A decision on a private-sector lease partner for West Jefferson Medical Center and East Jefferson General Hospital appears to be delayed indefinitely. A Jefferson Parish Council executive session planned Wednesday to discuss the issue was canceled within two hours of the end of a closed-door meeting Tuesday of an umbrella board, which had met to hear presentations from the...
A decision on a private-sector lease partner for West Jefferson Medical Center and East Jefferson General Hospital appears to be delayed indefinitely. A Jefferson Parish Council executive session planned Wednesday to discuss the issue was canceled within two hours of the end of a closed-door meeting Tuesday of an umbrella board, which had met to hear presentations from the three finalists.
The umbrella board comprising the two hospitals' governing bodies met behind closed doors for nine hours Tuesday to hear presentations from Louisiana Children's Medical Center, Ochsner Health System and Nashville, Tenn.-based HCA.
The presentations were followed by lengthy deliberations, but it was not clear if board members had selected an operator before adjourning.
Jefferson Parish Sheriff Newell Normand, who is chairman of East Jefferson General Hospital's board, declined to say if the board had voted on a recommendation for the Jefferson Parish Council to consider.
Parish Council Chairman Chris Roberts wrote in a Tuesday evening email to colleagues that "the council can decide at a later date as to how we proceed."
Normand would say only that the board's next step is to "share with (the council) the outcome of the meeting," but declined to elaborate. Normand also declined to predict when the selection of a lease partner for the hospitals will be announced.
"More important than a timeline is making sure we touch all the milestones we need to fulfill our fiduciary obligations to the community at large," Normand said.
Two Jefferson Parish officials familiar with the discussions said the two hospital boards had failed to reach consensus in selecting an operator. "It's too divided right now," one of the sources said, declining to elaborate.
For more than two hours on Tuesday, the meeting unfolded in two separate rooms. At first it was so that East Jefferson board members could talk privately, and Normand said this was to brief the newest board member, Sherif Ebrahim.
Discussions about consolidating the hospitals, which date back four years, have been conducted almost entirely in secret, and it's possible the board voted Tuesday in executive session. Hospital service districts, unlike other public bodies, are largely exempt from the state's open meetings laws when discussing marketing and strategy.
A board attorney, Peter Butler, said Monday that 15 years of case law extends the exemption to the umbrella board's authority to vote in private, even though the exemptions say nothing specific on the matter, and West Jefferson Medical Center's bylaws require it to vote in public.
Very little is publicly known about the three lease proposals or the specific criteria the board is using to make a decision. Normand said after the meeting that confidentiality agreements with the suitors are necessary to have "open and frank discussions with them."
"We can't violate that. That's a contractual obligation," Normand said. "We not only have contractual obligations, we have legal obligations we must adhere to. That's not even taking into consideration proprietary information about ourselves."
Given that the hospitals treat mostly Medicaid and Medicare patients, the three suitors are probably looking for some kind of public subsidy, said Robert Taylor, a finance consultant specializing in public-private partnerships in the health care industry. If so, hospital officials and the Parish Council should consider whether there is a cap on the subsidy, if the subsidy increases incrementally and if the subsidy is tied to performance, said Taylor, who has worked on 20 similar transactions in the past 10 years.
"You shouldn't worry too much about the size of the lease payment you are getting from them," Taylor said. "Rather, you should worry about the subsidy you have to pay them, because that's where the real costs come in."
It's also possible that, in lieu of a subsidy, the suitors are stipulating that any operating losses are the responsibility of the hospitals' public owners, Taylor said.