LA continues experiment with shaky hospital operator

For now the experiment in health care provision in north Louisiana appears it will continue, between the state when in between a rock and a hard place and Shreveport's Biomedical Research Foundation that took an opportunity to increase its relevance.

Three years ago the BRF, which at the time had as its only direct medical provision experience running a Positron Emission Tomography scanner, expanded its revenue base by a factor of over 50 when the Gov. Bobby Jindal Administration chose it to run the Louisiana State University hospital division that included state charity hospitals in Shreveport and Monroe. No local providers then seemed interested, so the BRF became the only non-hospital operator of the hospitals shifted out from state control.

When after state budgeting for fiscal year 2014 had concluded Congress abruptly increased the state’s Medicaid reimbursement proportion, sensing the break should expire that afforded Louisiana as a result of the hurricane disasters of 2005 to pay a discounted rate, Jindal had to respond quickly to the sudden, huge extra expenses on the horizon. With no model of such a transition available and little time in which to formulate one, the Jindal Administration did a remarkable job in securing operators on reasonable financial terms.

But after a couple of years, which featured improved performance at the hospitals for lower unit costs, it became clear that fine-tuning the lengthy contracts would use more wisely taxpayer dollars. The new Gov. John Bel Edwards Administration recently successfully accomplished voluntary renegotiation with all operators – except with the BRF’s subsidiary created to run the pair.

That relationship has proved rocky. Within months of the contract’s commencement, complaints came from the state and in a year had gotten to the point where LSU took the BRF to court over service provision. A district court ruling that LSU had not exhausted all administrative remedies mooted that, but the contention continued.

Throughout, the BRF had responded pugnaciously to claims of inefficient management that did not fulfill all of its contracted duties. It even filed for injunctive anti-trust relief against the largest regional hospital provider Willis-Knighton, in part presuming the then-pending state suit acted as a ploy to wrest the hospitals from it to deliver to Willis-Knighton. A district court dismissed that case prior to the other court’s ruling on the state’s action.

When the BRF refused the renegotiated terms, complaining these less favorable than those offered to the other operators, the Edwards Administration started the official 45-day clock on exiting the existing contract. Talks and current operations can continue until then, with the state claiming it has as a temporary operator a new group of civic leaders, as yet unnamed, until a new operating partner emerges. This maneuver could be to quell concern over Willis-Knighton taking over immediately and/or at least have some kind of search that well could end up with Willis-Knighton eventually awarded operations.

Regardless, the BRF either could knuckle under or let the stripping of the contract occur. Despite its continued assertions that this entire effort somehow smacks of a witch hunt aided by the state as proven by the alleged unfair offer it turned down, the facts are no other operator – all of whom have extensive experience in hospital management – has drawn anything close to the intensity of state complaints made against the BRF. For example, the operator of the other medical education campus in the system, LCMC Health that began as a manager of New Orleans-area nonprofit hospitals, essentially has garnered no criticism by the state in the past three years of its overseeing that hospital in New Orleans – which featured a transition to new facilities.

The relationship between the state and the BRF has produced way too much smoke, especially compared to those represented in the other entities’ contracts. Occam’s Razor tells us the simple story of an ill-prepared, outmatched organization underperforming seems much more persuasive than a conspiracy tale of the state collaborating with a competitor that led officials to manufacture controversy as a reason for all of the contention.

And now it seems the BRF admitted to the truth of the former scenario, when it gave preliminary agreement to a new contract largely like the others handed out with many of the items it critiqued as either discriminatory or unworkable or both. If agreed to by it and the state, it remains to be seen whether it can operate adequately under the new deal, meaning the experiment, for better or for worse, seems not ready to end.