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PAR Releases Report on Health Care Reform

A new report by the Public Affairs Research Council of Louisiana (PAR) outlines seven recommendations for reforming the state’s system of health care for the uninsured and medical education programs. “Realigning Charity Health Care and Medical Education in Louisiana” suggests a new mission for the charity hospitals in New Orleans and Baton Rouge and outlines several reforms in public health care delivery and financing in Louisiana, including expanded health coverage for the low-income population and an improved safety net for those without insurance.

These recommendations call for true regional academic medical centers at New Orleans, Baton Rouge, Shreveport and Monroe, which would be kindled by community cooperation, partnerships and affiliations between the public and private sectors. These hospitals, with proper leadership and support, can become centers of excellence in patient care, medical education and research. The size of these facilities should be compatible with local demographics and medical care needs, as well as the education and research missions of the medical schools.

The other six charity hospitals should be transferred to local control over the next two to five years. Some communities already have developed plans for transfer of ownership and operation that would integrate uninsured patients into the existing private service delivery infrastructure.

“The goal is to decentralize health care for the uninsured in this state so that people are given a greater range of primary and preventive care choices closer to home,” said PAR president Jim Brandt.

The report finds that charity health care and medical education are physically and fiscally intertwined in Louisiana’s state-run charity hospital system. In other states, responsibility for most indigent care rests at the county level, with community hospitals and primary care providers delivering care that is nearby and more easily accessible for most patients. State medical schools focus on physician education in academic medical centers, but also share part of the indigent care responsibility.

In Louisiana both physician training and charity care are merged and set apart in 10 state-run charity hospitals. This organizational model reduces geographic accessibility, emphasizes expensive hospital-based care, shrinks the number of paying patients and revenues, and isolates both the uninsured and physician trainees from the expertise and modern technology available in the private sector.

“Louisiana’s two-tiered, institutionalized approach to health care is outdated, uncommon and begs for reform,” Brandt said. “Public and private provision of care can and should be coordinated in every Louisiana community, but to do so will require determined leadership from the top to force change. Otherwise, the status quo will prevail.”

This report examines the current structure and funding of care for the uninsured and medical education in the state as compared to other states nationwide. It shows that the charity hospital system has failed to provide ready access to medical services for the uninsured population in Louisiana. Overcrowded emergency rooms and outpatient clinics have caused diagnosis and treatment to be delayed for countless patients, which is a major factor in the state’s poor health outcomes.

Compared to public hospital systems across the country, the Louisiana charity system is heavily subsidized with state and federal funds. It relies on Disproportionate Share Hospital (DSH) funds and Medicaid for more than 80 percent of its operating revenue, compared to less than 40 percent for public hospitals in other states. Revenues from patients with private insurance or Medicare represent a much lower proportion of total revenues than they do in other public hospital systems. Unlike public hospitals in other states that show substantial increases in service volumes, Louisiana charity hospital trends since the mid-1990s show significant decreases in services delivered, although budgets continue to increase.

Given the organizational structure of the system and its aging physical plants, it is unlikely to make progress toward self-sustainability, let alone provide improved access. But, with the implementation of appropriate reforms, the state can develop a more community-based approach to health care that provides expanded access and improved quality and outcomes.

The safety net of care for the uninsured should be broadened to include private hospitals for acute care and private clinics and physicians for primary care. Rules for funding care for the uninsured should be developed so that dollars follow the patients to both public and private care providers. Other budgetary changes would enable the state to capture additional federal funding for graduate medical education.

PAR’s recommendations for realigning charity health care and medical education are as follows:

Recommendation 1:  LSU hospitals in New Orleans and Baton Rouge should be replaced and sized in accordance with independent population and revenue projections. The hospitals should be operated as academic medical centers under the jurisdiction of the LSU Health Sciences Center in New Orleans. The LSU Health Sciences Center and University Hospital in Shreveport and the E.A. Conway Medical Center in Monroe should be maintained and operated as academic medical centers.

Recommendation 2: Regionally integrated systems of care should be established by local authorities and health care providers in order to plan for an orderly transition of indigent care over a reasonable period of time from six state-operated charity hospitals to regional and community-based networks that emphasize primary and preventive care, as well as quality specialty and hospital care.

Recommendation 3: Financing for graduate medical education (GME) programs should be restructured to increase substantially Medicare GME payments by locating residency training at community hospitals and primary care training sites. Financing with Medicaid GME funds also should be increased substantially and payments should be linked to specific state policy goals, such as increasing numbers of primary care physicians.

Recommendation 4: State and federal funds currently paid almost exclusively to state hospitals for care of the uninsured should be redirected so that “dollars follow the patient” in order to allow them to choose appropriate health care from a wide variety of accessible inpatient and outpatient services delivered by private- and public-sector providers.

Recommendation 5: Insurance coverage options should be a top priority of the state, regardless of the outcome of negotiations with the federal Department of Health and Human Services.

Recommendation 6: Accountability and transparency should be enforced rigorously by the Department of Health and Hospitals in the spending of Medicaid Disproportionate Share Hospital (DSH) dollars, including immediate issuance of rules that require all qualifying providers, whether public or private, to present full information about services delivered to uninsured patients before being reimbursed.

Recommendation 7:  Health care recovery and reform planning should be accomplished by the Department of Health and Hospitals in consultation with the Louisiana Health Care Redesign Collaborative, or a similar entity with broad representation of health care, business and consumer interests. The process should be statewide in scope and include all LSU hospitals and medical schools in addition to the services and programs included in the 2006 Health Care Redesign Collaborative planning effort.

The above set of recommendations outlines the path for improved health care statewide and must be considered as an interdependent set of reforms rather than a list of independent proposals. Louisiana needs to adopt a holistic approach to health care planning and reform unlike any it has demonstrated in the past. The sectors can no longer function in silos, and with steady and determined leadership the entire health care community can be strengthened.

Primary author of the report is David W. Hood, Senior Health Care Policy Analyst. Funding for this report was provided by the Community Foundation of Shreveport-Bossier, the Rosalind and Leslie McKenzie Fund, the Juliet Singletary Dougherty Fund for Education, Health and Health Research, the Wilbur Marvin Foundation, the Will and Leona Huff Family Fund, the R. Gordon Kean, Jr., Family Fund, the Alvin and Louise Albritton Memorial Fund, the Baton Rouge Area Foundation, the Ella West Freeman Foundation and the Keller Family Foundation.

For additional information or to obtain a copy of the report, write to PAR at P.O. Box 14776, Baton Rouge, LA 70898-4776, call (225) 926-8414 or visit PAR’s Web site at www.la-par.org.

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