An AP News Analysis: Hospital contracts have financial gaps

By MELINDA DESLATTE,Associated Press

BATON ROUGE, La. (AP) — Gov. Bobby Jindal's administration is moving so quickly to privatize the LSU-run hospitals that deals are being approved with significant financing pieces still uncertain, raising questions about whether the contracts are the best available for the state.

The LSU Board of Supervisors signed off Tuesday on contracts to turn over management of hospitals in Lake Charles, Houma, Shreveport and Monroe. The cooperative endeavor agreements contained blank pages where lease terms should have been and empty spaces awaiting dollar figures.

That means the governing board for the LSU System agreed to hand over operations of state-owned assets that care for the poor and uninsured, and that train many of Louisiana's medical students, without knowing how much money they'll get in the rental deals.

Board members, all appointed by Jindal except for the student member, are leaving it to the governor's administration to work out the deals. They appear to be doing little of their own vetting to make sure the numbers add up.

"We've had some assurances that it's a doable deal that's going to represent our state and our universities well," board Chairman Hank Danos said when questioned about the missing information after the meeting.

There was little talk of finances — or the information not included in the contracts — when the board considered and approved the arrangements. Danos didn't address those concerns during the meeting, even though lawmakers from Monroe and Shreveport urged delay because of the gaps in the financial details.

The deals that are crafted will obligate lawmakers and the state to decades-long contracts and spending requirements that will last far beyond Jindal's time in office.

Lawmakers already critical of the privatization deals and angry that they have little say in how they are crafted have seized on the gaps in the documents authorizing the management takeover.

"I've never seen anything where you have a contract (with) 50 pages missing. Lawyers, you know that's wrong," Rep. Kenny Cox, D-Natchitoches, said on the House floor recently.

Danos said he had full confidence in LSU System President William Jenkins and officials from the Jindal administration, who he said have been vetting the pending deals with lawyers and technical experts.

The board gave Jenkins the authority to sign off on final lease and rental payment deals.

"We care tremendously about specifics, but we also trust Dr. Jenkins," Danos said.

Jindal wants to privatize all but one of the 10 LSU hospitals. With Tuesday's approval from the LSU board, seven privatization contracts have been signed. A few of the deals have complete financial terms decided and outlined.

LSU hospital leaders said the privatization arrangements will preserve care for the uninsured, offer them new services and enhance graduate medical training programs around the state.

"We think it is the best solution going forward," said Robert Barish, chancellor of the LSU Health Sciences Center-Shreveport.

The Jindal administration wants to have all hospitals, with the exception of the LSU facility in Tangipahoa Parish, under private management by Jan. 1. Prior deals covering Baton Rouge, Lafayette and New Orleans hospitals had been signed before Tuesday's LSU board meeting.

Baton Rouge's hospital was closed, and most of its services were shifted to a private hospital in the city. In New Orleans, Lafayette and Houma, private hospital operators will take over LSU hospital management on June 24.

In Lake Charles, the public hospital's inpatient beds and emergency room will be closed and those services will be picked up by a nearby hospital in the city, which will build a new outpatient clinic on the LSU hospital site. Management turns over June 24.

The deal for the nonprofit Biomedical Research Foundation of Northwest Louisiana to manage the Shreveport and Monroe hospitals takes effect Oct. 1.

Jindal has described the deals as a cost-savings for the state and an improvement of an outdated charity hospital model. Without seeing all the details of the lease agreements and financial terms, it would be difficult for anyone to confirm that so far.

Melinda Deslatte covers the Louisiana Capitol for The Associated Press.

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