BATON ROUGE, La. (AP) - Gov. Bobby Jindal's privatization of the LSU-run public hospital network is bringing in $39 million less in lease payments for the facilities than expected this year, according to a report from the Legislature's financial analysts that is disputed by the Jindal administration.
The budget for the fiscal year that began July 1 was built on estimates provided to lawmakers by the Jindal administration that anticipated the new hospital managers would lease those facilities and their clinics for more than $140 million.
In a new publication, the Legislative Fiscal Office says that so far, the leases are only expected to generate about $101 million for the 2013-14 year. That would leave the budget with a $39 million gap that lawmakers have to fill before the fiscal year ends June 30.
"Based on review of all signed lease agreements, along with drafts of all but one pending agreement, the Legislative Fiscal Office projects that the level of lease payment revenues in (the current fiscal year) may be insufficient to support the current level of appropriation," says the assessment written by analysts Alan Boxberger and Charley Rome.
Jindal's commissioner of administration, Kristy Nichols, said Wednesday that the dollars will pan out as projected. She said the report doesn't tally the full lease payments planned this year for the LSU hospitals in New Orleans, Shreveport and Monroe.
"The LFO's report is wrong. We are right on target to achieve the approximate $140 million budgeted for lease payments," Nichols said in a statement.
If the lease payments fall short, the hole will be in a fund that lawmakers largely used to pay for Louisiana's public colleges, including the LSU campuses, this year.
Jindal chose to impose most of a federal Medicaid financing reduction to the state on the LSU public hospital system. He's pushed to privatize nearly all university-run hospitals and clinics, saying the state's charity hospital model of health care was outdated and too expensive.
The Republican governor estimated the privatization deals will save Louisiana $125 million this year, but that assumption factors in the lease payments.
Nichols said the fiscal office calculations don't account for a double lease payment for LSU's New Orleans hospital this year, to be made by the Louisiana Children's Medical Center "to stay one year ahead in their lease obligation."
She said the report also assumes the research foundation taking over management of the university system's Shreveport and Monroe hospitals will pay for a nine-month lease, since the deal starts Oct. 1. Instead, Nichols said the Biomedical Research Foundation of Northwest Louisiana will pay a full year's cost.
The LSU System had operated 10 hospitals around the state and their network of outpatient clinics, which cared for the poor and uninsured and provided training sites for medical students.
Privatization agreements have been worked out for nine of the hospitals and their clinics. LSU plans to continue to run one hospital, Lallie Kemp Medical Center in Tangipahoa Parish.
Under outsourcing deals already completed, the university hospitals in Baton Rouge and Lake Charles have been shuttered, with their services transferred to other private hospitals in the area. A similar plan is in the works for the LSU hospital in Pineville, but that agreement needs legislative approval to close the hospital.
Management of four other LSU hospitals around south Louisiana is being turned over to nonprofit organizations that run other private hospitals in the region. In north Louisiana, the Shreveport and Monroe hospitals will be managed by a research firm that has never run a patient care facility.
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