Louisiana Health and Hospitals Secretary Alan Levine plans to hire outside consultants to review a proposal by Louisiana State University to build a $1.2 billion hospital in New Orleans in partnership with the U.S. Department of Veterans Affairs.
Plans call for the construction of a 484-bed teaching hospital downtown with the proceeds from $800 million of revenue bonds. Financing also would include $300 million from the Louisiana Recovery Authority and $100 million from federal grants the state is seeking as compensation for damages to Charity Hospital as a result of Hurricane Katrina in August 2005.
Levine told a Senate panel last week that the project’s cost of $2.5 million per bed was more than twice the national average.
Levine said the state will pay for the review by drawing on a $74.5 million financing pool allocated in 2007 by the Legislature for land acquisition and design of the facility. He said the configuration of the current proposal might be too expensive and the project might not qualify for bond financing if revenues are not sufficient.
The business plan in question, developed in 2007 by Adams Management Services Corp. and Phase 2 Consulting, determined that the new hospital would attract nearly double the number of paying patients than Charity Hospital did before Katrina.
LSU officials have been asked by Levine to look at alternatives to a new hospital, including an expansion of Tulane University Hospital to accommodate LSU’s needs. Tulane and LSU students had trained at Charity Hospital, and the new public hospital would be used by both schools as their main teaching facility.
LSU operated Charity Hospital and University Hospital as the Medical Center of Louisiana at New Orleans before both were damaged by Katrina. Charity never reopened after the storm. University Hospital was extensively renovated before reopening in November 2006.
Louisiana is the only state that relies on a system of state hospitals to provide indigent care. Louisiana’s 10 state hospitals also provide medical education training.
The new VA Medical Center will replace an existing facility that sustained extensive flooding from Katrina. The LSU and VA hospitals would share support areas such as laundry, parking, and laboratories.
