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LSU hospital officials have long envisioned a state-of-the-art university teaching hospital for Baton Rouge that attracts a range of demographics and functions as an engine for economic development.

But for some reason, LSU’s charity and medical education missions are being conducted in a Shreveport hospital that attracts privately insured patients as well as those who can’t pay.

LSU Health Sciences Center-Shreveport came together because of adept leadership, legislative support, geography, timing and unusual capitalization opportunities among other factors.

Baton Rouge had a different set of circumstances judging from the state of Earl K. Long, the city’s dilapidated charity hospital teetering on the brink of disaccreditation and generally viewed as the city’s provider of last resort. LSU has been struggling to lock in a South Baton Rouge site for a new university hospital and hopes to announce something soon.

LSU system officials say Shreveport will serve as a model going forward. To John McDonald, chancellor of LSU HSC-Shreveport, the lesson is simple.

“It’s not rocket science,” he says. “You just have to provide for everybody the same, and you have to treat your patients in the same place. If you continue the culture of one place for poor people and another place for affluent people, then that will perpetuate.”

How did Shreveport do it? McDonald, who joined the medical school faculty in 1977 and became chancellor in 2000, says it began when Confederate Memorial Medical Center, the city’s charity hospital, was transferred from the Louisiana Health and Human Resources Administration to Shreveport’s medical school, which opened in 1969 as part of the LSU Health Sciences Center New Orleans. Shreveport became autonomous in 2000.

Confederate, built in 1953, had been a normal charity hospital, treating only indigent patients. It was antiquated, including no air conditioning, six-bed wards and one toilet per wing.

As part of LSU, however, it fell under State Board of Regents rules that let higher education institutions carry forward year-end surpluses. That made possible the renovation of Confederate, later renamed LSU Hospital under the Health Sciences Center umbrella. None of the state’s other charity hospitals could keep their surpluses, with results one sees today at EKL.

“We made it our business to become certified to take Medicaid,” McDonald says. “We developed a flow of money that came to us because we were diligent and collected what we were entitled to. In some charity hospitals, no one bothered much about collection because they’d end up having to give money back.”

During the late 1980s and early ’90s, LSU-Shreveport took advantage of Medicaid’s “disproportionate share” funding, which reimbursed charity hospitals at three times the cost of delivering care. If a hospital delivered $50 million worth of care, for example, it got $150 million from Medicaid. The program was designed to help public hospitals that had most of the indigent burden and were never able to generate enough income for capitalization.

The money went back into the hospital, a strategy that Jim Brexler, CEO of LSU’s hospital system from 1999-2004, calls brilliant and one that the system’s other hospitals would have been wise to emulate when the gravy was still on the table.

“The charity system generated a huge amount of money over that period, but then they stopped the three times the funding,” he says. “In all of that happening, Shreveport got to keep a lot of money. They wisely recapitalized it and put it into a program up there to create a home base for faculty and a mix of private and public patients.”

Otherwise, Shreveport’s facilities wouldn’t be in such good shape today, says Brexler, now president and CEO of Erlanger Health System in Chattanooga, Tenn. LSU Hospital spokeswoman Elaine King says it was all part of a concentrated effort to become as self-sufficient as possible.

“It just so happened it worked very well,” she says. “In 1991 we were the most profitable public hospital in the nation.”

The hospital, which funds the medical school, is about 95% self-funded. King complains that in the past few years, they haven’t received adequate funding from the state to be able to reinvest in infrastructure and equipment. At the same time, the hospital’s percentage of indigent, non-paying patients increased as a result of Hurricane Katrina. The hospital, which has 436 licensed beds, is at 100% capacity today compared to 85% before the storm.

McDonald says the hospital has been bursting at the seams since Katrina and any extra capacity it had is gone. Most of the new patient load is coming from South Louisiana residents who aren’t insured. The hospitals needs more beds but lacks the resources for an expansion, McDonald says.

“It ain’t perfect up here,” he notes.

Despite the difficulties, McDonald admits he’s proud of the institution and says a “sense of ownership” on the part of medical school faculty is what made it possible and keeps it going.

“I guess more unconsciously than consciously we determined that we were going to make this hospital our hospital,” he says. “So (faculty) had a personal commitment to the development of this hospital as a university hospital.”

Shreveport’s faculty/physicians don’t contract with the hospital per the LSU New Orleans model. Instead, they’re employees of the Health Sciences Center. McDonald, a transplant specialist, says attracting privately insured patients happened “one patient at a time” over many years.

“They came here, and they actually liked it when they came,” he says. “They came and felt well cared for.”

Charles Zewe, LSU System spokesman, says people who criticize the LSU hospital system as obsolete and dysfunctional and argue it should be dismantled disingenuously ignore LSU’s success in Shreveport.

“If you were to go to Shreveport, you would see a hospital that is thriving with patients and attracts a 30% mix of paying patients,” he says. “That model works, and everybody admits that it does. Shreveport is exactly what we hope to do in New Orleans. It’s the same model we intend to apply statewide.”