BATON ROUGE — In June 2015, the $1.1 billion University Medical Center opened in New Orleans to replace the old Charity Hospital nearby. The opening of the 2.3 million-square-foot center represented the promise and hope placed in a new public-private hospital system as a replacement for the aging charity system.
Less than three years later, that same partnership is in jeopardy due to the state’s recurring financial woes. If the state is unable to fulfill its part of the public-private contract, the partnership with LCMC Health would end, leaving University Medical Center under state control. This mirrors the financial uncertainties faced by public-private hospitals across the state.
After the legislature’s failure to agree on revenue-raising measures in the special session, uncertainty is engulfing the health care system as Gov. John Bel Edwards’ proposed “doomsday” cuts are coming closer to a reality. The House Appropriations Committee met Tuesday to discuss the potential cuts to close the $994 million budget hole once a temporary sales tax expires July 1.
The Department of Health has received notices from several of its private partners of their plans if the cuts materialize. University Medical Center would eliminate medical education, and Our Lady of the Lake would end its graduate medical program.
Several hospitals would be forced to reduce their staffs, laying off between 800 and 1,000 employees in Lafayette and 350 to 400 employees in Lake Charles.
Referring to the state’s private health partners in Shreveport, Commissioner of Administration Jay Dardenne said, “We have to keep that ball in motion — they recognize that.” But, he added, the private partners “also recognize that the budget does not contemplate being able to make the payments,” and they would not be able to manage University Health hospital without them.
At the meeting, Dardenne called on mostly Republican legislators who preferred budget cuts to revenue-raising measures to support specific cuts.
“For those of you who have been saying we should cut the budget, show the people of Louisiana your cuts, and examine the impact,” Dardenne said. “I will challenge all of you to find 692 million that you are willing to put your name on.”
While an extra penny of sales tax expires July 1, the real deadline is even sooner for certain cuts. Any cuts to Medicaid going into effect on July 1 must be submitted to the federal government for approval by May 1, and health professionals would need to be notified by April 1, a month earlier. From there, the federal government would have about 60 days to approve the changes.
In January, Gov. John Bel Edwards presented an executive budget which included a $656 million reduction in state funding to the Department of Health–a cut which would result in a loss of nearly $1.6 billion in federal matching dollars. Funding for nursing homes, safety-net hospital and clinics, mental health and substance abuse services and some Medicaid programs would all be reduced under the proposed budget.
Edwards has said he was not in favor of the cuts but was required by the state’s constitution to propose a balanced budget based on estimates at the time.
The inability to solve the budget deficit in the special session means that the Legislature will have to make cuts during the regular session, without the ability to raise additional state dollars.
Another special session following the regular session will likely be called in June as a last-ditch effort to pass revenue-raising measures and reverse some of the cuts made in the regular session.
Devon Sanders contributed to this report.
By Kaylee Poche and Ryan Noonan, LSU Manship School News Service