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Five New Orleans Hospitals Are in Poor Financial Health

Posted on: Wednesday, 1 August 2007, 06:04 CDT

By Steve Sternberg

Five New Orleans hospitals that have carried much of the city's medical burden since Charity Hospital was closed by Hurricane Katrina are hemorrhaging money, officials are prepared to testify at a congressional hearing today.

By year's end, the hospitals that provide 95% of the medical services in metro New Orleans will lose a total of $135 million, figures compiled by the Louisiana Hospital Association show. By 2009, the losses are expected to swell to $405 million.

"These losses cannot be sustained," says Mark Peters, CEO of East Jefferson General Hospital, about 2 miles from downtown. "We're trying to impress upon the committee our need for urgent financial help."

More cuts in medical services would strike another blow to a city still reeling from the loss of Charity, its major public hospital, and a two-thirds cutback in services provided by University Hospital. The two hospitals cared for more than 80% of New Orleans' poor and uninsured people.

"Health care is falling apart in the region," says Rep. Charles Melancon, D-La., who is to chair today's hearing of the House Energy and Commerce Subcommittee on Oversight and Investigations.

The burden of caring for the poor in New Orleans is huge, according to a Henry J. Kaiser Family Foundation survey called "Health Challenges for the People of New Orleans," which was released Tuesday. One-quarter of adults under 65 say they're uninsured, more than 40% say they have chronic disease, and nearly 10% say they have mental distress, says Kaiser's Diane Rowland, who is scheduled to testify today.

When floodwaters knocked out the 550-bed Charity facility, Ochsner Institute, East Jefferson General and West Jefferson Medical Center stayed open. Touro and Tulane soon joined them. University Hospital reopened in November 2006 at one-third its capacity before Katrina. Louisiana State University is planning a $1.2 billion hospital to replace Charity and University.

Before the 2005 storm, the federal government funneled about $1 billion for the uninsured to the state's network of 10 safety-net hospitals. In New Orleans before Katrina, most poor people were treated at Charity and University. When those hospitals closed, the state could no longer tap that money without a federal waiver to redirect it to private hospitals and clinics.

After the storm, the state Legislature was able to supply funding to cover 50% to 80% of indigent-care costs, Peters says. And the U.S. government paid out $99 million in grants to cover Medicare shortfalls in Louisiana hospitals, but that money was divided among 61 hospitals.

Peters says the hospitals' losses now stem mainly from lackluster revenue, soaring expenses and Medicare payments that fail to take into account the increased cost of providing care since the storm. Salaries in the first five months of this year were 13%, or $38 million, higher than salaries during the first five months of 2005, because of efforts to recruit and retain doctors, nurses and technicians.

The costs of hiring nurses and other contract workers increased from $9 million to $23 million, a 162% change during the same period. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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