Jefferson Parish's two publicly owned hospitals are negotiating a potential "partnership" with outside entities to bolster their position in the complex and evolving health-care marketplace, officials said Thursday. East Jefferson General Hospital and West Jefferson Medical Center are not up for sale or likely to be put under a private management contract, the officials said, but other options remain...
Jefferson Parish's two publicly owned hospitals are negotiating a potential "partnership" with outside entities to bolster their position in the complex and evolving health-care marketplace, officials said Thursday. East Jefferson General Hospital and West Jefferson Medical Center are not up for sale or likely to be put under a private management contract, the officials said, but other options remain in play.
The hospital officials would not specify the nature of the possible collaboration or identify the outside entities but said they are talking with three potential partners, after starting with 10. Nor would they predict when an agreement might be reached.
"This has to be a very deliberate and strategic process, with some haste," said Newell Normand, who is both Jefferson's sheriff and chairman of East Jefferson General Hospital. A parish official, who asked not to be identified because of confidentiality issues in the negotiations, said officials expect an announcement before the end of this year.
Normand, backed by West Jefferson Medical Center chairman Harry "Chip" Cahill and the chief executives of both hospitals, briefed NOLA.com | The Times-Picayune on the process after a 90-minute private meeting in Gretna with the Parish Council, Parish President John Young and representatives of a national health-care consulting firm that the Jefferson hospitals engaged last year for advice. The parish government officials left without public comment.
The negotiations involving two of Jefferson Parish's most valuable public assets come amid a national upheaval in the health-care industry, brought about in part by the Affordable Care Act, federal regulation and the pressure from insurers to reduce costs. Scale is the buzzword for health-care providers, and smaller, independent hospitals are said to be especially vulnerable because they have comparatively little leverage in striking favorable agreements with insurance companies for reimbursement.
The privately owned non-profit Ochsner Health System bought three New Orleans area hospitals from the national for-profit Tenant Healthcare Corp. in 2006 and a fourth local Tenant hospital in 2010. And last month, two Texas-based conglomerates, Baylor Health Care System of Dallas and Scott & White Healthcare of Temple, announced an agreement to merge into what would be the largest not-for-profit health-care system in that state.
Sales and mergers are among the most dramatic changes, to be sure, but lesser affiliations also are in the works for U.S. hospital operations. "I would say that the kind of conversations we are having regarding our two public hospitals are taking place at every hospital in the region," Jefferson council Chairman Chris Roberts said.
Publicly owned not-for-profit hospitals say they face particularly stiff competition from privately owned specialty hospitals that attract well-insured patients and leave poorer, uninsured people seeking care in the public hospitals, with little likelihood of paying for it. Two such specialty hospitals have opened in Metairie in the past 20 years.
And Jefferson's two public hospitals say they have taken on more indigent care since Hurricane Katrina shuttered Charity Hospital in New Orleans in 2005.
West Jefferson Medical Center, shown here, and East Jefferson General Hospital are exploring the possibilty of a partnership with an outside health-care provider.
Against that backdrop, Normand said, Jefferson Parish created a third hospital service district in 2009 to let East Jefferson General and West Jefferson Medical Center "assess, with the frontier of health care changing, whether a collaboration or partnership" of just those two hospitals could help them maintain services and remain viable. The conclusion was that they couldn't go it alone without taxpayer support.
"We came to the recognition we would not be big enough," Normand said.
Both hospitals were built with local tax revenue, but for decades have operated without it.
In 2011, Normand said, the umbrella board for the two hospitals began considering the prospect of a partnership with another health-care institution. Ten were interested, Normand said, including big chains, smaller groups, for-profit entities and not-for-profit networks from around the United States. "We are well regarded outside our market as well as inside," he said.
Officials are focusing on three possible partners, he said, sharing information in both directions. "We want to make sure it's sustainable," he said of a possible collaboration with an outside entity, while letting East and West Jefferson fulfill their missions "so that we don't ever have to call on the public for tax support."
An agreement somehow linking Jefferson's two hospitals with a chain or network would be their first since they formed a limited "alliance" with six other New Orleans area non-profit hospitals in the 1990s. At the time, there also were periodic rumblings that East Jefferson General's leadership was testing the waters to sell the hospital, a scenario that generally outraged community leaders.
Newell Normand, Jefferson Parish sheriff and East Jefferson General Hospital chairman.
In the current negotiations, Normand said, "Sale is not on the table. We believe we should continue to play a role in governance."
Normand did not rule out the possibility of contracting with an outside company to manage the two hospitals. The state of Louisiana, for example, has a private company, SMG, run the Superdome. But Normand said that probably won't happen with with Jefferson's two hospitals.