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The state of post-Katrina health care in New Orleans

"Perilous and desperate" are the words Don Smithburg, the head of the Louisiana State Health Care Services Division, which oversees the state's Charity Hospital System, uses to describe New Orleans' current health-care situation. Hospitals operating in the New Orleans area are doing what they can, Smithburg said in a recent telephone interview, but more needs to be done. With little bed space, a growing demand for services, fewer doctors, the state slashing the Medicaid budget, and the impending layoff of thousands of Charity System employees, Smithburg fears a downward spiral in an already devastated health-care infrastructure.

One of the most damaging blows Katrina dealt to the city's health-care network was the destruction of Charity Hospital and University Hospital, which were part of the state's public hospital system and attended to uninsured and low-income residents on Medicaid. Smithburg says the hospitals also provided a fertile training ground for medical students from Tulane and LSU medical schools. In addition, Charity Hospital was the highest-level trauma care facility in the area, and the city's toughest cases were treated there.

Prior to Katrina, 25 percent of Louisiana's population resided in the New Orleans area, and Charity and University hospitals served as the center of specialized care for the state's indigent population. Many patients from around Louisiana who needed organ transplants or brain surgeries were sent to New Orleans. As a 2004 Louisiana Department of Health and Hospitals (DHH) report reveals, the system was considered by the impoverished as the first, and perhaps only, line of defense against injury and illness. The state refers to it as "the safety net." In New Orleans, that net has split wide open.

Touro Infirmary, East Jefferson General Hospital, West Jefferson Medical Center, Ochsner Foundation Hospital, Children's Hospital and Tulane-Lakeside in Metairie -- which all are fully operational -- are trying to fill the gap in New Orleans. Other medical centers such as Meadowcrest in Gretna, Omega Hospital in Metairie and Kenner Regional, all on the south shore, and St. Tammany Parish General Hospital, Slidell Memorial, Doctors Hospital, Northshore Regional Medical Center and Lakeview Regional on the Northshore also are fully open.

Warner Thomas, chief operating officer at Ochsner, says his hospital is committed to helping the poor. "We continue to take anyone who shows up," he says. "We have seen a significant increase in uninsured at all of our locations, including the hospital and our clinics."

Ochsner, East Jefferson and West Jefferson hospitals currently are rotating day-to-day the city's Level One trauma cases, which include gunshot and car accident victims. It is a temporary fix; Ochsner and LSU currently are negotiating to make Ochsner's Elmwood Medical Center the city's temporary trauma center. An LSU spokesman says a lease agreement could be reached as early as this week. Smithburg also is attempting to secure 100 inpatient beds at St. Charles General Hospital in New Orleans, but he admits "100 beds isn't a lot, and the solution for the time being is to have more capacity in the market." Staffing the new locations will be a battle against time. Smithburg announced the furlough of 2,600 employees on Nov. 7, and they are expected to be laid off Dec. 18. The trauma center and the inpatient facility at St. Charles General will require 1,000 staff members, which Smithburg sees coming from the pool of former employees from Charity and University hospitals. For this to occur, however, the state public hospital system must secure bridge funding of about $140 million from the federal government.

State DHH secretary Dr. Fred Cerise reports that there are public outpatient services available in New Orleans. LSU is providing a mobile unit in the city and Tulane recently opened a walk-in clinic at the corner of Tulane Avenue and LaSalle Street for non-emergency medical care. There are three teams from the U.S. Public Health Service, and various other groups are offering free inoculations. "The federal groups, LSU and Tulane are functioning as the safety net for outpatient services," he says.

With less than a quarter of the city's population returned, Smithburg has redeployed 300 Charity employees to other parts of Louisiana. Workers have been reassigned to areas that have seen a surge in demand for services, including Baton Rouge, Lafayette, Houma and Shreveport, and specialty services have been spread throughout the state to address population shifts. Even though many displaced by the hurricanes haven't returned to Louisiana, U.S. Sen. Mary Landrieu's Web site asserts that an additional 13,000 people in the state have enrolled in Medicaid since Katrina.

Increased business in the Medicaid program doesn't mean increased revenue for the state. In fact, it places a burden on cash-strapped Louisiana. Part of the federal program relies on matching funds from the participating state government; Louisiana's share in the formula is approximately 30 percent. The state no longer can afford to pay this share and has proposed cutting $332 million dollars from the DHH. With the accompanying loss of the federal matching funds, it becomes a much larger cut to that department. Cerise says the severity of state's budget deficit requires this kind of drastic measure.

"So much of the state's budget is in the Medicaid program," he explains. "You can't get to the shortfall without touching it. Hospitals are such a big portion of Medicaid. When you try to absorb this cut without closing programs, everyone ends up taking a loss."

Much of the loss will come at the expense of health-care providers. As Cerise admits, Medicaid, which pays significantly less on claims than private health insurance, is not an attractive payer to providers, and this reduction will make it even less so. Still, the alternative -- eliminating programs -- was more problematic. Once a program has been turned off, says Cerise, it is very difficult to turn back on. He and the state Legislature hope the federal government can rescue Louisiana's Medicaid program through a proposal in Congress that would relieve the state of much of its Medicaid- matching responsibility. If the proposal, part of the Reconciliation Act, passes, then the cuts won't occur. Before the Louisiana Legislature closed its special session on Nov. 22, Medicaid had lost $668 million in state and federal funding and health-care providers were hit with a 9 percent cut in repayment on Medicaid costs.

Thomas believes there should be increased federal funding to the state's Medicaid program in order to pay existing hospitals. One possibility is the Centers for Medicaid & Medicare Services' Uncompensated Care Pool (UCP). Under this plan, non-state public hospitals like East Jefferson and West Jefferson, which normally receive a small fraction of Medicaid reimbursement from the state, would be eligible to get the full federal match, 70 percent of the cost of care.

Unfortunately for Thomas, private hospitals like Ochsner do not qualify for UCP. Even without that benefit, Thomas doesn't see Ochsner laying off any of its current staff, which since Katrina is down by 1,000 employees including a number of doctors, and he would like to hire an additional 500 workers. The hospital is running at close to 90 percent of the pre-storm patient volume and the outpatient clinics are at 80 percent volume. Thomas thinks with more people returning to New Orleans there is a need for increased services.

In order for the city to rebuild, Smithburg and Thomas agree, more workers are needed. Many will be doing dangerous work, so there will be a greater need for emergency room facilities and doctor visits. As for whether the state or federal government will be able to meet these requirements as the city repatriates, Smithburg is ambivalent.

"I'm not pessimistic, but I'm not optimistic either."

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