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Tensions emerge in Shreveport hospital privatization; Report says LSU med school threatened

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BATON ROUGE, Louisiana — The privatization deal struck for LSU's Shreveport hospital has created management and financial tensions that threaten the health of the university's nearby medical school, according to an outside review.

A consulting firm describes the current connection between the LSU Health Sciences Center at Shreveport and the research foundation running the state-owned hospital as "untenable," saying it places the medical school "at risk financially and programmatically."

ECG Management Consultants was hired by the health sciences center's foundation to evaluate LSU's medical training programs since the hospital privatization deal was struck nearly two years ago. The report was completed in November, but had not been released publicly. The Associated Press obtained a copy through a records request to Treasurer John Kennedy's office, which received a presentation on the findings.

The report describes a lack of "collaborative partnership" between the health sciences center and the hospital management and says the current arrangement doesn't "sufficiently recognize the value of the academic brand."

Gov. Bobby Jindal's administration turned over control of LSU's Shreveport and Monroe hospitals to the Biomedical Research Foundation of Northwest Louisiana in October 2013 through a no-bid contract, part of a push to privatize the university-run hospital system.

The research foundation, which operates the hospitals as University Health, had never run a patient care facility.

After the management transfer, tensions spilled into public view.

Financial documents took nearly a year to complete. LSU sent a collection letter demanding millions in payments during the dispute. The foundation accused LSU of mismanaging its clinics.

A spokesman for University Health said the hospital manager hadn't seen the ECG report and couldn't comment. Jindal spokesman Mike Reed praised the privatization deals as improving health care and cutting costs.

"LSU is committed to their long-term success, and we are confident the results of this audit will inform LSU's decisions on the best approach to take to bolster and sustain LSU Health Sciences Center at Shreveport," Reed said in a statement.

LSU hospitals chief Frank Opelka told lawmakers the Shreveport privatization arrangement "has faced some challenges."

University Health's CEO abruptly resigned this month.

"I think there was a misfit with the original chief executive and the vision of the fiduciaries of the hospital and the vision of the university," Opelka said during a legislative budget hearing.

In interviews, LSU officials downplayed the findings of the ECG report.

Sally Croom, a spokeswoman for the LSU Health Sciences Center at Shreveport, focused on the consultants' conclusion the graduate medical education programs were running efficiently. "As far as alarm, I didn't get that at all, from anybody," she said.

Daniel Layzell, chief financial officer for the LSU System, said the report "provides a good roadmap for the further evolution of the health sciences center."

But Sen. Robert Adley, R-Benton, worried about the financial viability of the research foundation running University Health, citing ongoing "questions about the business model and their ability to sustain the hospital without continuing to come to the state for money."

He described a poor working relationship between LSU and University Health management that has become obvious during meetings with the hospital operators.

"In most of those meetings they spend most of their time bad-mouthing LSU and the people there," Adley said. "For some reason, the hospital appears to me not to want this med school. That doesn't make sense to me."

Sen. Barrow Peacock, R-Bossier City, said he doesn't believe the medical school is at risk, but he cited "concerns about whether the partnership with University Health is the right partnership."

The Willis-Knighton Health System has reached out to Jindal and others about possibly assuming management of LSU's Shreveport hospital, according to a letter written to Treasurer Kennedy.

In the letter, Willis-Knighton CEO James Elrod said the troubled relationship between LSU and the University Health management "will ultimately diminish the capability and reputation of the medical school," with a negative impact on the regional economy.

Layzell said the university system isn't talking about finding another hospital manager.

"This is a new model, and they are committed to definitely try to make it work," he said.

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