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Health Care Collaborative: Go Statewide, Consider Charity Hospitals

Louisiana stumbled across the finish line last week to complete the first phase of a long journey toward a better health care system. Now that the initial outline for reform of the New Orleans region has been submitted to federal officials by the Oct. 20 deadline, the Louisiana Health Care Redesign Collaborative should exercise the authority already granted to it to develop a statewide redesign plan for health care delivery that integrates all LSU charity hospitals and the LSU medical schools into the reform options.

The Collaborative’s planning results, so far, include surprisingly promising recommendations. If implemented, these proposals could produce fundamental changes in the health care delivery system that ultimately would improve the health status of the low-income population in the New Orleans region. Unfortunately, redesign planning has excluded consideration of the charity hospital system and the rest of the state outside of the New Orleans region.

The impact of the storms ranges far outside the four-parish New Orleans region. Most areas of the state have felt the impact of overcrowded health care facilities and resources, because New Orleans residents had to relocate. More importantly, every community in Louisiana continues to deal with a dysfunctional health care system that existed for decades prior to August 2005. The failure to plan reforms for the entire state merely delays progress that will be essential to meet the Collaborative’s ambitious reform goals.

U.S. Department of Health and Human Services Secretary Michael O. Leavitt has committed to assist Louisiana with designing a health care system for the 21 st century. From the start, Leavitt has been clear about his belief that the state needed to replace its two-tiered health care delivery system – one tier for the population with health coverage that allows wide choice of providers and services and another tier for the uninsured that forces them to rely almost solely on the charity hospital system. The scope of the current planning process does not reach far enough to accomplish that goal.

While the Collaborative has made significant progress in planning for better record maintenance, transparency of performance measures, the development of medical homes for indigent care and expansion of insurance coverage for the entire low-income population of the New Orleans region, federal officials have expressed dissatisfaction with the progress being made toward eliminating the state’s second-class tier of health care.

The two-tiered process that allows LSU to plan for a $650 million, 350-bed replacement hospital in New Orleans independent of the state’s official health care planning entity makes no sense. Because it had the highest uninsured caseload and level of spending, the Medical Center of Louisiana at New Orleans was the most prominent feature of the public health care system in southeast Louisiana. Yet, the number of beds, construction cost and operating budget of the replacement for “Big Charity” have never been agenda items for any meeting of the full Collaborative, and only occasional discussions have indirectly touched on the subject. If this omission persists, Collaborative members planning for elimination of the “two-tiered” health care system must start with the assumption that both tiers will be firmly in place in the “new” health care system.

Supporting the cost of both tiers is not feasible. Federal officials are requiring that the reform plan be budget neutral in five years in order to receive the necessary transition funding. State and federal officials disagree on the amount of extra funding that will be necessary to implement the limited plans currently on the table. The state estimates $300 million or more per year while federal estimates are only $20 million. No matter where the true cost settles, to become budget neutral in five years, dollars will have to follow the patients from wherever they are being spent now – primarily in the charity hospital system.

A complete and accurate redesign plan, whether regional or statewide, would redirect sufficient funds earmarked for care of the uninsured from charity hospitals to the private insurance option that the Collaborative is recommending. The state does not have sufficient resources to expand health care coverage and continue to fund the antiquated charity hospital system at current levels.

With a planning structure as awkward and disconnected as the one Louisiana has adopted, it is unlikely to achieve the desired goal of a truly reformed health care system unless some changes are made. Given the unwieldy planning structure, it is fair to ask whether or not the process was organized from the outset to achieve positive results or to maintain the status quo. A new urgency in planning statewide, coordinated reforms that include charity hospitals needs to be adopted. Delays allow contracts to be signed and new and additional costs that support the status-quo system to be incurred. Immediate intervention by the Collaborative is needed.

Neither the current volunteer Collaborative members nor the DHH staff has the capacity to operationalize the unprecedented redesign. The state needs to hire an outside firm to manage the changes proposed for the New Orleans region, develop pro-forma financials for the regional and statewide models and set timelines for implementation, among other responsibilities. The bid process to hire an implementation manager with national credentials should be initiated immediately.

The necessary efficiencies to implement the redesign cannot be realized without a statewide approach to reform that includes the charity hospital system. The separate planning endeavors of LSU and the Collaborative must be consolidated. This will allow a coordinated approach to planning for the new health care system by including all of the component parts: the downsizing of the charity hospital system; the need to redesign and improve graduate medical education; and the shape and direction of the community-based, highly accessible, quality-driven network of care providers that should be the hallmark of the new system.

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