Privatization plans for LSU hospitals approved

BATON ROUGE (AP) — The LSU Board of

Supervisors agreed Friday to privatize the operations of its public

hospitals in New Orleans,

Houma and Lafayette that provide safety net care for the uninsured

and help train medical students.

Management of the hospitals and their

outpatient clinics will be turned over to nonprofit corporations that

run private hospitals

in the regions, under plans pushed by Gov. Bobby Jindal's


Basic outlines of the agreements were approved unanimously by LSU board members who said they hoped to move LSU out of the

hospital business and return the university system's focus to education.

"We're getting back to our core competencies, and we're very excited about that," LSU hospital chief Frank Opelka said.

University System President William Jenkins said he was relieved to see LSU moving away from the administration of health

care facilities, saying repeated budget cuts threatened patient care and education programs.

"By any analysis, we were not on a sustainable path and very soon our training of health care professionals was going to be

impacted," Jenkins said.

The companies taking over hospital management will make lease payments to the state, dollars that Opelka said would be used

to draw federal matching money to pay for services.

Lease terms are under negotiation and

haven't been released. The nonprofit corporations agreed to put up about

$30 million

in initial "milestone payments" as part of the deals, with

additional lease payments to be required to manage the hospitals.

The Louisiana Children's Medical Center,

which operates Children's Hospital and Touro Infirmary, will lease the

Interim LSU

Public Hospital in New Orleans and the new $1 billion, 424-bed

medical training and research center set to open in two years.

Ochsner Health System and Terrebonne General

Medical Center will manage the LSU hospital in Houma, the L.J. Chabert


Center and its outpatient clinics. Lafayette General Health System

will operate the LSU hospital in Lafayette, the University

Medical Center and its clinics.

Opelka, LSU System executive vice president for health care and medical education redesign, said the privatization plans will

shrink state costs, while maintaining health services and graduate medical education programs.

The lease agreements are designed to help fill budget gaps at the hospitals. Jindal stripped more than $300 million in state

and federal funding for the LSU health system after Louisiana's Medicaid financing was reduced by Congress.

David Callecod, president and CEO of Lafayette General, said he and his board felt a "moral and ethical obligation to step

in when we saw the potential cuts that were about to happen to the safety net."

Thousands of workers at the LSU health facilities will face layoffs under the plans and will have to reapply for their jobs

with the private hospital operators.

The cooperative endeavor agreements, when they are completed between the state and the hospitals, will go to lawmakers on

the joint House and Senate budget committee for review. Opelka said he hoped to have the transactions complete before the

budget year ends June 30.

When asked by LSU board member Scott Angelle if a public bid process was needed, Opelka said his lawyers said bid solicitations

weren't required under the law for a lease arrangement.

The Jindal administration and LSU leaders also are seeking private health care companies to run the other university hospitals

as well.

LSU's Baton Rouge-based hospital already has an agreement in place to shift operations in the coming months to Our Lady of

the Lake Regional Medical Center, rather than build a replacement hospital for Earl K. Long Medical Center.