The Sale of LSU’s Shreveport Hospital, A First Look

by John Settle
Shreveport Attorney John Settle
John Settle

A half page ad in the August 2nd issue of The Shreveport Sun sent an early warning of what is now a front page crisis –the future of the Shreveport LSU hospital (known as LSU Health Center) and the medical school. The ad touted “LSU Health…across North Louisiana and Beyond,” –noting that the sprawling complex on Kings Highway included a medical school, teaching hospital, a 24 hour level/trauma center, and a regional burn center. The bottom line message was “Let’s protect LSU Health now.”

The Heart of Health Care for 75% of the region
LSU Shreveport Medical Center

The sponsors of this full color advertisement were in the vanguard of what is now a growing army of concerned citizens, hospital employees and medical school faculty/students expressing concern over the future of this long standing local institution. A big thanks is due to LSU Health Sciences Foundation in Shreveport, Willis-Knighton Health System, Biomedical Research Foundation of Northwest Louisiana, the Community Foundation of North Louisiana, J.B. Atkins Foundation, Atco Investment Company, and the Committee of One Hundred of Shreveport-Bossier for sounding the initial alarm.

The late July announcement by the LSU System that its hospitals would suffer severe budget cuts in their 2012-13 budget has now become a front and center reality for the residents of Shreveport and Northwest Louisiana. The Shreveport Health Center must reduce its budget by $46 million, and all options are on the table.

A closed door meeting was held on July 17th (download LSU Health Minutes and notes) with members of the LSU Board of Supervisors, the Secretary of the Department of Health and Hospitals Bruce Greenstein, and various health care officials in the LSU System. An email directed to those in attendance revealed that Alan Levine, a former Louisiana Health and Hospitals Department Secretary who is now with a private health care management company, made a presentation to the assembled group.

HMA Alan Levine
Alan Levine, HMA

Levine led off the meeting with an introduction of his firm, Health Management Associates (HMA), and their activity in partnerships with schools of medicine in Florida and Mississippi. Levine’s belief was that LSU could sell its hospital operations in Shreveport, Houma and Bogalusa. He also stated there would be opportunities with a capital partner to purchase additional hospitals such as East and West Terrebonne General and manage them in a joint venture with LSU.

Levine also stated that the purchase of a LSU hospital would generate revenue that the State could use as match in the Medicaid program. He recommended as an initial step that LSU sell its hospital in Shreveport and use the proceeds to offset the budget cuts for the rest of the LSU system. Levine advised that the buyers would form a joint venture with LSU, invest capital into the facility, and develop a strategy for LSU to more aggressively compete in the hospital market.

The supervisors present indicated they wanted LSU’s management to pursue Levine’s suggested strategy. At the meeting, D.H.H. Secretary Greenstein stated that LSU should look to generate 2 years of funding to address the state funds shortfall in the system through the sale of Shreveport’s hospital.

Dr. Fred Cerise
Dr. Fred Cerise

LSU systems’ top health care leader Dr. Fred Cerise indicated his concern that this strategy could take a substantial amount of time to develop and that LSU would likely need to go through a competitive public procurement process and legislative approvals. Dr. Cerise advised the group that even if everyone agreed the Shreveport idea was a good one, time would be needed for due diligence, procurement, negotiations, and various approvals. Perhaps to no one’s surprise, Dr. Cerise was removed from his position overseeing LSU’s network of public hospitals and clinics a week after the meeting.

Much more can, and will, be reported on this evolving governmental challenge in future weeks.