Hospital Privitization Costs Still Foggy After Auditor's Report

May 14, 2013

Lawmakers that have fought the Administration for more power in the process of privatizing the state’s charity hospitals may get their wish as they consider funding for the cost of laying off hospital workers.

According to a report by the state auditor’s office, the privatization will cost the state 42 million dollar in leave payouts and unemployment payments. 

Ernie Somerville, who worked on the report, says the hospitals will also have 25 million in retirement costs to pay annually. “Upon privatization its revenue sources are going to go down, and to pay for these costs," Somerville says, "they’re going to have to find a mechanism to fund them.” Several of the hospitals are scheduled to transferred to private management sometime next month, and some of the contracts with private partners have yet to be released. “We haven’t seen them, the legislature hasn’t seen them, the press hasn’t seen them," says Somerville, "so we’re really anticipating what’s in there.” Somerville says the privatization could have other unanticipated costs. The Jindal Administration has promised lawmakers and the state that privatizing hospitals will save the state money. The executive budget projects a savings of as much as 780 million dollars for privatizing the hospitals. According to the auditor’s report the administration is still waiting on federal approval for the privatizations because federal Medicaid funds will have to be transferred to the private partners. Somerville says the next step is LSU Board of Supervisors, scheduled to meet on May 28, to approve two of the remaining contracts.