BATON ROUGE, La. (AP) — The Civil Service Commission reversed course Monday and agreed to privatization plans for four LSU hospitals, with nearly 4,000 layoffs set to take effect June 23.
The commission's 3-2 vote was the final step needed for Gov. Bobby Jindal to turn over management of university-run hospitals in New Orleans, Lafayette, Houma and Lake Charles to private hospital operators in the local communities.
The decision changed course from less than a week earlier, when the commission stalled the plans. Members said they needed more details about financing arrangements to determine if the state would save money and gain efficiencies from the deals.
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After the rejection, the Jindal administration and LSU provided additional paperwork. On Monday, Michael Kaiser, chief executive officer of the LSU Health Care Services Division, and other administration officials described the financing arrangements in a broad overview.
Kaiser said a reduction in federal Medicaid financing to the state — most of which Jindal decided to levy on the LSU public hospital system — would have shuttered services across the facilities and left the university system seeking private "partners" to help fill the funding gap. He listed a series of service closures that had been considered before the lease deals.
"These would have all been devastating cuts to each of these communities, but I'm sad to say these would not have been sufficient," to close the entire Medicaid funding reduction, he said.
Commission member Scott Hughes said since the last meeting, lawmakers approved a budget for next year that assumes the privatization of the hospitals, so he said rejection of the deals would leave no dollars available to operate the hospitals through LSU.
"If we were to deny these contracts, we will not be able to provide these services to the citizens. I believe these hospitals would close," he said.
Jindal is seeking to privatize nine of the 10 LSU hospitals and affiliated clinics that care for the poor and uninsured and that provide training sites for many of Louisiana's medical students.
Contracts have been signed for seven such arrangements, with the Civil Service Commission agreeing to five deals so far. Only one has taken effect, in Baton Rouge, where the LSU hospital was closed and most services were moved to a private hospital in the city.
The governor's top budget adviser, Commissioner of Administration Kristy Nichols, said the nine privatization deals will save the state an estimated $100 million annually, while also preserving graduate medical education and services to the uninsured.
Critics cited blank pages and missing financial information in some of the lease arrangements. They said the contracts were too rushed.
Leonal Hardman, a union representative of the public employees, urged commission members to slow down privatization, saying too many questions were outstanding about how the deals would impact health care services and hospital workers' jobs.
"Everything has not come together yet to say whether these are the best deals for the citizens and the taxpayers of the state of Louisiana," he said.
Hughes said he still had questions about some of the numbers provided by the Jindal administration and concerns about whether federal officials will sign off on some of the Medicaid financing needed to make the budget plans balance.
But he and other members of the commission, which is the state's human resources agency, said their review was only allowed to determine whether the privatization could save the state money and to ensure the deals weren't motivated by political considerations.
"I think the evidence has been presented that this is economical and efficient," said commission member Lee Griffin.
The commission is charged with overseeing layoff plans for contracts that would privatize the work that had been done by state employees.
Kaiser said nearly 4,000 employees work at the four hospitals and will be laid off June 23, including 2,771 "classified" employees, rank-and-file workers under the oversight of the Civil Service Commission.
The workers are able to reapply for their jobs with the new hospital managers, though it remains unclear how many will be rehired and whether they will take pay and benefits cuts under the privatization deals.