Lafayette hospital privatization runs over budget

BATON ROUGE, La. (AP) — Gov. Bobby Jindal's privatization deal for the LSU hospital in Lafayette was running $6 million over budget by April's end, with two months remaining in the fiscal year, raising questions about whether the contracts could cost more than anticipated.
The overspending was detailed in an update to lawmakers about payments made for the outsourcing contracts involving nine state-owned, LSU hospitals for the budget year that ends June 30. The hospitals are safety-net facilities that care for the poor and uninsured.
The Department of Health and Hospitals said fluctuations in the individual hospital budgets were anticipated but it expects the numbers to balance out across all the deals.
"Overall, the Medicaid budget which includes the partnerships is on track and within budget," DHH spokeswoman Olivia Watkins said in a statement.
Daryl Cetnar, a spokesman for Lafayette General Medical Center, which now manages the LSU hospital in Lafayette, said the facility has increased services, expanding hours at its orthopedics clinic, opening eight more inpatient beds and adding new cardiovascular services.
He said the hospital's billings reflect that increased patient care.
"As we reopened them, the need was there and they immediately started to fill up," Cetnar said. "The demand is just very high and we're doing our best to see as many patients as possible, so that's resulting is in the overages."
However, Cetnar said the state-owned hospital remains below the contractually-set cap for payments for health care services.
The state's budget for the hospital deals this year didn't include all spending allowed under the contracts, but rather estimates made by the Jindal administration of what patient care billings were expected.
Watkins said the budget projections "were based upon historical patient volumes."
No other hospitals so far have exceeded budget estimates, but lawmakers say the research foundation running the university's Shreveport hospital is asking for money above its budget allocation.
The issue comes as federal officials rejected financing plans for six of the hospital privatization deals. The Jindal administration is trying to broker a compromise with the federal agency that oversees the Medicaid dollars that pay for much of the patient services.
But a reworking of the financing arrangement could have the state forced to repay dollars that federal officials might deem improper.
Jindal's commissioner of administration, Kristy Nichols, said Louisiana could owe about $200 million. But lawmakers said they've heard figures topping $500 million or more.
In an analysis, the Legislative Fiscal Office said the state's potential repayment is unknown, depending on how the U.S. Centers for Medicare and Medicaid Services determines what was improperly spent. The state will have spent about $378 million in federal Medicaid money on the rejected financing plans through the current budget year, according to the analysis.
LSU health care adviser Jerry Phillips tried to allay concerns Friday with the university's Board of Supervisors, saying CMS supports the privatization efforts but just wants a piece of the lease payments reworked.
"We're getting nothing but positive indications," he said.

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