Louisiana Panel Approves Privatization of LSU Hospitals

The Louisiana State Civil Service Commission has approved the privatization of two public hospitals within Baton Rouge-based Louisiana State University Health Care Services Division, according to a report fromThe News-Star.

With the commission's approval, Shreveport-based Biomedical Research Foundation will take over Shreveport-based LSU Medical Center and E.A. Conway Medical Center in Monroe, La., starting Oct. 1. Cash-strapped LSU has been publicly seeking a partner since last year after deep cuts in state funding were enacted. The Louisiana legislature has said the privatization plan of nine LSU hospitals will save the state $100 million annually, but a state audit said the resulting layoffs associated with the plan could cost more than $40 million.

The commission's approval allows the hospital system to lay off 3,262 hospital workers at LSU Medical Center and E.A. Conway, according to the report. Those employees can reapply to work for the research foundation taking over the hospitals, and John Dailey — vice chancellor of LSU Health Shreveport — told the commission 90 percent of employees who are looking to keep their jobs will be rehired by the foundation.

About 600 workers opted to retire rather than reapply for their jobs, according to the report. LSU officials have acknowledged those who are rehired by the foundation will have less lucrative retirement packages and lessened benefits.

Mr. Dailey told the commission the takeover will allow the hospitals to keep running medical education programs and offering care for low-income and uninsured patients, according to the report. Mr. Daily also said the change in management will reduce state government spending.

The foundation could receive up to $148.4 million in supplemental Medicaid payments for low-income, nonpaying patients. Last month, state lawmakers discussed the financing and contract between the foundation and the state health department at a joint legislative budget committee meeting. Although they can review the contract and ask questions, state legislators don’t have the power to approve or reject the deal.

Louisiana routinely receives federal funding for nonpaying patients on Oct. 1. Previously, the state would pay each public hospital 50 to 70 percent of its projected amount for the year in October, but the foundation stands to receive 100 percent of its eligible costs under its contract with the state.

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