A report that the state’s new $1.2 billion University Medical Center under construction in New Orleans’ Mid-City may be leased to another New Orleans hospital once it’s completed is raising more than a few eyebrows around the State Capitol.
“For seven years now, we’ve heard we need this new facility because it is going to be a world-class, academic, research facility to compete with MD Anderson and the Mayo Clinic, and now we’re going to lease it out to a smaller hospital already operating in New Orleans?” says state Treasurer John Kennedy. “Sounds to me like we’ve gone from a Mercedes to a Pinto.”
Kennedy isn’t the only one questioning comments made in a news report last weekend by Larry Hollier, chancellor of the LSU Health Sciences Center in New Orleans. In the report, Hollier says the state is very close to leasing the Interim UMC Hospital and ultimately the new UMC hospital to another hospital in New Orleans. He did not disclose the identity of the potential lessee or what it might mean for the high-profile and, at times, controversial medical complex.
But Kennedy says the revelation vindicates what he and other critics of the complex have been saying for years: namely, that the state cannot afford and doesn’t need such a massive facility.
“I have said from day one it is too big,” Kennedy says of the planned 424-bed facility. “It will never cash-flow out.”
A spokeswoman at the LSU Health Sciences Center in New Orleans referred calls for comment to Hollier’s boss, Dr. Frank Opelka, LSU System executive vice president for Health Care and Medical Education Redesign. Opelka did not return calls for comment in time for publication this afternoon. The state Department of Health and Hospitals issued a statement saying, “DHH is assisting LSU in their efforts to transform an antiquated hospital system and medical education program by exploring opportunities for public private partnerships. LSU is the driving force behind the public private partnerships, and we continue to work with them to bring these partnerships to fruition, as they represent a significant opportunity to enhance patient care and bring their graduate medical education programs into the 21st century health care market. As LSU solidifies agreements and makes decisions in different communities, we’ll work with them to finalize the terms of the financing arrangements.”
Kennedy’s argument against the size of the UMC facility is twofold. First, the Greater New Orleans area already has more hospital beds per 1,000 people—2.83—than the national average of 2.7, he says. Adding 424 more, as well as several hundred beds within a new VA Hospital, also under construction, and a new hospital in New Orleans East will put the market at well over three beds per 1,000 residents.
Kennedy also points out that two separate health care consulting firms—both hired by the state—have said the state will have to kick in $100 million or so a year from the general fund just to keep the hospital in the black. And that’s assuming the state participates in the federal Medicaid program, something the Jindal administration says it will no longer do under the 2010 federal health care law.
“That could mean the state is on the hook for $200 million or $250 million a year,” Kennedy says. “Maybe this is finally starting to dawn on them.”
