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.
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.
And the shortfall will be in a fund that lawmakers largely used to pay for Louisiana's public colleges, including the LSU campuses, this year.
If the leases don't pan out and lawmakers can't fill the hole, colleges could face cuts.
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privatize nearly all university-run hospitals and clinics, saying the state's charity hospital model of health care was outdated and too expensive.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.
Jindal administration officials didn't immediately respond Wednesday to a question about whether it agrees with the Legislative Fiscal Office report.
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 biomedical research firm that has never run a patient care facility.
The fiscal office report suggests that the privatization deal for the Pineville hospital, Huey P. Long Medical Center, could generate additional lease money for the state budget to help close some of the $39 million gap.
But the deal presented last week to the LSU Board of Supervisors involved closure of the Pineville hospital and didn't include any expectation that the two private hospitals taking over the health services would be leasing any facilities from the state.