BATON ROUGE (AP) — Skeptical lawmakers questioned the financing plans for a new $1.2 billion public hospital complex in New Orleans, with some suggesting the state might need to reconsider whether to rebuild the shuttered Charity Hospital facility instead.
The LSU-run Charity Hospital has been closed since Hurricane Katrina flooded it in 2005. It provided indigent care and specialty services for the poor and uninsured while also training doctors and other health professionals.
Rather than gut and rebuild the hospital, LSU and Gov. Bobby Jindal’s administration plan to build a replacement facility for the Art Deco landmark, a new 424-bed medical center in collaboration with the U.S. Department of Veterans Affairs, whose hospital also was flooded. The two would have separate hospitals but share some operating costs.
The endeavor is an expensive one, and members of the House Appropriations Committee on Thursday said they were unsure if the financial plans for the new hospital were feasible.
“Until the final financial piece is put in place, I don’t think there is a done deal,” said Rep. Jim Fannin, D-Jonesboro, chairman of the committee.
The state has put up $300 million and is negotiating with the Federal Emergency Management Agency about federal rebuilding dollars for the hospital. FEMA has offered $150 million for the damage, but Jindal and LSU say the state is owed $492 million.
The final piece involves creating a private nonprofit entity to borrow money by selling bonds that LSU officials said would be paid off with the hospital’s income from paying patients.
Lawmakers said they worried the state would be responsible for paying the debt if the new hospital didn’t bring in enough paying patients, and they questioned whether the bonds would even attract buyers in the troubled financial markets.
“How do we proceed with a $1.2 billion plan when half of the money we don’t know if we’re going to get or how we’re going to get?” said Rep. Noble Ellington, D-Winnsboro.
LSU System President John Lombardi acknowledged the risks, but said a new teaching and research facility was needed to provide medical care in New Orleans, to train new doctors and nurses and to attract top research dollars and talent to the state.
“While this is an expensive undertaking, it’s got to be done right,” he said.
The Legislature would have to sign off on creating the nonprofit entity to sell the hospital bonds, plus it has oversight of the state money set aside for the project.
The committee also waded into the continuing debate about whether it would be cheaper and faster to rebuild the existing hospital, but lawmakers heard widely different figures about the costs, the construction timeline and the complications.
An architect who studied Charity Hospital said it would be $283 million cheaper to renovate the hospital than to build the new public hospital nearby.
Stephen McDaniel, with New York-based RMJM Hillier, said gutting and rebuilding the hospital would cost about $550 million, when including tax breaks for preserving and renovating an historic structure. He said a new hospital would cost $832 million — without including the exterior office buildings and other facilities LSU includes in its $1.2 billion plan.
McDaniel said a restoration of Big Charity would take three years, compared to five years to build a new hospital. He said the renovation would keep the facade and 20-story shell of the hospital but require a complete gutting and replacement of the interior.
“If the building is stable, why can’t we go in and create a state-of-the-art facility?” House Speaker Jim Tucker, R-Terrytown, said of the closed hospital.
LSU and Jindal administration officials disagreed with McDaniel’s findings, saying it would be more costly to renovate the historic building. They also said it wouldn’t provide the best standard of care to patients.
Jerry Jones, director of the governor’s Office of Facility Planning and Control, which oversees state construction projects, said rebuilding Charity Hospital would cost $70 million more than building a new $1.2 billion medical center, when including the price of furniture, equipment, a new energy plant and other needed exterior buildings.
“I don’t think you can do it for the money they say you can do it for, and I don’t think it’s a realistic approach,” Jones said.
RMJM Hillier was hired by the Foundation for Historical Louisiana, a preservationist group charged by the Legislature with evaluating whether Charity could be renovated and reused as a hospital. Preservationists hope to protect the historic neighborhood that is slated to be torn down for a new hospital.