Health System Troubles ...

By Janet Mcconnaughey for the Associated Press:

The five major hospitals and hospital systems in the area have hemorrhaged money since Hurricane Katrina as the cost of utilities, insurance and labor have all risen sharply, hospital officials said Wednesday.

"Combined, our hospitals are on the runway to lose $130 million or $135 million this year," Touro Infirmary Chief Operating Office Les Hirsch said in a telephone interview Wednesday, before testifying about the problems to a U.S. House Energy and Commerce subcommittee in Washington.

Mayor Ray Nagin and executives from Tulane University Hospital and Clinic, East Jefferson General Hospital, West Jefferson Medical and Ochsner Medical Center, which bought and reopened several hospitals that closed after the storm, also testified.

Those five hospital systems have lost about $58 million in the first five months of this year, officials said. That compares to a $12 million profit for the same hospitals during the seven months before August 2005, when the hurricane hit.

"These losses are not sustainable. Each one of us, at some point in the future, is going to have to face some very difficult decisions if something does not change," said Dr. Mark Peters, CEO at East Jefferson General Hospital.

They can't say specifically what sorts of cutbacks or closures might be needed if they cannot get federal help, said Dr. Robert Lynch, who officially started Wednesday as CEO at Tulane University Hospital and Clinic. Not only would it be inadvisable for business reasons, but it could violate antitrust laws, he said.

The losses so far this year are in spite of federal infusions of nearly $140 million to hospitals during the state fiscal year that ended in June.

Peters said East Jefferson got $9.5 million in federal grants. "Things would be a whole lot worse if that wasn't there," he said. "But it still highlights the hole we're in."

Figures compiled by the Metropolitan Hospital Council of New Orleans show that utility costs were up 32 percent from before the storm.

Labor costs, from housekeepers to surgeons, rose from $304 million in January-May 2005 to $357 million in the same period this year at the five hospitals. And the money pays far fewer workers, Lynch said.

Tulane has almost one-third fewer employees but salaries are up 15.7 percent, he said.

Dr. John "Jack" Finn, president of the Metropolitan Hospital Council, said one hospital brought almost 200 people from outside the country to work as housekeepers. "When their contract was up almost all of them were hired away by our hotels," he said.

Finn estimated that one-quarter of all patients in the area are uninsured. "Even people who would have been insured prior to Katrina. A lot of businesses are not back, so people are in different occupations that may not provide insurance. Secondly, there are a lot of new companies that, to survive, just can't provide insurance," he said.

jbv's Competitive Edge