Details matter in Charity Hospital reform

1st July 2013   ·   0 Comments

In 2009, when Alvarez & Marsal, a national performance auditor, recommended a handful of common-sense business practices that would save taxpayers $72 million a year at the state’s Big Charity hospital in New Orleans, I asked for a similar audit of the state’s nine other Charity Hospitals. The Charity Hospitals resisted.

Now the Jindal Administra­tion has decided to lease nine of Louisiana’s Charity Hospitals to private hospital corporations that would take over their operations. The private hospital corporations will pay the state rent, and the state will pay the private hospital corporations to treat our people. The Governor says this will save $100 million a year.

I believe the Governor is on to something here. It makes sense to me that Children’s Hospital in New Orleans, for example, could run Big Charity more efficiently than the state. But the details of the new arrangement matter, and they haven’t been forthcoming. Sweeping rhetoric is no substitute for rigorous financial analysis when dealing with billions of dollars of taxpayer assets. Talk doesn’t cook rice, as the Chinese say.

Here are a few questions to which taxpayers are entitled to straight answers:

– How much taxpayer money will the new leases save on an annualized basis for each Charity Hospital for each of the next five years?

– Precisely, how will the savings be achieved?

– Will the savings be realized without impacting the quality or quantity of care? After all, one way to save money at a free hospital is to deny care.

– How will the new arrangement help break the cultural dependency on government for free health care?

– What is the financial incentive for the private hospital corporations?

– What is the state’s exit plan if these public-private partnerships don’t work, if the private hospital corporations default, or if the federal Centers for Medicare and Medicaid Services (CMS), which provides the federal funding, withholds approval?

– When can taxpayers expect CMS approval?

– Will the operations of the private hospital corporations be subject to audit by the Legislative Auditor and review by the Legislative Fiscal Office?

– Will the operations be subject to the state’s Ethics Code and its public records laws?

– What are the benchmarks and performance indicators by which taxpayers can measure the success or failure of the new system?

– Will the private hospital corporations be paid the same as other Medicaid providers or receive higher rates?

– What will be the impact be on Louisiana’s community hospitals? – How do we know the lease payments by the private hospital corporations reflect fair market value to taxpayers for their assets if the leases weren’t bid out?

The Governor is right to try to reform Louisiana’s Charity Hospital System. Taxpayer money can be saved without sacrificing care. But taxpayers deserve to know the details of his plan so they can judge for themselves.

– John Kennedy
La. State Treasurer

This article originally published in the July 1, 2013 print edition of The Louisiana Weekly newspaper.