Strife emerges in LSU privatization deal

Only a year into privatization, a bitter feud has erupted from a deal that transferred management of LSU’s Shreveport and Monroe hospitals to a research foundation that had never run a patient care facility.

Now, finger-pointing and traded jabs of mismanagement threaten to mar the contractual arrangement that Gov. Bobby Jindal orchestrated and praised as improving the future of health care for Louisiana.

The angry – and public – dispute comes at a bad time for the Jindal administration, as it’s asking federal officials to approve Medicaid financing plans for that hospital privatization deal and several others in south Louisiana.

Without that federal 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.

LSU claims it’s owed more than $25 million for services rendered as part of the 10-month-old management transfer, and the new operator of the hospitals, the Biomedical Research Foundation of Northwest Louisiana, is accusing LSU of having mismanaged its clinics.

A flurry of back-and-forth letters from lawyers and health care officials seems to contradict claims that the hospital “partnership” is going well.

Critics of the privatization deals, who note they were approved by LSU’s governing board with blank pages in contracts, say the disintegrating relationship between the university system and the foundation known as BRF was inevitable because the deal was sketchy from the start.

But Jindal and other supporters of privatization suggest the seeming hostility is only a temporary disruption in a still-solid contract and health care plan.

“Across the state, these partnerships are major successes because they’ve increased access to better health care and have reduced wait times for services. We have discussed the situation in Shreveport with LSU leadership and they have assured us that they are committed to resolving it in a timely manner,” Jindal spokesman Mike Reed said in a statement.

The research foundation took control of the two hospitals in October 2013. BRF’s president is a Jindal campaign contributor who was one of the Republican governor’s appointees to the LSU Board of Supervisors at the time the deal was struck.

Fissures appeared publicly when a letter surfaced in early August from BRF, which operates the Shreveport and Monroe hospitals as University Health, to the U.S. Department of Health and Human Services alleging “potential violations” of federal regulations.

The letter accuses LSU of improperly handling patient scheduling and administration at the hospitals’ outpatient clinics, creating a two-tier system where uninsured patients had longer waits and different care than insured patients. LSU officials denied those claims.

By mid-August, LSU fired off a blistering collection letter to the research foundation, saying it owed the university system $25.3 million and hadn’t assumed the financial obligations required under its contract, creating problems for LSU’s Shreveport medical school.

The foundation “has effectively utilized LSU as BRF’s personal piggy bank and placed significant financial burdens upon LSU and thereby negatively impacted the medical school’s financial stability,” wrote Patrick Seiter, a contract lawyer for LSU.

Stephen Skrivanos, chairman of the research foundation’s board, disputed the amount owed and blamed the university system for an inability to complete a list of ancillary agreements related to hospital operations.

He accused university officials of forcing both sides to waste millions in legal fees because they refuse third-party mediation and of showing an “apparent disregard for the human lives” who rely on the north Louisiana hospitals for care.

“LSU’s one-sided assertions are as disingenuous as they are unprofessional,” Skrivanos wrote in an email response to the LSU letter.

A few days later, BRF announced that it paid the university system $6.4 million for the back-owed debts and placed another $10.6 million into escrow, to be disbursed once remaining financial terms were worked out.

LSU health care adviser Jerry Phillips replied that the BRF announcement shouldn’t be construed as some sort of agreement reached between the two sides of the dispute.

The exchange of accusation-laden letters came the same week the federal agency that oversees Medicaid spending sent Louisiana’s health departments a series of questions about the privatization deals, as it determines whether to approve the financing plans to pay for them.

EDITOR’S NOTE: Melinda Deslatte covers the Louisiana Capitol for The Associated Press.