Louisiana: Hospital privatization effort saves money

The public hospitals previously operated by the Louisiana State University healthcare system spent significantly less than budgeted for indigent care in the just completed fiscal year, but lawmakers wonder whether uninsured patients are merely seeking treatment at other hospitals, the Associated Press reported.

The privatized hospitals spent $52 million less than budgeted in the 2014 fiscal year, which concluded on June 30, according to the wire service. Altogether, the state spent $1 billion on indigent care through the Medicaid program.

Privatization of the hospitals began to take place last year, primarily through no-bid contracts. Nine hospitals and a variety of clinics previously operated by the LSU healthcare system were either moved into private hands or shut down.

"We feel really comfortable that they are managing their budgets, that their new cost structures that they're setting in place are working, and at the same time we're getting really good quality care," Louisiana Secretary of Health Kathy Kliebert told the Associated Press.

However, the numbers drew some skepticism from lawmakers, particularly in light of the fact that the uninsured have inundated many private facilities.

"I want to understand where did that savings come from specifically?" state Sen. Sherri Smith Buffington (R) told the Associated Press. "I want to know if that's a true reduction in volume or if that's volume that went elsewhere for care. Patients don't evaporate."

The deal also drew some skepticism from the federal government. The Centers for Medicare & Medicaid Services rejected a portion of the privatization plan earlier this year, concluding that the advanced lease payments Louisiana received from the private operators could not be drawn down in order to leverage matching Medicaid payments. Gov. Bobby Jindal's (R) administration said that it would find a new way to reconfigure the payment structure, but that the privatization would remain in place.

To learn more:
- read the Associated Press article

Suggested Articles

A commonly used format for formulary submissions has been updated to enable drug companies to share information with payers on unapproved products.

NextGen Healthcare's Rusty Frantz sounded off about hospitals opposing proposed federal data-sharing rules while also sharing data with tech giants.

Welcome to this week's Chutes & Ladders, our roundup of hirings, firings and retirings throughout the industry.