Biomed Deal is Not Privatization

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the Key Role of Alan Levine

by Elliott Stonecipher

Jindal-DOAIt was October 2012 when Governor Bobby Jindal rolled-out the part of his state hospital “privatization” plan he was willing to let those who would pay for it – taxpayers – see.  No one, except the select few insiders who concocted that plan, could have guessed that doing away with the centuries-old, taxpayer-supported “charity” hospital system would create a new, hybrid sort of “charity” hospital dependent still on taxpayer support.  As the October 1st takeover of state hospitals in Shreveport and Monroe by Shreveport’s Biomedical Research Foundation (BRF) bears down, more and more sources of taxpayer financing of the deal are confirmed.

With each public meeting or public release of related details, the years-ago genesis of Jindal’s “privatization” op more clearly emerges.  A key in understanding when and how this was put together is former Louisiana Secretary of the Department of Health and Hospitals, Alan Levine.Bobby_says_privatize_everything

This Is Not “Privatization.”  So Why Are We Doing It?

Our state legislature’s Joint Committee on the Budget met last Friday to discuss the contract terms for Biomed’s takeover of Shreveport’s LSU Medical Center and Monroe’s E. A. Conway Medical Center.  Governor Jindal and legislative friends have made sure the Committee has no power to do anything with or about these hospital takeovers – they are being done solely and completely on Jindal’s executive fancy.  Such, however, did not stop the Committee from meeting:  Mike Hasten of Gannett News filed this report, and The Advocate’s Mark Ballard filed this one.

Alfred-E.-JindalThese reports, and the comments of some meeting participants, are very helpful.  One very important point was repeatedly made:  now, just 36 days before operational control of these Shreveport and Monroe hospitals is handed by the the governor to Biomed, neither Jindal’s nor Biomed’s top staff know if this will even save the state any money.  First, from Mike Hasten’s work:

“(State Senator Robert) Adley also questioned why there’s no language that would indicate the state would save money.  Liz Murrill, counsel for the Division of Administration, said ‘The whole thing is based on the expectation of the state is going to save money.  That’s why we’re doing it.'”

Then from Mark Ballard’s:

“(Adley) asked BRF and Jindal administration officials to document how much the public hospitals cost now and how much it’ll cost BRF to provide the same services. Adley asked how close the numbers were.  ‘They should be close,’ said Stephen Skrivanos, BRF chairman, but the number for how much the hospitals would cost state taxpayers when managed by the foundation is but an estimate.”Hospital-Privatization-KKilchrist

This is not “privatization,” and whatever it is could very well cost taxpayer money rather than save it.  How does that comport with the reason Governor Jindal has always given for ordering this huge change?

Even more definitively, this deal cannot be “privatization” when Biomed does not have the (private) assets to complete the contract.

Alan Levine, Hospital Management Associates (HMA), and The Original Plan  

Many participants in the early stages of Jindal’s “privatization” gambit – whether from the inside or outside – have concluded it was initially hammered out between Jindal and Hospital Management Associates (HMA), a for-profit hospital company listed on the New York Stock Exchange, and originally intended partner with the state in the privatization push.  In fact, incontrovertible evidence places two senior executives of HMA in at least one of the earliest such planning meetings, a jarring fact:  senior executives of a for-profit company being given exclusive access to top state officials as they plan Louisiana’s healthcare policies.  In understanding how that could happen, one must first note that a then-Senior Vice President of HMA was Alan Levine.

Alan Levine
Alan Levine

Levine had been picked by Jindal early in his administration as Louisiana Secretary of the Department of Health and Hospitals (DHH), and notes in his bio that he was also “Jindal’s Senior Health Policy Adviser.”  Later, in July 2010, Levine left state government to take the HMA job.  (Bruce Greenstein took over as Secretary of DHH when Levine left, and current Secretary, Kathy Kliebert, was moved up to the job when Greenstein was forced out earlier this year.)  Perhaps of note, Levine became CEO of Tennessee-based Mountain States Health Alliance six days ago, on August 19, 2013.

Louisiana Voice-BtnAs Tom Aswell has recently reported on his Louisiana Voice blog, Levine was one of twelve people who met on July 17, 2012, in the LSU President’s conference room to discuss privatizing state hospitals.  (Dr. Frank Opelka and Larry Hollier participated by teleconference.)  Dr. Fred Cerise, then head of the LSU Health Care System, memorialized the meeting in three written pages which continue to be circulated around the state.  Perhaps nothing about the meeting was more notable than the presence of both Levine and HMA’s CFO, Kelly Curry, there to pitch HMA’s privatization plan for state hospitals.  More specifically, Cerise’s notes stress that Levine recommended as the first step the sale of LSU Medical Center in Shreveport, with the use of proceeds to “offset budget cuts for the rest of the LSU system.”  There also, speaking in support of the Levine / Jindal plan, was then-Secretary of DHH, Bruce Greenstein.

