BATON ROUGE, La. — Louisiana is renegotiating the terms of deals with the private managers of its safety-net hospitals and services, in what is becoming an annual bargaining session aimed at keeping state costs in check.
Gov. John Bel Edwards’ lead negotiator, Commissioner of Administration Jay Dardenne, said drafts of the latest contract proposals are out this week for hospital managers to review as talks continue. One deal has been completed, governing the New Orleans hospital.
The main negotiation issue is money, with the Edwards administration trying to ensure the deals have caps on the state’s financial liability amid Louisiana’s continued budget struggles.
“I don’t think there are any of our partner hospitals who are asking for less and who don’t think they should be paid more, but we don’t have the resources,” Dardenne said. “It’s a huge amount of money, there’s no question.”
The contracts, negotiated by former Gov. Bobby Jindal’s administration, will carry a nearly $1.2 billion price tag in the fiscal year that began July 1, according to data provided Monday by the Louisiana Department of Health. Lawmakers reduced spending on the contracts this year by about 6 percent to help balance the budget.
Jindal privatized nine state-owned charity hospitals and their clinics that cared for Louisiana’s poor and uninsured through no-bid contracts over 2013 and 2014. Previously, the facilities had been run by LSU.
In most instances, the management company of a nearby hospital took over operations. Three hospitals — in Baton Rouge, Lake Charles and Pineville — closed and their services were shifted to private hospitals.
The Edwards administration says the contracts were too hastily slapped together, with terms that weren’t favorable to the state.
“We felt like it was too much of a blank check,” Dardenne said.
Last year, Edwards signed short-term add-ons to the contracts that contained spending controls, new data collection requirements to track patient care and other provisions. But those terms expired when the last budget year wrapped up June 30, so the governor’s administration is seeking to enact similar provisions for the current year.
The first deal reached is with Louisiana Children’s Medical Center, which operates the New Orleans safety-net hospital and clinics.
Among its many terms, the memorandum of understanding sets a maximum fixed dollar amount the hospital manager can receive for services. If the state has to enact midyear cuts, the safety-net facility operator is required to try to trim expenses without damaging the medical training done by LSU at the hospital and clinics.
The agreement also says the hospital manager will pay “fair market value” for the services of LSU’s doctors; will contract with LSU for disease management and services aimed at improving patient outcomes; and will develop a business plan for unused space, including a “provision for increased mental health services.”
The agreement, like the others expected to be negotiated, will expire June 30, 2018. That means the Edwards administration will have to haggle again over the deals next year unless it and hospital managers can agree to more permanent changes to the contracts enacted by Jindal.
Striking a deal with the operator of the state-owned hospitals in Monroe and Shreveport could prove among the thornier negotiations.
Officials with the Biomedical Research Foundation of Northwest Louisiana, whose spokesmen didn’t respond Monday to a request for comment about negotiations, have repeatedly clashed with LSU and state officials over payment amounts and contract terms. Dardenne said the hospital operator didn’t meet the terms of last year’s deal.
“We’re having broad discussions about our ongoing relationship,” he said.
Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte