Make LA state-owned hospitals primarily for teaching

Appropriate to the continuing debate over restructuring of indigent health care in Louisiana with a goal of improving its less efficient, reduced quality-of-outcome nature is whether a best performer in the current charity system can have its characteristics replicated over a larger such system.

Currently, Louisiana in the only state whose indigent health care system relies almost exclusively on a money-goes-to-the-institution rather than a money-follows-the-person system. This has created a situation where the indigent must make pilgrimages to a handful of large institutions for even routine care. The federal government is urging the state to get with the program by revamping the system to allow the indigent to select their own health care options and to make that portable.

Established interests in the state resist ending the institutional bias. They include not just political elites such as Gov. Kathleen Blanco and nursing home operator and state Sen. Joe McPherson, but the Louisiana State University system which has control over the charity hospital system. The federal government mostly has no leverage over trying to influence this change because it has not committed to throwing in extra money as an incentive to pay for transition costs.

But there is one way in which it does. In the aftermath of the hurricane disasters of 2005, it was decided the old Medical Center of Louisiana at New Orleans (“Big Charity”) facility would have to be rebuilt. Agreement has been swift that it should be a state of the art facility to enhance the teaching function of the hospital, and that it should be built in tandem with a Veterans Affairs hospital to share some facilities and thus costs. However, disagreement has risen over its size. Those such as Blanco, McPherson, and LSU who favor the current system want a bigger facility, while those who want reform such as Sen. David Vitter do not and proof that the size facility built would be cost effective and efficient.

Size matters here because a larger one would be more amenable to the present system, where it would be expected a good number of the indigent would be forced to go for care. A smaller facility would be appropriate to a reformed system where fewer indigent, given less costly alternatives, would use it. Forces against reform hope that by getting things rolling on a larger facility that it will become a “sunk cost” in the minds of policy-makers providing less incentive to reform the overall system.

It is here where the federal government does have leverage, because before any federal money goes into rebuilding, it has to have the approval of federal officials. Vitter has indicated that these officials will not approve of a larger facility. But if reform opponents can demonstrate the charity system can work better and more efficiently, they can try to use this ammunition to overcome federal resistance.

That’s where the LSU Health Science Center, Shreveport comes into play (technically, it and its sister institution in Monroe are run out of the Health Sciences Center in New Orleans, a separate division than the other nine charity hospitals). Financially, it does better than any other charity hospital in the state and, like the other few institutions in the system that focus largely on teaching, its care level is comparable to that of the private and nonprofit sectors. If this model could be replicated, this strengthens the argument of opponents to reform.

However, Vitter doesn’t think it can, and he’s right, for two reasons. First, while about half of the hospitals in the system have major physician training programs, others do not. It is the presence of these that boost care and gets private business into the hospital because that facility has some specialties and/or the latest knowledge in a particular field that others in the private or nonprofit sectors cannot provide.

Yet while this would argue that this model cannot be replicated across the entire charity system, that doesn’t negate that it potentially could be brought to the facilities primarily dealing with advanced medical education – and Big Charity would be the best example of that kind. Regardless, the analogy still fails because the New Orleans metropolitan area, even in its reduced state, is much larger than Shreveport’s, meaning the “expertise” advantage looms much smaller; that is, specialties and knowledge scarcer in a smaller environment are more prevalent in the larger one, meaning there is less impetus to have to use the state’s services when the private or nonprofit sector will provide them.

By all means the latest in facilities should be built in New Orleans – but with teaching, not as a hospital for the poor – in mind primarily. This indicates that Vitter’s and reformers’ view on scaling back grandiose plans make perfect sense.