George Carlin saw EvilInarguably linking this meeting to what has transpired since is the presence in the room of Biomed’s Dr. John George, also one of four members of the LSU Board of Supervisors in attendance, along with Shreveport’s LSU Medical School Chancellor Dr. Robert Barish and Vice Chancellor Dr. Hugh Mighty.  Among the other members present from the LSU Board of Supervisors were two who are often recognized as notably close to Governor Jindal, Rolph McCollister, Jr., and Robert “Bobby” Yarborough.

Neither Cerise nor Interim Public Hospital CEO Dr. Roxanne Townsend understood Jindal’s absolute requirement that all state employees always drink his kool-aid.  Their disagreement with the plan netted their firings within weeks of the meeting.

How Long Has This Plan Been In the Works?  60 Minutes and Investigations Upset the Plan

A careful review of the dates of Alan Levine’s various employment periods reveals much about how long Jindal’s state hospital op may have been in the works.

Part II., Section 1121, A. (1) of the Louisiana Ethics Code – which is correspondingly included in Louisiana Revised Statutes, Title 42 – provides as follows:

“No former agency head or elected official shall, for a period of two years following the termination of his public service as the head of such agency or as an elected public official serving in such agency, assist another person, for compensation, in a transaction, or in an appearance in connection with a transaction, involving that agency or render any service on a contractual basis to or for such agency.”

In plain English, Levine could not pitch HMA to Louisiana for the privatization op for two years after leaving DHH.  Berkshire Hathaway’s BusinessWire ran the story of Alan Levine’s hiring at HMA on July 16, 2010.  Thus, two years and one day later, on July 17, 2012, Levine and HMA’s Kelly Curry took the lead in explaining to ten Louisiana state officials (plus two on the phone), the HMA / Jindal plan to privatize state hospitals.

Too much control?
Too much control?

The op presented by Levine at that meeting directs our attention to what a “privatization” plan is, and is not.  Given that HMA says on its website that it owns 71 hospitals and 580 clinics, it obviously had the assets required to do what Jindal intended, aided to whatever degree by their professional and/or personal relationship.  But, on December 2, 2012, CBS’ 60 Minutes crashed that possibility, broadcasting its investigation of HMA.  Yet, with Greenstein still at the helm at DHH and in on the original deal and its planning, the assumption among interested parties was that the “privatization” gambit would move forward.  But, proving that things can always get worse, including for Jindal, on January 7, 2013, just a bit over a month after the 60 Minutes feature effectively neutered HMA, the FBI served a subpoena on attorneys for the state Division of Administration targeting yet another DHH-based matter, a Medicaid claims processing contract.  That contract was with Maryland-based IT company, CNSI, and Greenstein had once been its Vice President for Healthcare.  From his position as DHH Secretary, Greenstein had allegedly helped CNSI get the lucrative contract, a matter about which he had already been pressed by some state legislators.  Ultimately, on March 29, 2013, Greenstein was allowed by Governor Jindal to resign rather than be fired.  Related state and federal investigations continue.

Whose health?
Whose health?

In the wake of the HMA / Levine / Greenstein roster blow-up, no hospitals in Shreveport or Monroe or elsewhere opted-into the “privatization” deal.  Importantly, Biomed had its participation in the deal hard-wired at some point after Dr. John George and the LSU Medical School’s Robert Barish and Hugh Mighty attended the July 17, 2012, meeting in Baton Rouge.  Whether or not Biomed’s unusual inclusion in the deal as an unnecessary third-party – especially without involvement or experience in the healthcare industry – influenced hospital companies to steer clear of the deal is not certain.  Regardless, various risks existed which the other companies could not satisfactorily mitigate.

It has been clear for at least many months that one way or another, the two state hospitals at issue are going to be run by a highly politicized combination of (1) Biomed, headed by a sitting member of the LSU Board of Supervisors, (2) Biomed’s new business entity for this purpose – BRF Hospital Holdings, LLC (BRFHH), which will sport a new and separate board strongly influenced by two powerful state senators, Greg Tarver and Francis Thompson, in whose districts the Shreveport and Monroe hospitals are located – and (3) the LSU Medical School’s top three state employees.  Given that the mixologist of that power cocktail is Governor Jindal, he and his top operatives are, obviously, de facto shot-callers.

