Louisiana Charity (LSU) Hospital System and the Impact of Privatization on Cost, Access and Quality

During the decades before Medicaid and Medicare, the charity hospital system was the reliable provider of care for a large and very grateful low-income population. Many continue to think of the charity system as “their hospitals” and even those who are Medicaid-eligible often choose the public hospital instead of a private physician or clinic.

One of the first charity hospitals in the U.S. was founded in 1736 when L’Hôpital des Pauvres de la Charité (Charity Hospital for the Poor) was founded in New Orleans. Louisiana was still a French colony at that time. In 1876 another hospital was added in Shreveport with the same mission--to care for the poor. From the 1930s through the 1970s the number of hospitals continued to grow to 10 facilities statewide until recent privatization initiatives by the current Governor - Bobby Jindal.

Over the past two years, the Jindal Administration has worked to “privatize” the charity hospital system, arguing that (1) access to care will be improved (2) quality will be higher than what is found in public hospitals and (3) costs will be substantially reduced. Transparency has been lacking regarding these and other issues surrounding privatization efforts of the administration. However, a recent report from the Department of Health and Hospitals claims that nine privatized hospitals have spent $51.8 million less than budget for Fiscal Year 2014-15.

Skeptics (including legislators) have pointed out that (1) the books have not yet closed on the fiscal year and (2) lawmakers in areas with the privatization deals have raised concerns that some of the uninsured patients are going to other private hospitals in the region that aren't getting reimbursed for the care.