Advisers' work will not be steered by assumptions about the size and cost of the project
With two months remaining to meet a promised deadline for a business and financing plan, the University Medical Center governing board will hire more consultants to help map out a final sketch for a new teaching hospital near downtown New Orleans.
View full sizeUniversity Medical Center is expected to open in early 2015. The board approved plans Wednesday for Verite Healthcare Consulting LLC to help craft a business plan, with Kaufman Hall & Associates conducting a separate financial analysis of Verite's work. Separately, Kaufman Hall will advise the board on strategic planning as it attempts to open a Charity Hospital successor by the promised date of early 2015, almost a full decade after Hurricane Katrina.
Both firms have worked previously on the hospital development. But their earlier efforts assumed the outlines of a model long sought by state planners and the Louisiana State University System: a $1.2 billion, 424-bed complex that would be constructed with as much as $400 million in debt.
This time, with the project under intense political scrutiny, board members said the firms will not work under such assumptions as they help move from planning to construction by deciding what facilities to build, what services to offer and how to pay for the project. The state currently has more than $700 million on hand, with the possibility for another $150 million to $200 million coming from a settlement between the state and federal government for Katrina damage to Charity contents.
UMC Chairman Bobby Yarborough said the new round of consulting conforms to Gov. Bobby Jindal's recent charge for the board to craft an independent plan that cannot be labeled as belonging to LSU or any other interest.
Still, the board is not expected to deviate from the concept of a multibuilding campus -- patient towers, a diagnostics and treatment building, an ambulatory care-medical office building and support facilities -- on the Mid-City footprint, despite a continued push from some planners and activists to build anew inside a gutted Charity shell.
Jindal's order for pursuing an independent plan followed high-profile meetings last month with U.S. Sen. David Vitter, state House Speaker Jim Tucker, state Treasurer John Kennedy and several board members after Vitter, Tucker and Kennedy assailed the existing plans as too large and too expensive.
Even before then, Yarborough had promised to present a final business plan at the Legislature's Joint Budget Committee's Sept. 16 meeting. House Budget Chairman Jim Fannin has demanded the document as a condition for giving the state facilities office permission to begin construction.
Since the June fireworks among Jindal and his fellow Republican officials, the hospital board has abandoned its effort to secure federal mortgage insurance to back a bond sale. Vitter framed that maneuver as proof that the project will be an overbuilt drain on the state treasury. Tucker took a friendlier tone Wednesday, making a surprise appearance at the board meeting to endorse re-engaging Verite and Kaufman Hall.
"This logical next step will lead to an answer that I think the Legislature can be comfortable with," Tucker said. "There's an impatience about this project because it's been almost six years since Hurricane Katrina, but we've got to get it right."
Board member Darryl Berger, who represents Tulane University, said the consultants will not dictate the direction board members choose: "This will be a dynamic, interactive process."
And authorities across the board promised the arrangement will not delay the project. Jerry Jones, the state facilities chief responsible for construction, said his office will by the end of this month or in early August begin driving test pilings. Jones also awaits a construction management group's estimate for the rest of the project -- though that figure will be based on existing plans.
Jones, meanwhile, presented the board with options he said would yield the existing 424-bed complex without selling bonds. The various scenarios would involve combinations of building shells of certain facilities to be finished later and using third parties to finance some construction: perhaps Entergy Corp. for the utilities plant, the foundation of LSU physicians for the ambulatory care center or a developer for one or more parking decks.
Building shells is common when building patient towers and some research or treatment facilities, though Jones noted that it would obligate the hospital to higher construction costs in the future. Further, any options using a third party, while reducing initial capital investment, could require additional operating costs once the hospital is open while also sacrificing potential assets.
Bill Barrow can be reached at bbarrow@timespicayune.com or 504.826.3452.