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Politics likely part of operator replacement

Yes, taxpayers must pony up more for north Louisiana charity hospital services. But because that largesse on a continuing basis comes from the federal level, that begs a very interesting political question.

Last month, this column mused about the financial ramifications of a pending deal on University Health hospitals in Shreveport and Monroe. For months, the state has sought a takeover of these from BRF, and last week the deal finally came to fruition. Beginning Oct. 1, a combination of the Louisiana State University System and Ochsner Health System would run both. The former runs and owns entirely Lallie Kemp Regional Medical Center, and the latter operates Leonard J. Chabert Medical Center.

Legislators had gotten wind that the deal would throw more money to the new operators. This seemed odd, as the Gov. John Bel Edwards Administration previously had cut subsidies to operators, maintaining the existing deals – thrown together hastily as the state had to respond to a large federal government retrenchment in health care aid – paid too much.

However, the Edwards Administration insisted that the $43 million boost would not come from state dollars, but from federal money. Of course, many Louisianans pay federal taxes, but proportionally that would end up a much smaller figure than trying to meet a pledge of a similar amount of state dollars.

The deal also should placate state Sen. Greg Tarver, the most outspoken critic of the operator being shown the door, BRF, whom Tarver said shortchanged the state even as BRF complained the state gave it too few funds. It will receive a $13 million buyout for receivables paid for partly by state taxpayers as LSU and Ochsner agreed jointly to foot that, but this will leave BRF no role at all in management; Tarver lobbied against any continued BRF involvement.

Still, BRF could have a board presence if Ochsner follows through with appointing BRF’s chairman as one of its choices, and Tarver also worries that BRF won’t make all payments due to LSU even with the buyout. The System meets to approve the contract this Friday, while legislators are scheduled to review, but not change or disapprove, the deal two weeks later.

Previously, this space asked whether Louisiana taxpayers would end up paying more because of this deal. They will, in terms of federal taxes and/or deficit spending and from the LSU portion of the buyout, but not the $43 million annual hike. Yet this leaves an even more interesting question: why have the transfer at all?

Again, any performance issues over which BRF faced accusers – principally from LSU itself – it blamed on lack of money. Yet now the state suddenly has found all this extra money from Medicaid, so why didn’t the state retain BRF and send that money its way? According to BRF, that have solved the issue.

Three explanations present themselves to answer this question. First, perhaps something about Medicaid regulations, for whatever reason, made BRF ineligible to have that increased amount of cash. That’s unlikely, but you never know with the Byzantine regulatory structure of Medicaid.

Second, BRF may have demonstrated such a level of incompetence that the state deemed any additional money still would not have solved problems. Certainly, the constant bickering over the past five years reminds of the aphorism where there’s smoke there’s fire, but at the same time anecdotal evidence suggests that BRF’s tenure did improve the quality of care. More to the point, would the quality of care and efficiency have been so significantly different between BRF and the new group with $43 million more in the pot, especially if BRF had assessed things right when it claimed only lack of money caused it to underperform?

Most likely, politics intervened, with Edwards using the opportunity to curry favor with two interests that could help him politically and even electorally. Ochsner (and all the other private-public partner providers) have benefitted from the extra taxes heaped upon Louisianans (and federal taxpayers) to afford Medicaid expansion, and obviously LSU benefits from having control over more dollars. What better way to strengthen support for Edwards both in legislative battles and running for a second term by pitching dollars towards these institutions, making them even more likely to lobby for the governor’s initiatives and reelection (if on a personal level)?

Additionally, two or all three explanations may serve to answer that question. Regardless, it seems highly improbable that the political fortunes of Edwards didn’t play a role in how it all turned out.

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