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Louisiana Department of Health & Hospitals | Kathy Kliebert, Secretary

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State Health Officials Announce Landmark Public-Private Partnership Agreements for LSU Hospitals

Agreements preserve services, strengthen medical training, expand specialty care in regions

Monday, December 10, 2012  |  Contact: Media & Communications: Phone: 225.342.1532, E-mail: dhhinfo@la.gov

BATON ROUGE - Today, Louisiana Department of Health and Hospitals Secretary Bruce D. Greenstein and LSU System Executive Vice President for Health Care and Medical Education Redesign Dr. Frank Opelka held events in three regions of the state to announce that agreements have been reached to form public-private partnerships involving three LSU hospitals. Interim LSU Hospital and its successor University Medical Center in New Orleans will partner with Louisiana Children's Medical Center; Leonard J. Chabert Hospital in Houma has reached agreements with Ochsner Health System and Terrebonne General Medical Center; and University Medical Center in Lafayette has formed a partnership with its neighbor, Lafayette General Medical Center.

LSU has been working to accelerate a system redesign through public-private partnerships over the past several months due to Congress's sudden action in July that reduced Louisiana's Federal Medical Assistance Percentage (FMAP) rate to the lowest it has been in more than 25 years.  The FMAP reduction eliminated $126.9 million in State General Funds from the LSU Health System's budget, which amounts to a total reduction of $329.2 million when federal funds that would have been used for match are considered.  This funding loss has prompted immediate and significant reform of the State's health care programs.

LSU officials in October announced a plan for bringing their budget to balance with these unexpected FMAP reductions that keeps all hospitals operational and maintains critical services, including the medical home-model clinics that provide much of the care to recipients in the public hospital system today. The final, and most instrumental, part of this plan involved establishing public-private partnerships. Three of those partnerships are part of today's announcement.

In the first stage of these partnerships, the partner hospitals will collectively make payments totaling $12.1 million in the LSU system, allowing them to avoid previously planned staff layoffs at the public hospitals and maintain patient services at the existing locations as the partners involved progress toward final agreements. These payments are part of the hospitals investment to strengthen the local health systems and lease the public hospital property from LSU.

"Today we are taking a monumental step toward modernizing our public hospital and medical training systems in Louisiana," Opelka said. "By partnering our responsibilities with local resources and providers, we are able to protect patient care, provide more training opportunities for students, and operate a more efficient and integrated health system."

"Since Congress unexpectedly reduced Louisiana's Medicaid funding in July, we have worked with LSU to accelerate a redesign of our public hospital and medical education training programs. These partnerships keep core services intact and offer exciting opportunities to enhance both patient care and medical education," said Louisiana Department of Health and Hospitals Secretary Bruce D. Greenstein. "Thanks to the invaluable contributions of the legislative delegation members in the regions where these hospitals are located, we've been able to establish relationships that are home grown and tailored to the dynamics and needs of each region, which puts local leaders in stronger control of the future of health care in their communities."

The terms of each of the public-private partnerships announced today preserve the patient services and graduate medical education programs already in place at the three public hospitals, while providing opportunities for increased access to specialty care and enhanced medical training through work with the partner hospitals.

The partner hospitals will lease the property of Interim LSU Hospital and its successor University Medical Center - New Orleans, Leonard J. Chabert Medical Center in Houma, and University Medical Center - Lafayette, including the hospitals and their affiliated outpatient clinics, from LSU. The LSU staff will continue working at these facilities to maintain academic and clinical services, with the partner hospitals assuming responsibility for facility upkeep and operations. 

Each of the partners will expand their roles in the clinical care, medical research and education programs provided through the LSU hospitals. The public hospitals will continue serving as the safety-net hospital in their regions for people who are uninsured and high-risk Medicaid recipients, who will continue to have access at the existing LSU hospital locations.

Each partner will make a series of milestone payments, when the memorandum of understanding is formally executed, when the cooperative endeavor agreement is executed and when the partnership is formally enacted. These payments are non-refundable. Once the Cooperate Endeavor Agreement (CEA) is finalized, the payments can be credited toward the cost of the lease of the public hospitals and their related facilities.

Local officials and hospital leaders from each of the respective regions praised the agreements as a positive step in creating a stronger, more sustainable public hospital and graduate medical education system.

"This is a great step for the future of health care and graduate medical education in Louisiana, and will go a long way toward helping us improve health outcomes and establish better patterns of care for the people of our state," said Senator David Heitmeier, Chair of the Senate Health and Welfare Committee. "The agreement with Children's Hospital will strengthen the Interim LSU Hospital now, while giving us the right partner to ensure the success of the new academic medical enterprise."

"As a nonprofit hospital, Children's is driven by its mission to provide world-class comprehensive health care for all Louisiana families," said Louisiana Children's Medical Center President & CEO Steve Worley. "We will continue and grow that commitment through our partnership with LSU, and we look forward to many years at their side delivering compassionate health care and cutting edge medical training."

 "This hospital is incredibly important to this region, and the legislative delegation has worked tirelessly with LSU and state officials to find a sustainable path for it to continue to provide exceptional care to our families and loved ones," said Senator Norby Chabert. "Expanding our partnership with Ochsner makes sense, and this relationship will strengthen the health care services and medical training we provide right here in Houma."

 "The Ochsner Health System has a rich history of providing exceptional patient care and world-class medical education and research programs through a nonprofit mission," said Ochsner Health System CEO Warner Thomas. "Along with Terrebonne General Medical Center, we look forward to bringing our experience and expertise to the LSU Health system as we work as partners to improve the experience for patients, students and residents of the Houma and Thibodaux region."

"We are proud to be involved in the partnership with Ochsner and LSU at Chabert Medical Center," said Terrebonne General Medical Center CEO Phyllis Peoples. "Terrebonne General looks forward to our continued efforts to provide top-notch quality care to the residents in our community."

"I am so pleased to be part of this announcement, an important milestone for health care services and medical training in our community," said Senator Fred Mills. "I want to thank everyone who was part of how we got here, particularly my colleagues in the Legislature who have worked so relentlessly on behalf of their constituents. Lafayette General is the perfect partner to begin the next phase of building a better, stronger UMC.

"Lafayette General Medical Center is an eager partner for LSU here in Acadiana," said CEO David Callecod. "This is a vibrant community that deserves a modern, progressive and efficient health system. We look forward to working with LSU to deliver first-rate patient care and medical training."

Leaders at these hospitals have each signed a memorandum of understanding to formally enter into a partnership. These memoranda will be presented to the LSU Board of Supervisors at a special meeting on Friday, Dec. 14. Once the memoranda are approved, LSU will work with the hospital partners to finalize cooperative endeavor agreements that detail the terms of the new relationships.

While the terms of each partnership will vary based on patient volume and graduate medical training opportunities provided in those regions, each agreement to establish a public-private partnership is designed around the needs of that community, and is driven at the local level. The agreements are designed for the partner hospitals to work with LSU to keep patient care in the local community and reduce patients' need to travel for health care beyond their locales.