More Hospital Bonds, Please

An economic analysis of the new state teaching hospital in New Orleans has recommended that the bond issue for the facility be increased by $150 million.

The report, prepared by Verite Healthcare Consulting for the Louisiana Department of Health and Hospitals, said the additional money is needed to provide working capital for initial operations.

The current financing plan for the new $1.2 billion facility includes $300 million from the state, $475 million in federal reimbursements for storm-damaged Charity Hospital, and $425 million in revenue bonds.

Based on an interest rate of 5.5% on 30-year revenue bonds, the study said increasing the proposed bonds to $575 million would result in an estimated total annual debt service of $36 million.

The study found that the 462-bed facility will need at least $70 million a year in state aid initially and as much as $100 million in later years.

The Louisiana State University system would own the hospital. The facility will be leased to an independent oversight body that would issue the revenue bonds.

The state hospital will be the primary teaching center for medical students and post-graduate residents at LSU, Tulane University, and other New Orleans-area universities. It would be one of 10 state hospitals that provide indigent care and medical education in Louisiana.

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