By Steve Worley, President and CEO
Earlier this year, state budget reductions caused $152 million in cuts to LSU’s seven public hospitals. The hospitals, which provide a safety net of healthcare for the indigent and uninsured, announced cuts to clinic hours and services, and layoffs, including 420 here in New Orleans scheduled for the beginning of the year. The announcement sent shockwaves through the medical community, as the public hospitals are staffed by medical school faculty and offer a training ground for residents to treat patients under the supervision of more experienced physicians. Many feared New Orleans’ medical schools would lose prestige as it would be increasingly difficult to attract top faculty and students.
Those fears were averted in mid-December, when the state, along with LSU, announced that Louisiana Children’s Medical Center (LCMC), the non-profit corporation that runs Children’s Hospital and Touro Infirmary, will lease and take over the management and operations of the Interim LSU Public Hospital, better known as University Hospital, and the new $1 billion, 424-bed University Medical Center, currently under construction on Tulane Avenue, when it opens in the spring of 2015.
University Hospital, like Charity Hospital before it, plays a significant role in providing vital medical and surgical services to the citizens of this region, and has a pivotal responsibility in providing quality medical education for the future physicians of the state. The acquisition will allow University Hospital to remain at 200 beds, avoiding a previously announced cut to 150. Clinic hours and services will also remain the same. University Hospital/UMC will remain respected teaching hospitals, be staffed by LSU and Tulane faculty and residents, and continue to serve the uninsured.
The plan calls for LCMC to acquire University Medical Center Management Corporation (UMCMC), a not for profit 501(3) corporation originally established to manage and operate the University Medical Center. LCMC will be the parent corporation over the boards of Children’s, Touro and UMCMC. LCMC will make an upfront payment of $7 million, and then a total of $10 million paid over time. The state will use the money to get matching federal healthcare dollars to help pay for services at the hospital and clinics.
LCMC is stronger and more financially sound than ever before. I want to assure you that this transaction will not only help us maintain this position, but also will result in strengthening Children’s and Touro as premier care providers in the region. This new affiliation will have no affect on our current hospitals’ operations, their medical staff or employees. In fact, the size of the medical staff and number of employees will continue to grow in the future.
Healthcare reform is giving rise to new payment models and the increased development of integrated healthcare systems. LCMC is evolving into a strong system that is capable of providing for all of the healthcare needs of all the citizens of the region.