University Medical Center operator threatens to terminate management agreement over budget impasse

New Orleans-based LCMC Health, the operator of New Orleans-based University Medical Center, is threatening to walk away from the public-private management agreement to run the hospital over the budget impasse in Louisiana, according to The Times-Picayune.

LCMC CEO Gregory Feirn and UMC CEO William Masterton penned a letter to Louisiana Gov. John Bel Edwards' administration March 12 giving official notice that they are considering a "potential withdrawal event" regarding their contract with Louisiana to run the hospital.

"The fundamental reason necessitating action is the current budget impasse and the state's failure to provide any funding for UMC in state fiscal year 2019," Mr. Feirn and Mr. Masterton wrote in their letter, according to the report. "While this process unfolds, LCMC Health will continue to provide care for patients who count on us for critical, life-saving healthcare services. We look forward to further discussing." 

If the state is unable to fulfill its part of the public-private contract, the partnership with LCMC Health will end, leaving University Medical Center under state control, which would cost the state hundreds of millions of dollars and would jeopardize the jobs of more than 2,000 hospital employees. If the partnership ends, it is unclear how the 1,000 medical students and 2,400 other healthcare students will receive training.

While UMC received $388 million in state and federal funding for the current budget cycle, the Edwards administration's current draft budget does not provide any funding for the hospital in fiscal year 2019. The draft budget assumes the state will have to make $944 million in cuts.

The partnership between UMC and LCMC Health is not the only public-private management contract in jeopardy over Louisiana's troubled finances. Hospital operators in Baton Rouge, Lafayette and Lake Charles have also sent similar letters to the state threatening to terminate their management agreements if the budget crisis isn't resolved.

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