Tough love should cause ending the charity system

Often years ago, but not recently, I have written that Louisiana needed “tough love” from the federal government to do the right thing. That was commonly the case under the administration of Gov. Kathleen Blanco which put growing government ahead of empowering people, the correction driven by the presidency of George W Bush. This legacy continues, now under Gov. Bobby Jindal, derived from one of the last acts of the Bush Administration.

That was a new rule regarding the use of Disproportionate Share Hospital funds, which is the federal government’s way of reimbursing hospitals for providing Medicaid services as the clients typically the facilities little or nothing. Starting this July, it restricts the kinds of procedures for which reimbursement will qualify.

Louisiana will feel the impact of this change far worse than any other state in terms of health care financing because no state approaches it in the amount of Medicaid DSH funding that goes to government-owned institutions. The state has stubbornly stuck by its charity hospital system which, instead of decentralizing and privatizing it for efficiency sake, creates worse outcomes and higher costs. It’s predicted to be $137 million, but private providers also will suffer and will look to the state either to make up the difference or close their doors in some cases.

With the federal government now telling the state some things it does as part of allowing the indigent to use government facilities at no cost as their sole health care provider it now will have to fund by itself, this might be the last push needed finally to get the state out of the health care provision business. With cost control becoming dramatically more important, both in terms of efficiency of service provision and that the charity system bloats the number of state employees, state officials think this may force the closing of the seven smaller charity hospitals, leaving just the New Orleans, Baton Rouge, and Shreveport operations going.

However, the Jindal Administration needs to think even bigger on this. Even as some of its own policies have had or will have the effect of depopulating the charity system, it never had fully committed to ending it, perhaps due to political pressure from some legislators who like the idea of people thinking the are responsible for their health care and thereby earn their votes for that, and from the Louisiana State University System that gets the power, prestige, and additional resources to run it. This imperative can transform the system from a large charity system to what it should have been all along, a small teaching system.

Currently, the state actually runs no facility in Baton Rouge, where only dentistry is headquartered for teaching purposes. Instead, months ago it began contracting out to Our Lady of the Lake, preferring that arrangement to using its run-down former facility whose rebuilding is in limbo. That program could be moved to New Orleans with many other specialties, and anything else that can be (as with the other seven institutions) placed in non-government providers and/or the other two facilities.

The New Orleans facility itself of course is a subject of great debate, where only last week arbitration wrapped up to determine how much federal money would go to a new facility when the old was damaged further during the 2005 hurricane disasters. The problem is the old facility may well still be usable at a much less expensive price than a new one, and any new one, even after Jindal scaled down palatial plans of Blanco on this account, might still be too big in the absence of the state assigning it as a medical home for Medicaid patients instead of devoting just as an instructional hospital.

Thus, really to get ahead of this problem the charity system should be dismantled, with only hospitals devoted solely to teaching medicine run by LSU in Shreveport and New Orleans. Further, the new New Orleans facility, if the plans to build an entire new one and not renovate the old are not abandoned, should be downsized even further to reflect this reality – another way to save money and which also would save public aggravation over the impact a larger, new facility would have on the Mid-City area.

It has taken much effort to overcome decades of inertia that has wedded the state to the idea of a charity hospital system. Jindal should take advantage of the tough love the federal government provides on this account puts to rights this historic aberration with its demise.