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Deep cuts could leave UMC without a lease partner

University Medical Center (FOX 8 Photo/FILE) University Medical Center (FOX 8 Photo/FILE)
BATON ROUGE, LA (WVUE) -

The head of the Department of Health and Hospitals warned state lawmakers Tuesday that more deep funding cuts will produce dire consequences for state funded health care services. The threatened cuts have the private manager of the “safety net” hospital in New Orleans considering ending its contract with the state.

Inside the State Capitol, DHH Secretary Dr. Rebekah Gee prescribed a dose of reality for the budget crisis.

"We can't lose our schools and close down our hospitals and expect that life will go on as usual,” Gee said.

Her department winces at the cuts it could face over the next few months. DHH would have to absorb a $64 million cut in its budget before June 30 when time expires on the current budget year, and that has funds for private operators of state-owned hospitals facing the scalpel.

Greg Feirn, CEO of LCMC Health that operates the billion-dollar University Medical Center in New Orleans as part of a lease agreement with LSU said the latest proposed cuts range from $44 million to $126 million.

"And neither of those scenarios represent something that's workable for our public-private partnership and what we're trying to accomplish in New Orleans,” he said.

He said LCMC would not want to see the growth of the hospital complex stunted.

"We're here to provide care for all, we're not here to reduce capacity or limit care - it's not part of our mission,” Feirn said.

LCMC and some other hospital managers partnering with the state said they could scrap their contracts.

"The are private entities that have boards and business models, and they're not doing it as a charity. They're doing it to make sure that it works with their bottom line,” Gee told members of the Health and Welfare Committee during a special session that was called to deal with the current budget crisis.

Feirn said there is a remaining $91 million lease payment for the current budget year, and that going forward the payment is $85 to $87 million.

"We operate an effective health care organization, we lease that asset from the state," he said. "They're expecting that revenue source just like we're expecting an appropriate budget to provide care.”

LCMC’s cooperative endeavor agreements has a 60-day “without cause” exit clause.

"And we work very closely with DHH in the budgeting process, so there's no excess in the budget that was formally agreed on, there's not any room for reduction,” Feirn said.

DHH is also concerned about the impact further cuts would have on mental health services. Department officials told state lawmakers that when hospital beds for the mentally ill are reduced, the state ends up paying in other ways because many end up in the criminal justice system.

Feirn said he is optimistic that the governor and state lawmakers will find a solution to the budget crisis before the special session ends on March 9.

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