Rebuilt Big Charity increasingly seems best option fo LA

It sounds like the state needs to start listening closely to those who favor rebuilding of the Medical Center of Louisiana – New Orleans (“Big Charity”) from its existing structure rather than embarking on a costly new structure that may not be cheaper for the same quality and whose new construction can disrupt historic neighborhoods.

Today at a legislative committee hearing questions were raised about whether the state should build an entirely new facility, which would raze 74 acres in Mid City New Orleans, instead of taking the existing Avery C. Alexander Memorial Hospital building that was severely damaged by Hurricane Katrina and rebuilding it. While damage was extensive, the only independent survey to date, authorized by the Legislature, shows as expensive as renovation is, at $550 million, still would be cheaper by $282 million over a total replacement – and that after the Gov. Bobby Jindal Administration ordered scaling back some of the grandiose ideas for it previous to his taking office. Additionally, they argue rebuilding would occur two years quicker than building anew.

The Louisiana State University system which runs the facility has ordered evaluations which it says – but will not publicly reveal the details of – shows it would be more expensive to renovate the existing facility. One selling point in its favor is that it could combine some functions with a U.S. Veterans Administration hospital to be built next to it. But even so, including extraneous items that he argues would be needed in a rebuilding, state facilities director Jerry Jones claims it would cost $70 million to rebuild than build new.


Consider, then:

Renovating promises a benefit of as much as $282 million and a cost of as much as $70 million. The risk-return ratio here would seem to favor rebuilding, especially as it appears it could be done more quickly.

The federal government has disputed the state’s claim that the damage to the old building was $492 and has offered only $150 million to compensate (up from $24 million), saying much of that damage was through state neglect of deterioration. Many have argued all along that since the state was looking to replace the building prior to the storm, Katrina is being used as an excuse to request much higher financing than otherwise. It would seem that since rebuilding offers a greater likelihood of lower costs, if full compensation is not certain that should be the route to go.

The envisioned rebuild might be too grandiose given the Jindal Administration’s own plans. In his overhaul of indigent health care, Jindal is seeking to shift access to care away from the acute aspect which would argue, in addition to the New Orleans metropolitan area decline in population, for less need for hospital capacity. The lower projections of need there are, the more cost effective rebuilding rather than building new becomes, as Sen. David Vitter has argued.

And to the intangibles add the fact that historic structures need not be threatened by a rebuilding. Given the above, it would seem the best expected value – lowest cost to the taxpayer – of comparable alternatives would be rebuilding rather than building anew.

Legislators are right to be skeptical of a new facility. The VA can adjust to build with the state if the state makes the decision in a timely fashion, and one wonders whether the pitch for a new facility is nothing more than a ploy to try to extract as much money as possible from the federal government to compensate for what the state should have been doing in terms of maintenance over the decades. Given current objective conditions, the argument is swinging in the favor of rebuilding and the Legislature this next session, which must make some final decisions in this regard, needs to keep the state taxpayer in mind when resolving this question.