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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