SADOW: Time To Dump The North Louisiana Hospital Deal

The best defense is a good offense, and so the private-public partnership for charity hospitals in Shreveport and Monroe has descended into farce as the state claims breach of contract and the operator sues its presumed opposition, providing so far the only real blemish on a largely successful transition into this model.

You knew trouble might develop when the state made the decision to turn over operations at all but one of its ten state-run general hospitals to nongovernment entities with the eventual deal almost two years ago for Louisiana State University Health Sciences Center-Shreveport and E.A. Conway Medical Center – historically managed together – going to the Biomedical Research Foundation of Northwest Louisiana. The nonprofit established nearly three decades earlier had no experience in managing health care except for operation of a PET scanner and had subsisted mainly off of taxpayer dollars (renewed only recently).

Until then, all of the hospitals were run directly by the Louisiana State University System which still officially oversees the operators, and all but the north Louisiana hospitals ended up under the management of nonprofit entities that run hospitals, although one partner in central Louisiana was a for-profit company. For its part, the BRF created a subsidiary to manage the hospitals, now called University Health Systems, past a startup period.

Besides turning over the pair to a non-medical provider whose revenues then were less than two percent of the hospitals’, the fact that BRF vice chairman of its board John George then sat on the LSU Board of Supervisors also raised some eyebrows on this deal. Last year, when he took on the role of chief executive officer of the BRF, a paid position, he resigned as a supervisor. Regardless of his dual role, apparently BRF was the only interested party in running the hospitals, with Shreveport-based Willis-Knighton Health Systems expressing interest but passing, in part because it thought this could have competitors bring anti-trust issues with the federal government.

Since then, and from the start, disputes arose between the LSU System and the BRF. At one point over reimbursement questions LSU sent a collection letter, but that got resolved – temporarily. Things apparently boiled over earlier this month when LSU sent another note, demanding George’s resignation and accusing University Health of reportedly not paying its bills, failing to support LSU’s teaching and research mission, and damaging the hospitals’ reputations. It demanded a satisfactory response from the BRF by the end of the month or it would invoke passages of the cooperative endeavor agreement that BRF had not served its public purpose and had failed to perform designated duties. This would give the state six months to find another partner – perhaps Willis-Knighton, which had suggested early in the year in a letter to Treas. John Kennedy that it might be a better operator of the Shreveport hospital (which dwarfs operations of the one in Monroe, but presumably the pair would remain a package deal).

Perhaps not coincidentally, not long after and bolstered by a report it commissioned, the BRF sued Willis-Knighton, as it has offered University Health’s medical school faculty members a deal work in its clinics (and building one for them), which could drive traffic to its hospitals. The BRF claims this would monopolize the Shreveport-Bossier marketplace in commercially insured clients and thereby drive up prices in this market.

There’s much less to this than meets the eye. While the report tends in its statistical analysis to mix apples and oranges that erodes its argument, it also fails to note that the commercial market makes up little of University Health’s business, which mainly comes from government-backed insurance (prior to the handover, well over 80 percent). Further, it’s not actually the BRF’s business at risk, it’s the state’s, whose administrators and employees seem more worried about BRF management than anti-trust issues.

Some drama of this nature should have been expected by asking an organization with no real expertise in the area to scale up in extreme magnitude to assume this responsibility. While the BRF has considerable local political connections, this should not deter the state from terminating the deal with it without an adequate corrective plan from it.



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