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Revised hospital plan on target for better health system

While most of Louisiana that cares about state policy has been focused on hot issues in and around the Legislature, resolution of one of the biggest single items in monetary terms largely has gone unnoticed, the Gov. Bobby Jindal Administration’s review of the need for a new Medical Center of Louisiana – New Orleans, better know as “Big Charity” in the past and now as “LSU Interim Hospital.” The results of the study give some insight into the future of indigent medical care and policy in the state.

As former Gov. Kathleen Blanco left office, her administration was plumping for a huge, 484-bed facility that dovetailed with existing policy which sent money to institutions, mostly state-owned, for indigent care, rather than following the path all other states were taking in reshaping their health care system along a money-follows-the-person format. This would mean such a large facility was unnecessary, but Blanco insisted that it was a cheaper alternative to continue the traditional charity system even if some cosmetic efforts at efficiency were introduced.

Not long after taking office, Jindal initiated a review of the Blanco plan (buttressed by a self-serving study which said it could pay for itself) and the product was unveiled yesterday. It faulted the Blanco assumptions in several areas and showed Jindal planned to move away from the charity model.

Given macro-financial changes the cost of the project remains about the same, but with a smaller facility – 52 medical/surgical beds and 8 fewer psychiatric beds, as a result of shorter stay lengths, increased population over what had been forecast in Orleans but, most crucially, that the proportion of uninsured in the area served by the new facility would drop from 84.1 percent to 73 percent and the total number of uninsured would drop as well by almost 1,000 to be made up for by increases in Medicare/commercial and Medicaid payers. The significance of this in overall indigent care policy is that the total uninsured would decline and, of those remaining, fewer would head to the new Big Charity because of policy changes to get them insured and to have non-government providers pick up more of them, suggesting a shift to money-follows-the-person.

In addition, the report recognizes an inherent fault in the Blanco proposal, that an ever-increasing size would attract more non-state money to finance its operations, principally through the federal Disproportionate Share Hospitals funds which cannot be used for certain things and get capped. At a potential low of $189 million a year for this particular facility, contrary to the report created at the behest of Blanco the state could not break even and would have to subsidize its operation averaging $41 million a year for its first few years. It also noted the unrealistically low medical inflation assumptions of the previous study and used a 4 percent figure twice as high.

This presented a second point of significance, that for the state even to expect the subsidization figure to remain this low a 20 percent increase in efficiency would have to be realized. Therefore, the operating Louisiana State University system is compelled to demonstrate how this increase in efficiency is to occur as well as how to attract more non-indigent patients to it (since they bring more revenue). The prior report blandly assumed the novelty of the new enterprise itself alone could do this, although this report retains the assumption that the proportion of Medicare/commercial payers would double with the new facility from 2.6 to 5.2 percent of the area’s population in that category.

It therefore is possible that unless a strategic plan by LSU can be formulated to match this requirement, it may be back to the drawing board again or continued reliance on the interim facility (which this study showed costing more in subsidization than the projection of the new facility) or even retrofitting the old facility (not mentioned). Hopefully, this requirement will be taken seriously and is not thrown in for show with a preordained plan rigged to show these goals can be achieved, and hints that it will not be a pro forma exercise came in the caution that the continued reform of the system including reduction of the numbers of uninsured was needed and that the costs of planning and implementation failure were substantial.

In the end, Jindal did come up with a more realistic survey that will require a relatively reduced state commitment and one that does not seem designed to prop up the existing, less efficient money-goes-to-the-institution system. It should satisfy the federal government who wishes to combine forces with a Veterans Affairs hospital next to it, and take at least initial steps towards the redesign of indigent care in Louisiana, perhaps the next big item on the Jindal agenda starting next year.

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