A Good Deal for Biomed  

For those who care to wade through the contract documents governing this arrangement, there are many, many troubling facts with which to deal, and many, many more unanswered questions.  Any possible protections for the public against a bad deal have been deliberately neutered by those in on its design.  As the reader considers the following sampling of known concerns, she or he may remember that Biomed does not have the liquid assets to do this deal, and that gushers of money flow through these hospitals each year, $437,058,645 in 2012, to be specific.

(1)  Taxpayer money shuffled to Biomed can – and certainly will, it now seems – continue.

—  For openers, as Melody Brumble at the Shreveport Times reported in early June, the state’s lease of workspace from Biomed has been $3.8 million each year, but in advance of this deal, jumps to $8.6 million each year.

—  In another report by Melody Brumble which was published in the Shreveport Times and Monroe News-Star, Biomed could, within two weeks of its takeover of the hospitals, receive $148.4 million in state and federal supplemental funding via Medicaid.  Ms. Brumble notes, ” … The foundation will receive 100 percent of its eligible costs …” from the subject state-controlled fund.  Other hospitals in the state, in reimbursement for the same services to certain patients, are reimbursed at much lower rates.

What's best is...
What’s best is…

—  The contract between the state and BRFHH passes to Biomed the Accounts Receivable owed to the LSU Hospitals in Shreveport and Monroe, but the state retains the liabilities / debts of those hospitals.  Thanks to a Public Records Request by Tom Aswell, we learned the day before yesterday that Accounts Receivable totaled $34,493,105 through June 2013.  That amount is contested by other sources as far lower than fact, but regardless of that, this is a liquid asset – gathered while taxpayers fully funded the hospitals – being handed to Biomed.

—  By ways and means which are incomprehensible to the public, if not simply undisclosed, Biomed will very likely receive other funding from the LSU Medical School, if not other state agencies as well.  Since 1976, med school and LSU Hospital state funds have been co-mingled in various ways, and figuring out precisely how that happens and works is more or less impossible to discern.  Going forward, the public’s powers of discernment will be extinguished this side of a courthouse.

(2)  No matter how little detail of this deal non-insiders can divine, some additional and troubling features of this deal are known.

—  It will cost Biomed far less to run these two hospitals than before.  While the real and verifiable change in the number of employees is not known, the fact is that hundreds fewer employees will work at these facilities going forward, and civil service protection will have been stripped away from those remaining.

—  By a specific provision in the contract, notwithstanding all the state and federal dollars at issue, Governor Jindal and his folk have agreed that the Louisiana Public Records Act, used to do much of this pre-takeover research, will not apply to anything Biomed cares to say belongs to it.  Its record to date clearly shows that Biomed will say everything belongs to it.

—  The public is told that since Biomed will be paying the state $39,000,000 (or so) a year to lease these facilities, it is a good deal for the taxpayers.  As I noted at the beginning of this piece, testimony given in the Friday legislative hearing makes it clear that those on the frontline are anything but sure such will prove true.  That may be because no one knows if the payments will be made, how much they will be adjusted down before payment, what form of “payment” – real money or some accounting gimmick knock-off of real money – will be accepted, etc., etc.  We do know, though, that no Public Records Request for the verification for such payment details will be of any use.

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

—  As mentioned in Friday’s legislative hearing, we can expect (a) a name change for these hospitals which attempts to deflect its mission of continued care for North Louisiana’s indigent and other poor, and (b) lucrative contracts for the friends of insiders for marketing, advertising, public relations, lobbying, janitorial services, maintenance, office supplies, toilet paper, travel services, laundry, lawn mowing, freezer repair, etc., etc., etc.

Definitive, necessary information on which to base irrefutable conclusions about this deal is simply not available to the taxpaying public.  So, taxpayers have a bit over a month to find some proponent of the arrangement who will meet with us, publicly, and answer our questions … directly and honestly.  

As I noted from the beginning of this work, and as I continue to believe, these hospitals should no longer be state-owned and operated.  Qualified and financially viable hospital companies must be available to partner with the state (i.e., its taxpayers).  Since our governor has more than two years left in office, why the rush?  Could Biomed be a place-holder for some other entity not yet publicly named?  If so, when that deal happens, what of the current taxpayer assets will remain?

Elliott Stonecipher

Elliott Stonecipher’s reports and commentaries are written strictly in the public interest, with no compensation of any kind solicited or accepted.  Appropriate credit to Mr. Stonecipher in the unedited sharing of his work is requested and appreciated.

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