Louisiana still recovering from financial shock of LSU hospital privatization

Louisiana is still reeling from former Gov. Bobby Jindal's (R) deal to privatize nine hospitals formerly run by Baton Rouge-based Louisiana State University, according to an analysis published by The Shreveport Times.

Evidence shows the privatization has improved care and access for poor and uninsured patients, cut down on wait times and increased service offerings, according to the report. However, the cost of the deals lingers, and it may be too much for the state to bear. Privatizing the hospitals cost approximately $1.3 billion this budget year alone, according to the report.

Most of the hospitals were privatized through no-bid contracts and are now managed by nearby hospitals, though three closed and moved their services to other facilities, according to the report. The deals produced millions in advance lease payments, but these funds were spent right away to fill out the budget for the cash-strapped state, according to the report.

The advance lease payments have generated additional controversy because federal Medicaid officials claim $190 million was improperly tied to the contracts, according to the report. Officials have ordered the state to repay the funds. On top of that, LSU is struggling to pay for the costs of former and retired hospital employees not covered by the private hospital operators, which cuts into its medical school budget, according to the report. State lawmakers are working on legislation that would shield LSU from footing the bill for former employee expenses for hospitals and clinics it no longer operates, according to the report.

Nonetheless, some of the hospital operators have threatened to walk away due to the severity of the situation, but the state does not have a back-up plan if the facilities close. Current Louisiana Gov. John Edwards hopes to renegotiate the contracts, according to the report.  


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