- Associated Press - Tuesday, March 29, 2016

BATON ROUGE, La. (AP) - Facing another round of budget cuts, Louisiana likely can’t afford all of its privatized LSU hospitals and could shutter the safety net facilities except for those in Shreveport and New Orleans, the health department’s chief financial officer said Tuesday.

Jeff Reynolds, undersecretary for the Department of Health and Hospitals, delivered the grim news to a House budget committee as lawmakers grapple with proposals for how to close a $750 million state budget shortfall for the financial year that begins July 1.

“It’s going to be ugly,” Reynolds said.

During a recent special session, lawmakers agreed to raise more than $1.2 billion in taxes for next year’s budget. But that wasn’t enough to cover all the gaps, and they can’t raise taxes in their current regular session.

To balance next year’s budget, as much as a $283 million cut could fall on the health department, under proposals being floated by the Edwards administration, and that would grow to a $750 million reduction with lost federal matching dollars.

Under that worst-case scenario, Reynolds said, the privatized LSU hospitals and clinics that care for the poor and uninsured in Lake Charles, Bogalusa, Houma, Alexandria, Monroe, Baton Rouge and Lafayette could shutter because the state wouldn’t meet its financial obligations under the management contracts.

He said the New Orleans and Shreveport safety net hospitals would be largely protected, to keep the state’s medical schools operating.

If Louisiana expands its Medicaid program, as the Democratic governor intends, the state could save $124 million next year, taking advantage of enhanced federal financing streams to pay for services, according to health department estimates.

Reynolds said that could soften the blow of budget cuts in his agency, allowing the safety net hospital services and clinics to remain open in Baton Rouge and Lafayette. But he said the others would still shut down and Monroe would have reduced services.

“There are medical needs and demands that the people of this state require,” said Rep. Walt Leger, D-New Orleans. “What happens to the people who need health care in Lake Charles or in Monroe?”

Rep. Mark Abraham, R-Lake Charles, said shutting down those hospitals, clinics and services for the uninsured “could create chaos” in communities.

“If this scenario goes through, the effect on the health care system will be devastating across the state,” Reynolds said.

He said uninsured patients would face restricted access to health care and would flood emergency rooms at other private hospitals. Those hospitals, Reynolds said, would have to ration care and many people would be forced to wait “until they’re in an emergency situation.”

That shift would affect the working poor newly eligible for Medicaid services under Edwards’ planned expansion. Reynolds said the available doctors and hospitals that care for Medicaid patients would be more limited without the safety net facilities.

Lawmakers questioned prioritizing the New Orleans and Shreveport hospitals. Reynolds said that if the department were to make across-the-board cuts to the hospital management contracts, then all the facilities would likely close.

LSU medical school leaders said closing any of the facilities harms their ability to train students, who are spread across those privatized hospitals and clinics for training. Larry Hollier from the New Orleans medical school said that if only the New Orleans facility stayed open, that wouldn’t provide enough patients for students.

“We would have to shift residents, doctors in training, out of the state to complete their training,” Hollier said.

Worsening the news, LSU leaders told the House committee that if budget cuts end most of the privatization deals, Louisiana would owe hospital managers millions in early lease payments the hospital managers gave the state.

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Follow Melinda Deslatte on Twitter at https://twitter.com/melindadeslatte

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