Last Modified: Thursday, August 02, 2012 7:53 PM
BATON ROUGE (AP) — A former Louisiana health secretary suggested LSU could bring in private companies to take over hospitals in Shreveport, Bogalusa and Houma to shrink costs as the university health care system struggles to cope with budget cuts.
Internal memos released Thursday by LSU in response to a public records request say Alan Levine, who now works for a Florida-based health care firm that runs hospitals, offered the idea to university leaders at a closed-door meeting in July.
"He recommended as an initial step that LSU sell its hospital in Shreveport and use the proceeds to offset the budget cuts for the rest of the LSU System," LSU's vice president for health affairs, Fred Cerise, wrote in a description of the meeting to the university system president, William Jenkins.
Contacted by The Associated Press, Levine said he didn't recommend hospital sales, but suggested lease arrangements with private health care firms. Cerise said Thursday that any sale ideas have since been discarded by LSU's governing board members in favor of considering leasing or other partnerships with private companies.
Cerise raised concerns in the documents about any sale arrangement, saying it would take time and could generate controversy in Shreveport, where the hospital is a large teaching and research facility and praised by area lawmakers and community leaders.
As LSU leaders sought suggestions for how to cut costs, Cerise suggested using bridge funds to keep all university-run health facilities open until 2014, then tapping into Medicaid expansion dollars available under the federal health care overhaul law.
In his memo, Cerise said Gov. Bobby Jindal's current health secretary, Bruce Greenstein, "immediately rejected" that idea in the July 17 meeting, though the costs would be covered largely by the federal government.
Jindal is refusing to expand Medicaid in Louisiana, calling it too expensive for states and the federal government. The Republican governor is pushing for repeal of the health care law.
The meeting was one of several brainstorming sessions after the Jindal administration levied the bulk of a Medicaid funding reduction on the LSU hospitals that take care of the poor and uninsured and that train the bulk of Louisiana's doctors.
Since those sessions, LSU leaders have come up with a temporary fix to shrink the budget cuts from more than $300 million to about $50 million and keep all of its hospitals open for the current fiscal year that began July 1.
Initial scenarios offered in the memos suggest that before the stopgap financing was pieced together, the cuts were predicted to close hospitals and damage graduate medical education. Nearly all the scenarios were dire ones.
"All of them show pretty dramatic reductions. That's when we started to focus on the revenue side," Cerise said in an interview.
But the financing is only temporary, and university leaders still are working on a long-term plan to cut costs across the 10-hospital system that also includes a network of outpatient clinics.
Cerise said Levine was brought into the early discussions by members of the LSU Board of Supervisors looking for outside advice from someone familiar with Louisiana's unique network of public hospitals.
But Cerise said he wouldn't describe Levine's recommendations as "a sales pitch" for his company, Health Management Associates, which runs hospitals in 15 states.
"Everybody acknowledged that we couldn't just decide to sell these to Alan and proceed that way," Cerise said. "He understood if we were to proceed this way, there would need to be a public procurement process. Now, whether his company would be interested in participating in that process, we really didn't have that kind of discussion."
Levine said he suggested leasing facilities to an independent operator where LSU would retain some governance of the hospitals while also creating a new revenue stream for the university health care system.
He said it was premature to determine whether HMA would be interested in partnering with LSU to run some of its hospitals, though he said the company has "extensive positive experience working with academic institutions and not-for-profits."
"My advice to the board members at the meeting and to Fred was to get an independent consultant to advise them if they choose to go down the path of a lease," Levine said in an e-mail. "It is important to seek a partner that fits LSU's mission and that LSU is comfortable having a long-term relationship with."