Apr 26, 2013 7:34 PM by AP
BATON ROUGE, La. (AP) - Lawmakers raised questions Friday about whether the LSU privatization agreements devised by Gov. Bobby Jindal's administration provide enough public scrutiny of hundreds of millions of dollars in taxpayer funding.
Deals to turn over management of LSU's Lafayette and New Orleans hospitals to private hospital operators allow for records to be shielded and board meetings that take place in private, according to information provided to the Joint Legislative Committee on the Budget.
"It is looked at as a not-for-profit, private entity that is conducting its business in a competitive market," LSU hospitals chief Frank Opelka told lawmakers.
Sen. Ed Murray, D-New Orleans, said accountability is needed to build the public's and legislators' confidence that dollars are being spent properly.
"What about public meetings, public records, public audit and those kinds of things?" Murray asked.
Patrick Seiter, a lawyer for LSU, said, "They're not required of a private entity."
Nonprofit corporations that run private hospitals will assume management of the university-run hospitals in Lafayette and New Orleans and their clinics on June 24, as a way to cut state health care spending.
LSU's network of hospitals and clinics take care of the poor and uninsured in Louisiana and train many of the state's medical students. Jindal, a Republican, is seeking similar deals for six more LSU hospitals, hoping to leave only one as a public hospital.
The Louisiana Children's Medical Center, which operates Children's Hospital and Touro Infirmary, will lease the Interim LSU Public Hospital in New Orleans and the new $1 billion, 424-bed medical training and research center set to open in two years. Lafayette General Health System will operate the LSU hospital in Lafayette called University Medical Center.
LSU and Jindal administration leaders said the privatization efforts will lower state costs while also improving patient access and supporting medical training programs.
"I believe that this is the best way that we can continue to maintain care for our patients and continue to train the doctors that we need for the state," said Larry Hollier, chancellor of the LSU Health Sciences Center-New Orleans.
Liz Murrill, a lawyer for Jindal's Division of Administration, said language will be added to the agreements to ensure the legislative auditor can review any spending of public funds - an issue raised by the auditor's office after the lease arrangements were signed.
But leaders of both the Children's Medical Center and Lafayette General said they didn't plan to hold public board meetings about the LSU facility operations.
"The public needs to just write a check and hope that you all do the right thing?" Murray asked.
Sen. Dan Claitor, R-Baton Rouge, pointed out that language in the cooperative endeavor agreements lets the hospital managers determine which records are considered confidential or proprietary and not subject to public records requests.
"I would assume that in practice they would slap that across every document that is sent," he said.
Committee members also said information remains murky on the deals' annual costs.
According to information provided by LSU, the New Orleans deal calls for Children's Medical Center to pay the state a $110 million upfront lease payment, to help stave off LSU hospital cuts this year. The dollars will be applied to lease obligations in later years.
Children's will owe the state $24 million annually for the two years it will lease the Interim LSU Hospital and then $62 million annually when the new hospital opens.
The lease is for a 42-year span with three, 15-year renewal options.
In Lafayette, the initial lease term is 10 years. Lafayette General will pay $16 million a year in lease payments for the LSU hospital.
The state will provide money to the hospital operators for health services through the Medicaid program funded jointly with state and federal dollars.
Jerry Phillips, undersecretary for the state Department of Health and Hospitals, said the governor's budget for next year dedicates $126 million in Medicaid funding for the Lafayette agreement and $348 million for the New Orleans deal.
Sen. Sherri Buffington, R-Keithville, said she worried there wouldn't be enough money remaining to make the other six deals work, including for the Shreveport hospital in her region.
"As one of those remaining six hospitals, I am incredibly uncomfortable," Buffington said.