through until the spring of next year. That will provide about $50 million more than anticipated in upfront payments.
Other money could come from transferring money from other state sources and using some of the $155 million in unanticipated revenue that forecasters now project the state will bring in next year.
Date: May 23, 2013