Dire charity hospital scenario may work in reform's favor

In response to requests from the Gov. Bobby Jindal Administration, the Louisiana State University system which runs the state’s charity hospitals prepared reports of the impact of impending budget cuts, including the worst case scenario. Despite a small percentage loss, that scenario predicted a major impact. But would that be so bad?

The operation of these hospitals consumes only $90 million of the general fund out of $971 million spent by the unit, of which the largest projected cut is $31 million. However, that portion that does come from the general fund mostly covers medical direct-care personnel and prisoner care, the latter of which the Jindal Administration said not to cut. The system argues that having to do without some of that personnel would require closing some services that would have, at its most extensive, a ripple effect that would close three unnamed hospitals. Even the best-case scenario would turn two into out-patient-only facilities.

Yet when contemplating this outcome and putting in the context of grander plans that Jindal has for the restructuring of indigent care in Louisiana, these might not be bad alternatives. This plan would provide incentives to move indigents out of the inefficient current system that promotes the ill to troop to a government hospital regardless of the nature of the malady, to one that uses the private sector for more efficient utilization of services that likely would shift usage away from charity hospitals towards non-government facilities, with lower per-patient costs to the taxpayer.

Cuts in the charity system could speed the process along. In fact, one aspect of Jindal’s plan coincides with an outcome identified by the LSU system, making Lake Charles’ W.O. Moss Medical Center into an out-patient-only facility. This might argue making them in the larger urban areas (although paying attention to the medical education missions in New Orleans and Shreveport) where there is more slack for the private sector to pick up.

If Jindal is smart, as mentioned elsewhere he can use budgetary problems to accelerate and more comprehensively introduce government spending reforms as flush coffers would allow opponents who believe big government should provide all more cover to obstruct reform. Using this tool of necessity, Jindal could save not just the relatively small projected amount, but leverage that to drive down expenses in covering the indigent while have care provided as good or even better to more people.

Even if the “no government spending left behind” debt-inducing spending package championed by national Democrats gets rammed into law, Jindal would be wise to follow his reformist instincts and not let that interfere with this opportunity. The Legislature may thwart him in the end, but as the health care spending crisis of the state continues to eat away at state resources, he at least must try.