Jindal administration rewrites LSU hospital privatization contracts, seeking federal support

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BATON ROUGE, Louisiana — Gov. Bobby Jindal's administration has renegotiated contracts for six LSU hospital privatization deals, hoping to reach a compromise with federal health officials that will keep Medicaid dollars flowing to the privatized patient services.

The contracts govern the management transfer of hospitals in New Orleans, Lafayette, Bogalusa, Shreveport and Monroe and a deal that closed LSU's Lake Charles hospital and moved its inpatient services to a nearby private hospital.

In May, the U.S. Centers for Medicare and Medicaid Services, or CMS, rejected financing plans for those six privatization deals and sought a rewrite of the contractual arrangements.

The Jindal administration's new proposal would change the way the hospital managers are paid, establishing a new payment category with a special reimbursement rate.

It wasn't immediately clear Tuesday what other adjustments were made to the nearly 400 pages of contracts. The Jindal administration and LSU didn't immediately respond to requests for details of the changes.

The LSU Board of Supervisors announced that it will hold a special meeting Wednesday to consider the rewritten contracts. The deals need board approval to take effect.

Jindal privatized nearly all the LSU hospitals without waiting for federal officials to sign off on financing arrangements that rely on millions of federal Medicaid dollars. Without that approval, the contracts can't work because there's not enough money to support them, and the state could have to repay what it's already spent on them.

The Republican governor touted the privatization arrangements as improving health care for the poor and uninsured in the state, along with medical training programs run by LSU. Critics countered that the deals were too rushed and could crater the state's budget if not approved by federal officials.

Completed through no-bid contracts, the privatization deals have taken effect for nine university hospitals and their clinics.

Under most of the contracts, the management company of a nearby hospital took over operations of the LSU facilities. In north Louisiana, a biomedical research foundation now manages the Shreveport and Monroe hospitals. Three contracts closed an LSU hospital and shifted its services to private facilities.

The deals are estimated to cost more than $1 billion in the current budget year, much of that federal money.

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