As the relationship between LSU, University Health and the hospital’s operator, the Biomedical Research Foundation of Northwest Louisiana, deteriorates, what lies ahead?
Early in September, LSU Health Shreveport medical school was placed on “fiscal watch” by a Board of Regents committee after LSU President F. King Alexander said it is losing millions of dollars and could soon be “out of business” [ed.’s note: The medical school supplies doctors to University Health]. A claim that the BRF has said is LSU’s fault.
The plot thickened late last month when the governor’s office moved to terminate the BRF’s contract as operator of University Health after the BRF refused to negotiate contract tweaks of the privatization deal that are being sought by Gov. John Bel Edwards.
Gov. Edwards pledged as recently as Monday that the medical school is not going to be moved anywhere else in the state of Louisiana, saying, “I’m disappointed we can’t reach an agreement but remain optimistic. I believe in making sure we have safety net hospitals and we’re going to make that happen at University Health.”
Dr. Alexander blamed the medical school’s financial troubles on its public-private partnership with the BRF and its operator of the school, University Health. He told regents in late August that the hospital is losing millions of dollars and the foundation has failed to pay hospital bills in full and has provided too little money each year for the hospital to sustain the medical school’s mission long term.
“What would happen in Shreveport is the hospital would put $30 million to $40 million back into the medical center each and every year. When the public-private partnership occurred, the hospital went to the private partner that hasn’t been able to provide the $30 to $40 million since the partnership was formed,” Dr. Alexander told the Board.
“They were inexperienced in working with an academic medical center. And they don’t understand the significance of supplying the academic medical center with revenues.”
Chair of University Health Stephen F. Skrivanos wrote a letter responding to what he called Alexander’s “misstatements.”
“Unfortunately, Dr. Alexander has completely misstated the facts. He has also ignored University Health’s outstanding achievements in bringing improved care to the poor and underserved citizens of north Louisiana, financial stability to the Shreveport and Conway hospitals, and substantially enhanced financial and educational support for the Shreveport SOM,” the letter stated.
The lengthy letter presents evidence that the financial problems faced by the Shreveport school of medicine are long standing and University Health has provided substantial assistance, payment issues are a “red herring,” and quality of care has “dramatically” improved.
“Long before privatization began, the Shreveport SOM has been incurring steadily increasing operating losses, of $50-$100 million annually, under a failed financial model. In addition, since 2011, LSU has drawn down a staggering $200 million in reserves in an attempt to balance its budget,” the letter said.
It also explained LSU requested $100 million per year in payments and University Health has continued to provide substantial and growing support to the SOM in Shreveport, with more than $380 million in payments since privatization.
“We have not underpaid LSU in any way,” Skrivanos’ letter said. “We have been consistently puzzled and disappointed by the refusal of the Shreveport SOM’s administration and Dr. Alexander to attempt to work with us to adopt a more efficient business model.”
Furthermore, a letter from LSU Health Shreveport Interim Chancellor and Dean Dr. G.E. Ghali said the school is not in imminent danger of closing its doors and is working closely with school officials and Gov. John Bel Edwards’ administration to solve funding issues.
“LSU President F. King Alexander and Governor John Bel Edwards have both assured me that our Health Sciences Center in Shreveport, including the schools of medicine, allied health and graduate studies, will continue to fully operate and execute our state missions of patient care, education, and research,” Dr. Ghali’s letter said.
“Over the past six months, I have reported that both the state of Louisiana and LSU have experienced a multitude of challenges relative to statewide privatization imposed by the previous Jindal administration, was well as various other factors that are beyond our immediate control. These are issues that my administration here on our campus, as well as President Alexander’s administration at our main campus in Baton Rouge, are steadfastly working through,” Dr. Ghali’s letter added.
Now that the BRF could be removed as operator, the two parties have 45 days to continue conversations under the contract.
The Biomedical Research Foundation took over management of the teaching hospital and another in Monroe, both operated by University Health Hospitals, as part of then-Gov. Bobby Jindal’s plan to privatize the state’s charity hospital system in 2013.
This isn’t LSU’s first flashpoint with the BRF. The school served a breach of contract notice to BRF in 2015, demanding the foundation withdraw as the operator. When it did not, LSU filed suit asking 19th Judicial Court Judge Todd Hernandez to remove BRF as the hospital operator immediately, claiming the foundation was in breach of the public purpose of its contract, had failed as operator, and damaged the reputation of LSU’s medical school in Shreveport. But Hernandez ruled that LSU failed to negotiate in good faith.