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Jan 25, 2010
Governor Jindal Announces Historic, Transformative Health Care Agreement between LSU & Our Lady of the Lake Hospital

-$14 Million State Investment to Increase Care for Poor and Improve LSU Medical Education-

BATON ROUGE – Governor Bobby Jindal announced today an historic, transformative agreement on a first-of-its-kind public-private partnership between Louisiana State University (LSU) and Our Lady of the Lake Regional Medical Center that will improve and expand access to health care services for the poor and enhance graduate medical education for Louisiana’s doctors, nurses and health care professionals. The agreement is now subject to approval by the boards of each organization. The Governor also announced the state has reached a tentative agreement with the federal government on two disallowances regarding Medicaid payments and have an update on the progress of the state’s Medicaid reform efforts.

Governor Jindal said, “Today, we are announcing an historic public-private partnership agreement between OLOL and LSU to create an enterprise with the infrastructure and resources to compete for outstanding students, provide high quality care, improve access for everyone in the region and embark upon major research opportunities.  This kind of agreement has never before been offered in Louisiana. It brings the best of our public system – our faculty, clinics and LSU training programs – together with an institution that is already one of our largest providers of care for the poor – Our Lady of the Lake Regional Medical Center.”

Jindal added, “The state will make a $14 million investment to expand services as part of this LSU-OLOL collaborative. This is in addition to the $24 million in funds LSU was already appropriated. As a part of the overall collaborative, OLOL is committed to spend at least $100 million in capital. This is not only an important investment because federal funding for LSU and Medicaid is being reduced, but this collaborative will improve and expand services for the poor while making LSU’s medical training program more competitive, and creating more jobs at OLOL and greater economic growth in Baton Rouge.”

Dr. Fred Cerise, LSU System Vice President for Health Affairs and Medical Education said, “Our careful evaluation of the collaboration has shown it has substantial benefits for Louisiana and our patients. The success of our educational programs is key to making this work. We have identified a platform at OLOL where the clinical activity and financial support can allow these programs to continue to thrive in their excellent traditions and where patients can have greater access to the services they need. The collaboration is also cost-effective in a fiscal environment that continues to evolve.” 

“We believe this is a new model of care that accomplishes a great deal for our community. This collaboration ensures there are physicians continuing to be trained to take care of us, our children and grandchildren. There is still a great deal of work to be accomplished in the next two years and we are ready,” added OLOL Chief Executive Officer Scott Wester.

Louisiana Department of Health and Hospitals Secretary Alan Levine said, “This agreement will certainly transform health care in Baton Rouge, and will improve care across the state as well. Medical residents will be afforded more opportunities right here in Baton Rouge, training our future doctors and nurses in a variety of medical fields that are not currently available at LSU, such as cardiovascular surgery. Residents throughout the Baton Rouge region will have easier access to quality care at a lower cost to the state – truly a win-win situation for everyone.”

Donna Ryan, MD, Pennington Biomedical Research Center said, "This is a landmark event for the medical care, medical education and medical research communities of Louisiana. This project will enable us to grow joint programs, building on Pennington's national reputation for research in obesity, diabetes and cardiometabolic disease - the leading causes of chronic diseases in the US.  The project benefits Pennington Biomedical Research Center by providing opportunity to develop leading treatment programs and it benefits the medical faculty and medical trainees by giving them the access to Pennington's research expertise.  It is all to the ultimate benefit of health for Louisiana citizens."

Senator Mike Michot said, "Because of the hard work of the Jindal administration and the folks at LSU and Our Lady of the Lake, we're going to have a health care system in the state that will save more lives and provide our sons and daughters with a better education. This agreement is an important step for the people of our area that will also provide the state a competitive edge when competing for business and industry and medical students."

Rep. Jim Fannin said, "This is a win-win for the charity system, LSU and all of the citizens who benefit from these services. I'm appreciative of the efforts of Governor Jindal and his administration in working with all parties to create a deal that will not only save lives, but also save the state valuable dollars."

Representative Hunter Greene said, "I am excited to see LSU and OLOL work together to become more efficient and streamlined in providing health care in the capital area. I will continue to do everything I can to help make this partnership work for the benefit of the patients, healthcare professionals, and the taxpayers of Louisiana. I believe this will be a positive move forward for all stakeholders."

Rep. Bodi White said, "Our health care professionals already do a tremendous job at keeping our children and families healthy- and because of this partnership between Our Lady of the Lake and LSU, our doctors and nurses will have better tools and facilities to save lives. The new Level 1 trauma center will make Baton Rouge one of only three Level 1 trauma centers in the state, which will help save more lives in and around the Baton Rouge Metro Area. This agreement will give both patients and students invaluable resources that will also make Baton Rouge a top city for medical innovation, and attract even more people to our community."

Rep. Erich Ponti said, "This agreement between LSU and Our Lady of the Lake will deliver a higher level of healthcare that will put our city and state on the cutting edge of advanced medical training. With the new level one trauma center and the opening of a new urgent care clinic, all of our citizens will have access to better trained physicians, new physician training programs and improved access to care that all of our citizens need. This partnership puts our city on the forefront of advanced medical training and healthcare services being delivered."

