Louisiana Governor Moves Forward With Hospital Privatization Plan Without Federal Agency’s Approval

Louisiana Gov. Bobby Jindal’s administration is moving forward with a plan to privatize some of Louisiana’s state-run hospitals, despite the Centers for Medicare and Medicaid Services (CMS) rejecting the use of federal funds that would have provided a significant source of financing for the plan.

The six hospitals within the LSU Health Care Services Division (HCSD) that are being privatized under Jindal’s plan include hospitals in Baton Rouge, Bogalusa, Houma, Lafayette, Lake Charles, and New Orleans. 

Because Jindal did not wait for federal approval before shifting the management of the hospitals, the source of the funding of the plan, a reported $1.1 billion this budget year, is currently uncertain.

The state is appealing the CMS decision and, reports say, working to negotiate alternative financing in order to move forward with the plans. In a letter to the CMS, state Commissioner of Administration Kristy Nichols urged the agency to expedite the process. “I cannot emphasize enough the importance of settling on an alternative structure as quickly as possible so that the improvements that are underway in Louisiana as a result of the public-private partnerships can continue,” wrote Nichols. 

Jindal, who this year has already been struggling to deal with a $1 billion budget gap, is facing criticism for how he has managed the plan to privatize the hospitals. “Gov. Bobby Jindal’s reckless pursuit of using federal Medicaid funds in an ill-conceived scheme to privatize state-run hospitals has backfired, and now the people of Louisiana will pay a dear price,” said state Rep. Robert Johnson (D-Marksville), according to The Town Talk.

Even after questions were raised by State Treasurer John Kennedy about whether or not CMS would approve the plan, Nichols made assurances that the plan was sound. “We have researched this very carefully. We went through a very exhaustive review,” Nichols told The Advocate.

Nichols told lawmakers in the the house and senate budget committees that the rejection will not have implications for the state budget until August or September of 2015, reports the Associated Press. A former health department official, Jerry Phillips, told lawmakers that appealing the CMS decision would take a minimum of six months.

Issues surrounding the privatization plan were discussed by lawmakers during a hearing related to the closure of a hospital not involved in the privatization plan. The House Health and Welfare Committee voted Tuesday to close the Huey P. Long Medical Center in Pineville. Rep. Johnson reportedly lobbied legislators to vote against the closure, which passed the committee by a 10-8 vote, citing concerns about the committee’s integrity. “If we are casting a vote, I think we have a right to know what we are voting on,” he said.

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