After four years of private and public meetings, the parties involved with planning the $1.2 billion medical complex in New Orleans’ Mid-City finally produced a memorandum of understanding earlier this year. If it seems like the document was delivered late in the game, that’s because it was.
At some point in late 2007 or early 2008, officials from LSU and Tulane couldn’t agree on what kind of process had been used during the first few years to determine costs and other planning details. A study would be left up to LSU, only to have Tulane claim it never took place, and so on and so forth.
Alan Levine, who inherited the drama last year when he became Department of Health and Hospitals secretary, rubs his temples with both hands while recounting his early days on the job. Two red marks remain on either side of his forehead. “If I told you some of the back and forth that’s gone on, you would think I was making it up,” Levine says. “They see a boogeyman in places that I don’t.”
That’s why the MOU had to be perfect. LSU and Tulane had to be on the same team. “Every single word was parsed and argued,” Levine says. “I’m not kidding.” It also wasn’t a joking matter when LSU signed off on the memorandum this summer, but only after it added a few tweaks. Tulane, meanwhile, had simply rubber-stamped the state’s revised draft, ready to move forward.
It’s the second Thursday of August, and Levine’s boss, Gov. Bobby Jindal, has been telling reporters in New Orleans the deal will be sealed in roughly a year. Levine agrees with the assessment, but adds one caveat. There’s still a lot of room to make up between LSU and Tulane, who would partner with a few other universities to run the 424-bed medical complex, or what basically amounts to a cutting-edge teaching hospital.
The divide between LSU and Tulane is generations old, although Levine has only recently been steeped in the duality that exists in New Orleans and Baton Rouge, from its politics to its territorial universities. But it’s only one aspect of the deal—there are also governance issues, financing, property questions and legal battles. “This is the most interesting challenge of my entire career,” Levine says. “There really are a lot of moving pieces, and there’s a great deal of things going on and progressing that are parallel.”
Under Levine’s MOU, a not-for-profit corporation would be set up to run the hospital and associated medical complex, which is scheduled to be built alongside a new Veterans Affairs Department hospital in lower Mid-City [veterans officials recently said their project stands separate from the teaching hospital]. A 12-member board would oversee the nonprofit, with four members—including the board chairman—coming from LSU, one from Tulane, one from Xavier University and one nominated on a rotating basis by the presidents of Dillard and Southern universities and Delgado Community College. The remaining five members would include individuals not affiliated with any of the universities.
The LSU Board of Supervisors, however, amended its MOU draft to create an 11-member board with five LSU representatives, including the permanent chairman. In a press release, Charles Zewe, LSU’s vice president for communications, said, “LSU board members contend that the LSU System is putting up the money for the project and should have more control. Under the draft MOU, LSU would own the medical center and lease it to the not-for-profit corporation.”
In other words, LSU officials are concerned about assuming any debt that would come as a result of the deal. And, with LSU now wanting more of a leadership role, Tulane’s top officials are expressing concerns to the state about being under LSU’s thumb.
Levine says it was a game of “shuttle diplomacy” up until then, with LSU in one part of his offices on the ninth floor of the Bienville Building downtown and Tulane in another. Most everyone thought a resolution was forthcoming. Maybe that’s why Commissioner of Administration Angele Davis announced shortly after LSU’s amendment that the state would no longer pursue land acquisitions until a true agreement is reached. Tulane spokesperson Mike Strecker says hopes are high that the state’s ultimatum “will resolve the impasse created by the decision of the LSU Board of Supervisors.”
Levine says one solution could be to change the kind of nonprofit that would be formed. Under the second MOU draft, a state-sponsored nonprofit is called for, which would place all monetary responsibilities on the board. A traditional nonprofit also could be created, but that would require approval by the Legislature and then appropriations. It’s not something the parties involved really want to do, considering how lawmakers tried to block part of the project this spring. “We’re discussing both options right now,” Levine says.
Then there’s the land needed for the complex, some 70 acres in all. The expropriation law that would be used—taking for the public good—still is untested in the courts. But that battle might be on the far horizon, especially since there are other pending cases waiting to be decided. Opponents—many would rather see something built inside the old Charity Hospital—have filed lawsuits.
Attorney William Borah, president of Smart Growth for Louisiana, a planning and advocacy group that’s suing the City of New Orleans over the VA hospital, calls the whole deal “destructive” because it would set into motion a plan that would be “abandoning Charity Hospital, abandoning the Central Business District and destroying a historic residential neighborhood struggling to rebound.”
According a recent public opinion survey of New Orleans voters by political scientist Edward F. Renwick, the controversy is likely to become a hot issue in the approaching Crescent City mayor and council elections. In the poll, voters preferred building a new hospital inside Charity by a 2-for-1 margin to the alternative location in the lower Mid-City neighborhood. “The voters at this point seem to have very clear preference for candidates who are open to putting a new hospital inside the old Charity building,” Renwick says.
Finally, there’s the financing question. The state is ponying up $300 million in capital outlay cash, but FEMA is floundering on an expected $492 million that’s meant to reimburse Katrina damages to Charity, offering the state only $150 million. The rest will come from bond sales that will be repaid with future operating income, which is a process Levine says will help the proposed board “stay honest,” since debt holders will be watching closely.
To many people, despite all the legal complications, territorial disputes and money questions, the proposed facility simply is a promise that was made four years ago in the desperate, trying aftermath of Hurricane Katrina. Today, they’re still waiting, which Levine admits is agonizing. But he says he recognizes the need to deliver on that promise, which is supposedly about a year away. “The plan is to build a new hospital,” he says, “and I don’t see any reason that’s not going to happen.”