Immediate Past Chairman of Blueprint Louisiana Sean Reilly said, “We are delighted that LSU and Our Lady of the Lake have reached an agreement to bring this new model of graduate medical education and health care to our state. It’s a wonderful opportunity to show that we can deliver health care differently—something we can replicate statewide. Much of our country has used this model for years and we’re glad we are finally using it in Louisiana for the benefit of our residents and our health care professionals.”

Executive Vice President of the Baton Rouge Area Foundation John Spain said, "We are extremely pleased with the partnership between Our Lady of The Lake and LSU and are confident that it will provide access to high quality health care for all our citizens and world class training for our future physicians. The Baton Rouge Area Foundation has devoted significant time and resources to finding a solution for the replacement of the Earl K. Long hospital and we are pleased to have played a role in bringing about this unique public/private partnership."

BRAC’s President and CEO Adam Knapp said, “We are excited about the partnership between Our Lady of the Lake Regional Medical Center and LSU, which has the potential to create new economic growth, medical education, and research. It also has the ability to improve the quality of our region’s healthcare workforce and prevent duplication of valuable community resources.”

Six Major Steps in the Historic, Transformative LSU-OLOL Agreement:

1. First, for the first time in the history of the Baton Rouge region, a new Level One trauma center will be established at Our Lady of the Lake. Level One trauma centers provide the highest levels of emergency and trauma services around the clock, with the most experienced physicians.

According to the American College of Surgeons, Level One trauma centers provide tremendous opportunities for students in every aspect of medical science. The centers are required to keep trauma surgeons, anesthesiologists, physician specialists, nurses, and resuscitation equipment immediately available 24 hours a day and lead the nation in advancing injury-related research and providing injury prevention services. The American Trauma Society says that organized trauma care systems can reduce the risk of death by more than 50 percent among those who are seriously injured.

Trauma centers are also an important piece of communities’ disaster preparedness efforts. The Health Resources and Services Administration (HRSA) recently conducted a survey that showed that more developed trauma systems enabled communities to be more prepared for day-to-day treatments and mass casualty events. Developed trauma centers are capable of having the surge capacity to respond to disasters, whether it’s an act of terrorism or an act of nature.

Louisiana currently has just two trauma centers, both Level One, and each operated by LSU. One is at Interim Hospital in New Orleans and the other is at the LSU Health Sciences Center in Shreveport. There is currently no trauma center in the Baton Rouge region. In anticipation of additional patients under the agreement, OLOL also will construct facilities for and maintain at least 60 beds, as well as the new trauma center.

2. Second, LSU will open a new 24-hour, 7-day-a-week urgent care clinic in North Baton Rouge. The new clinic will adjoin the new LSU Health System North Baton Rouge Clinic, the state-of-the-art facility recently opened on Airline Highway. This step is a critical component of the agreement, as Louisiana has one of the highest rates of non-emergency use of emergency departments in the nation, and this new clinic will help direct patients to care in a more beneficial and less costly setting.  According to an analysis performed by LSU and OLOL, in FY 2008, 63 percent of the emergency room visits at Earl K. Long were non-emergent.

LSU will also enhance its current outpatient services at its Mid City, Perkins Road, and Leo Butler locations. Ambulatory surgery and clinic activity will also increase at the LSU Outpatient Surgery Center on Perkins Road.

3. Third, the agreement will greatly improve and expand access and services for the poor. Currently at Earl K. Long, many services, such as trauma, invasive cardiology, cardiovascular surgery, neurosurgery and urgent care, are not offered. In cases where services are not available, the patient either does not receive the service, or the patient must be transferred. Under the new partnership between OLOL and LSU, patients will receive a full complement of services with virtually every specialty available to treat them. 

4. Fourth, the agreement will improve graduate medical education in the Baton Rouge region. A majority of LSU’s graduate medical education programs will be relocated to OLOL, even while they still gain tremendous experience in LSU’s established outpatient clinics throughout Baton Rouge.  At OLOL, medical residents and students will be exposed to a larger volume of patients and a more diverse caseload, and LSU will have the opportunity to broaden its scope of clinical faculty, particularly among specialists, to provide a more rich training experience. LSU residents’ increased access to new learning opportunities will enrich their time as a resident, and will attract even more medical students to Baton Rouge.

The medical education program improvements come at a critical time, as currently, 97 percent of Louisiana’s parishes are health manpower shortage areas and 25 percent of the state’s practicing physicians are over the age of 65.  Under this new agreement, there will be an estimated 325 residents training at the Lake in 110 slots. And this is expected to grow over time.

5. Fifth, the agreement establishes new academic and clinical buildings at Our Lady of the Lake and Baton Rouge will become home to a state-of-the-art, well-capitalized facility with modern technology. This will help the facility to not only meet accreditation requirements for hospital and residency programs, but to compete with some of the best academic enterprises in the country. Our Lady of the Lake will add additional space for educational use, to provide more common-area room and for at least 60 additional beds to accommodate the increased volume of patients and training. The new space will be fully integrated into the capacity of the entire OLOL hospital complex.

