BATON ROUGE, La. (AP) — LSU’s network of charity hospitals and clinics faces massive cuts after Gov. Bobby Jindal’s administration decided that the largest share of new Medicaid reductions will fall on university-run facilities that care for poor and uninsured patients.
The Department of Health and Hospitals said $329 million of the nearly $523 million in cuts announced Friday — nearly two-thirds of the budget reductions — will hit the public health care system run by LSU, which also provides the lion’s share of medical education and training in Louisiana.
“A new LSU health system must emerge from this,” DHH Secretary Bruce Greenstein said.
The cuts will strip 25 percent of the public health care system’s nearly $1.3 billion budget planned for this year and half of all funding that the system gets for caring for the uninsured.
Louisiana has 886,000 uninsured residents, about 20 percent of the state’s population.
Hospital officials had warned they couldn’t make deep cuts without closing facilities, and previous discussions of smaller possible reductions involved hospital closures. LSU System President William Jenkins didn’t say Friday how the cuts for the fiscal year that began July 1 will be divvied up.
Greenstein and Commissioner of Administration Paul Rainwater repeatedly said the administration plan doesn’t call for closures, but asks LSU to make structural changes and create efficiencies. They didn’t offer specifics, saying university leaders would make those decisions.
“We’re not talking about closing hospitals. We’re talking about being strategic in how we spend money,” said Rainwater, the Republican governor’s top budget adviser.
But John Matessino, president of the Louisiana Hospital Association, said it would be difficult for LSU to make cuts that deep without closing some of its 10 hospitals.
“How do you make some of those kind of cuts without doing that? I don’t know. That’s a pretty big wallop that they’re getting,” Matessino said. “That becomes a pretty major game changer for the charity hospital system.”
Sen. Sherri Smith Buffington, R-Keithville, agreed.
“A cut at that level you’re certainly concerned for patients and families. I’m deeply concerned about the possible collateral damage to medical education and training programs because those faculty physicians not only teach, they also treat those patients,” Buffington said.
The cuts are tied to a congressional reduction in Louisiana’s federal Medicaid financing rate that came up after lawmakers finished work on the 2012-13 budget.
The Jindal administration didn’t make the full level of cuts needed to close the gap, banking on improved state income estimates over the next couple of months to fill the remaining hole. If that doesn’t happen, DHH will have to slash millions of dollars more this year.
Other cuts will fall on hospitals that take care of Medicaid patients, and certain funding that small rural hospitals get for treating uninsured patients will be eliminated. Matessino said the rural hospital cuts could be devastating.
“Some of those hospitals absolutely depended on those dollars to keep their doors open,” he said.
A state-run mental hospital in Mandeville will be closed. More than 300 Department of Health and Hospitals employees will be laid off. Eight vital records service centers around the state will be shuttered, and some contract costs will be trimmed.
The health department will cut the Medicaid payments to nursing homes, but tap into a trust fund to cover the rate cut. DHH also will submit claims sooner in the year, to take advantage of the higher federal Medicaid match rate before it changes Oct. 1.
LSU’s vice president for health affairs, Fred Cerise, said he hadn’t had time to evaluate the implications of the budget cuts. But earlier this week, Cerise said the hospitals and clinics have few places to make reductions without eliminating services for patients.
“We’re in a spot now where we don’t have any cushion,” he said a few days before the cuts were announced.
The steep drop in funding to the safety net hospital system comes at a time that Jindal also decided against expanding the state’s Medicaid program under the federal health care law starting in 2014 to take care of more uninsured patients, even though the federal government would cover most of the initial costs.
In the cuts announced Friday, private and community hospitals are taking smaller hits than the LSU charity and rural hospitals, but Matessino worried about the spillover impact. If LSU shrinks the care it provides to the uninsured, those patients could head to the private hospitals with no money to cover those costs, he said.
Congress reduced Medicaid funding to the state in the recently passed federal transportation bill as part of Republicans’ efforts to offset some of the expense in highway funding.
The reduction targeted a provision that U.S. Sen. Mary Landrieu added to the federal health care overhaul law that was designed to buffer Louisiana from a Medicaid rate drop because of the influx of rebuilding dollars after hurricanes Katrina and Rita in 2005. An error in the writing of the provision has sent hundreds of millions more to Louisiana than what was initially expected.
