A Watershed Moment for LSU

In early 2005, a leading private health care system in our state published an assessment of Louisiana’s health care safety-net system, the LSU public hospitals. That report included an urgent call to action to address concerns about a system that was failing to keep pace with national trends in public health care and medical training.

Specifically, it noted declining utilization, high uncompensated-care costs, high Medicaid reliance and insignificant investment from local communities as worrisome variances from other successful models. Shortly after its publication, hurricanes Katrina and Rita devastated our state, putting any plans for significant reform on hold as that state struggled to grapple with a monumental recovery effort.

Perhaps ironically, it is the after-effects of those storms that are now accelerating the need to resume the serious discussion about modernizing our state’s public hospital system. Like many of our neighboring deep-South states, Louisiana has historically experienced a federal Medicaid matching rate of more than 70 percent. This summer, after the Louisiana legislative session concluded, the U.S. Congress acted suddenly, and without advance warning, lowering the rate of federal funding for Louisiana’s Medicaid program to the lowest level in over 25 years, ultimately putting our reimbursement on par with states like Maine, Missouri, Oregon and Wisconsin, all of which have smaller Medicaid populations. More urgently, Congress’ actions left Louisiana with an $859 million gap in this year’s state budget.

The Disproportionate Share Hospital program, commonly referred to as DSH, is the largest discretionary Medicaid program. It provides funding to hospitals that treat a large volume of low-income patients without insurance. Louisiana is the fourth-highest spender of DSH resources, with over 90 percent of those dollars directed to the LSU public hospitals. Between DSH and Medicaid payments, LSU Hospitals are paid on average 30 percent more than private hospitals to deliver the same care.

This is in spite of the fact that in recent years, overall private hospital spending increased as changes in the health care system caused more patients who traditionally sought care in LSU hospitals to go to other hospitals. In response to Congress’s reduction in Medicaid funding, the LSU system announced plans to meet the budget shortfall.

Make no mistake; this is a watershed moment for LSU and our state. The concerns aired in the 2005 report still exist and must be addressed, and while the loss of funding provides an immediate catalyst for change, it is only accelerating the inevitable. If we are to continue providing critical safety-net health care services to Louisiana residents, and if we are to continue using the LSU system as the basis for medical education and training in our state, we need to examine how we can do a better job at both while living within our budget constraints and the realities of our health care system.

In most states, public hospitals are largely governed and financed at the local level, where communities invest in those resources independently of state subsidy. Our state-owned and financed hospital-based charity care structure cannot be sustained in today’s health care economy – with or without these reductions.

Last week, LSU leadership laid out their roadmap to achieving this reduction, which includes no hospital closures and strengthens graduate medical education programs. Instead, they are working on a new model by focusing on maintaining medical homes and outpatient clinic care while maximizing public-private partnerships to close service gaps and enhance graduate medical education programs.

While each community will require a solution that works best for the particular region, LSU must foster these partnerships across the state to better balance their resources and deliver services in a more effective way. One example of a public-private partnership is already happening in Baton Rouge where LSU is partnering with Our Lady of the Lake on a plan that is not only saving the state more than $400 million, but also expanding health care services to the poor and improving graduate medical education.

The bottom line is that the LSU Health System is on course to operate in a 21st century model that protects patient care, provides more training opportunities for students and gives us a meaningful chance to incorporate new and more diversified health care partners into the public hospital network.

We at DHH stand ready to roll up our sleeves and work with LSU and leaders across the state to build a stronger system that both taxpayers and residents who rely on LSU for their care, as well as our future health care professionals who will train at these hospitals, deserve.