Finances pinched at N.O. hospitals

• By ALLEN M. JOHNSON JR.
• Advocate New Orleans bureau
• Published: Nov 21, 2008 - Page: 16A - UPDATED: 12:05 a.m.

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NEW ORLEANS — State health secretary Alan Levine is championing a “not-for-profit” governance model for a $1.2 billion replacement for Charity Hospital in New Orleans.

Meanwhile, the governor’s appointee is continuing to seek federal aid for ailing medical facilities in the metro area.

Five of the 10 acute-care hospitals in the area continue to struggle financially more than three years after Hurricane Katrina flooded state-run Charity Hospital in New Orleans, Levine told the Louisiana Recovery Authority this week.

“Those hospitals are taking a beating,” Levine said later, referring to Touro Infirmary, Ochsner Hospital, Tulane Medical Center, East Jefferson and West Jefferson hospitals.

But taking care of poor uninsured patients who once went to Charity is no longer the big financial headache for the five hurting hospitals, Levine said.

All five medical facilities were later compensating for caring for those needy patients, Levine said.

“Frankly, the uninsured issue is not much of an issue anymore because most of the uninsured (patients) have gone back down to pre-Katrina levels,” the secretary said. “The bigger issue is operating costs.”

Since Katrina, hospital personnel salary and benefits costs have soared by nearly 20 percent, he said. Hospitals have struggled to retain staff amid decreasing revenue and sharp population drops since Katrina.

“Some of the hospitals are at risk at having their bonds go into default,” Levine said, referring to the credit market crisis.

Hospitals are getting hit because many medical facilities invest their reserve funds in the stock market, Levine said, who operated hospitals for 20 years before Gov. Jindal appointed him as Louisiana’s top health official.

“There are some hospital CEOs in New Orleans that are probably going without sleep right now because of the challenges they are facing,” Levine said.

The plight of the five hospitals underscores the critical condition of health care in the New Orleans area, as the state pushes for its $1.2 billion LSU/Veterans Administration teaching hospital to replace still-shuttered Charity.

A “not-for-profit” governing board, modeled after successful university teaching hospitals at Duke University and others, would safeguard LSU/VA from the kind of free-market palpitations facing the five New Orleans facilities, Levine said.