You knew trouble might develop when
the state made the decision to turn over operations at all but one of its ten
state-run general hospitals to nongovernment entities with the eventual deal almost
two years ago for Louisiana State University Health Sciences Center-Shreveport
and E.A. Conway Medical Center – historically managed together – going to the Biomedical Research Foundation of Northwest
Louisiana. The nonprofit established nearly three decades earlier had no
experience in managing health care except for operation of a PET scanner
and had subsisted mainly off of taxpayer dollars (renewed
only recently).
Until then, all of the hospitals
were run directly by the Louisiana State University System which still
officially oversees the operators, and all but the north Louisiana hospitals
ended up under the management of nonprofit entities that run hospitals, although
one partner in central Louisiana was a for-profit company. For its part, the
BRF created a subsidiary to manage the hospitals, now called University Health
Systems, past a startup period.
Besides turning over the pair to a
non-medical provider whose revenues then were less than two percent of the
hospitals’, the fact that BRF vice chairman of its board John George then sat
on the LSU Board of Supervisors also raised some eyebrows on this deal. Last
year, when he took on the role of chief executive officer of the BRF, a paid position,
he resigned as a supervisor. Regardless of his dual role, apparently BRF was
the only interested party in running the hospitals, with Shreveport-based
Willis-Knighton Health Systems expressing interest but passing, in part because
it thought this could have competitors bring anti-trust issues with the federal
government.
Since then, and from the start,
disputes arose between the LSU System and the BRF. At one point over
reimbursement questions LSU sent a collection letter, but that got resolved
– temporarily. Things apparently boiled over earlier this month when LSU
sent another note, demanding George’s resignation and accusing University
Health of reportedly not paying its bills, failing to support LSU’s teaching
and research mission, and damaging the hospitals’ reputations. It demanded a satisfactory
response from the BRF by the end of the month or it would invoke passages of
the cooperative
endeavor agreement that BRF had not served its public purpose and had failed
to perform designated duties. This would give the state six months to find
another partner – perhaps Willis-Knighton, which had suggested early in the
year in a letter to Treas. John Kennedy
that it might be a better operator of the Shreveport hospital (which dwarfs
operations of the one in Monroe, but presumably the pair would remain a package
deal).
Perhaps not coincidentally, not
long after and bolstered by a report
it commissioned, the BRF sued
Willis-Knighton, as it has offered University Health’s medical school faculty
members a deal work in its clinics (and building one for them), which could
drive traffic to its hospitals. The BRF claims this would monopolize the
Shreveport-Bossier marketplace in commercially insured clients and thereby
drive up prices in this market.
There’s much less to this than
meets the eye. While the report tends in its statistical analysis to mix apples
and oranges that erodes its argument, it also fails to note that the commercial
market makes up little of University Health’s business, which mainly comes from
government-backed insurance (prior
to the handover, well over 80 percent). Further, it’s not actually the BRF’s
business at risk, it’s the state’s, whose administrators and employees seem
more worried about BRF management than anti-trust issues.
Some drama of this nature should
have been expected by asking an organization with no real expertise in the area
to scale up in extreme magnitude to assume this responsibility. While the BRF
has considerable local political connections, this should not deter the state
from terminating the deal with it without an adequate corrective plan from it.
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