Studies from the University of North Carolina at Chapel Hill have confirmed that low volume hospitals, like Earl K. Long, face considerably more instability from year to year in demand for and cost of inpatient services than larger hospitals.

6. Sixth, the OLOL-LSU partnership will save the state more than $400 million that would have been required to build a new hospital. Under the agreement, LSU will continue to operate outpatient clinics at North Baton Rouge, Mid City, Perkins Road and Leo Butler. Further, LSU will keep all of its residency slots, even during the transition period to the new facility, and secure inpatient obstetrics and prisoner care at another location.  

Additionally, the per-unit cost of services at Earl K. Long was found to be higher than    similar services at OLOL.

Also DSH funding has historically been used to help subsidize LSU’s graduate medical education program, but with the federal government’s reduction to DSH funding for LSU, this agreement will generate even more cost-savings by treating more patients from OLOL, which has a higher Medicare payer mix at the federal level than LSU’s current Earl K. Long facility. In fact, this is estimated to save the state several million dollars.

The Governor said that under the agreement, OLOL would also work in conjunction with the Capital Area Human Services District and LSU to maintain the current level of behavioral health services

The LSU Board of Supervisors will take up the new cooperative endeavor agreement (CEA) for a vote at its January 29, 2010 meeting and OLOL’s boards and sponsors will begin to take up the CEA for votes beginning on January 27th. After LSU and OLOL approve the agreement, the Louisiana Legislature’s Joint Legislative Committee on the Budget must grant approval and the U.S. Centers for Medicare and Medicaid Services must approve an amendment to the Medicaid state plan.  The Department of Health and Hospitals and Division of Administration will approve funding, implementation and ongoing budget allocations for the collaboration laid out in the new agreement.

The Governor said under this agreement, the state will provide $14 million to LSU and OLOL to help support the new facilities and expand services as part of the collaborative. This is in addition to the $24 million in capital outlay funds LSU was already appropriated for a new facility. LSU will invest $20 million of that $24 million to help fund the collaborative and $2 million will be used to renovate and expand LSU’s outpatient surgery center on Perkins Road. Another $2 million in capital outlay will be used for the new around-the-clock Urgent Care Clinic in North Baton Rouge.

Settling Federal Disallowances

The Governor also announced today the state has reached a tentative agreement to settle two outstanding federal disallowances incurred by the state over the last decade. These disallowances total approximately $426 million and include the Road Hazard Disallowance and the Nursing Home Disallowance.

The Road Hazard disallowance involves the state’s self-insurance fund and was originally issued by the U.S. Department of Health and Human Services in 2005. HHS alleges the state improperly used federal funds to pay for claims, and the disallowance currently totals $310 million, including approximately $158 million in interest. State officials recently met with HHS representatives to negotiate settlement terms of the disallowance, and a tentative agreement was reached that would provide for a lower interest rate, a longer repayment period, and a delayed first payment. The tentative agreement reduces the disallowance to the original base amount of approximately $150 million, a more than 50 percent reduction in the total disallowance.  The interest has also been reduced to one percent from February 22, 2005 through January 31, 2010.

The Nursing Home disallowance involves $116 million in Federal Financial Participation-related to payments made to non-state government owned nursing homes as part of an Intergovernmental Transfer between the state and these homes between 1999 and 2001. The settlement terms on the disallowance set an interest rate of 1.82 percent with repayment over a year period of four or five quarters. As similar appeals by other states have been rejected, DHH was advised to settle outside of the appeals process, and will seek approval of the JLCB to transfer funds from the Elderly Trust Fund, which currently holds nearly $800 million, to the State Treasury to begin payments in March 2010.

Progress on Medicaid Reform Efforts to Improve Care

Governor Jindal also announced today that the state is moving forward in its work to improve the Louisiana Medicaid program. The Governor has proposed creating coordinated systems of care in Louisiana Medicaid to improve the current fragmented, fee-for-service system, which has been decried by virtually every national health policy expert covering the entire political spectrum as a failed system that incentivizes waste and overspending.

Our Lady of Lake and LSU are among the first organizations to agree to partner under the new, reformed system, a critical step because OLOL is one of the largest providers of  pediatric physician services in the state. With LSU and the Lake physicians working together in all their facilities, they have the opportunity to develop a truly integrated system of care for the Medicaid program. An increased focus on coordination of care – particularly in primary, specialty and preventive care – is a necessary component to improving overall health outcomes for Louisiana. Coordination can also equate to less strain on the state budget as it will reduce Louisiana’s extremely high rates of avoidable hospital stays and readmissions.

The new integrated system will be designed around the key principles of transparency, consumer choice, community leadership, aligned incentives for improved outcomes, changing consumer behavior and the reduction of fraud and waste. The most important benefit will be to the Medicaid enrollee who can expect greater coordination of care between their primary physician and any specialty needs a patient may require management of chronic conditions, better health and higher satisfaction in their care.

Since the state has reached agreements with the federal government on disallowances worth hundreds of millions of dollars, it will now be submitting a state plan amendment instead of its original waiver request for expanding Medicaid and improving health care services.

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