Report breaks down possible cost of hospital privatization

BATON ROUGE, LA (WAFB) - Plans to privatize hospitals within the LSU system could cost the state of Louisiana about $67 million up front and up to $26 million each year.

Those numbers are from a report by the Louisiana Legislative Auditor.

More than 1,700 jobs have already been cut from the seven hospitals and another 5,200 in all are expected to be eliminated.

Ernest Summerville Jr., a CPA with the Legislative Auditor's Office says one of the problems with the privatize initiative is that not all of the contracts have been signed.

"We're changing management groups, so it's a big distinction in the two," says Summerville. "So in that lease agreement is where all the details are and that's what were waiting to see that is where we will learn about the actual agreement."

The report said the state will owe $32 million in termination pay and unemployment benefits when the privatization is complete.

The administration says they do not agree.  In a statement released Monday night:

LSU will utilize lease payments to address a portion of term pay costs, and any remaining costs will be addressed with supplemental funds.  We disagree with the unemployment costs projected in the report, which were based on an assumption that 91 percent of employees would seek unemployment, when in fact LSU expects that same percentage of employees or higher will be hired for jobs with the private hospitals assuming the operations.  Also, the retiree legacy costs cited in the report have already been included in DHH's budget for FY 14.  What the auditor's office left out of this report is that, based on their own analysis, the hospital partnerships will reduce the state's UAL (the debt of the retirement system) by $300 million, and they will reduce the annual costs of the retirement system to government agencies by $82 million.

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