The Shreveport-based operator of the state's two safety net hospitals in North Louisiana is citing unfair funding for the breakdown in negotiations over a new Memorandum of Understanding with the state that led to allegations of breach of contract.
Building our Region's Future, formerly known as the Biomedical Research Foundation, operates University Health hospitals in Shreveport and Monroe and held its annual meeting just days after they were notified by Governor John Bel Edwards and LSU that they are in breach of their contract with the state.
"I feel like we just finished the fourth season of Game of Thrones and I'm really looking forward to the fifth season," BRF President and CEO John George, Jr. said at the start of the meeting.
The state-owned hospitals in Shreveport and Monroe provide health care and other health-related services to the uninsured and those on Medicaid.
University Health Hospital Board Chairman Steve Skrivanos said at that meeting Thursday afternoon that the MOU did not include enough supplemental funding for North Louisiana compared to University Medical Center in New Orleans, which also receives supplemental funding from the state.
"University Health, by comparison across the state, is being inadequately funded," Skrivanos said.
Using a series of slides to explain to shareholders and employees why BRF did not sign the MOU, Skirvanos pointed to the $241 million University Health received from the state in 2016 in a year when they recorded 135,453 inpatient days, while UMC in New Orleans received $410 million and recorded just 72,158 inpatient days.
Skirvanos says the original Cooperative Endeavor Agreement (CEA) with the state, which was executed on October 1, 2013, was never intended to shift responsibility for the cost of safety net healthcare to University Health.
"Our safety net hospital in Shreveport would not survive," Skirvanos said.
BRF also says the new MOU "Effectively eliminates the antitrust suit against Willis Knighton."
The antitrust suit, filed by University Health and BRF in July 2015, alleges the hospital system has a monopoly-level market share in the relevant Shreveport-Bossier City hospital market and has exploited that position to harm the public "by plotting to move commercially insured patients from University Health to Willis-Knighton. BRF claims that doing so could cause up to $20 million in damages.
A Federal Court hearing is set for Friday to unseal the documents in that suit.
The administration and LSU, which previously managed the hospitals in Shreveport and Monroe, started a legal process of their own earlier in the week that could lead to the ouster of BRF as the hospitals' operator.
Commissioner of Administration Jay Dardenne, the governor's chief budget adviser, and LSU sent letters late Monday notifying BRF that it has breached its contract.
At Thursday's annual meeting, BRF reiterated the response they released Tuesday to the notice of the breach, which said they expect to resolve its contract disagreement with Louisiana Gov. John Bel Edwards' administration without being ousted, saying that they expect to negotiate a new Memorandum of Understanding with the State that is fair and equitable for North Louisiana citizens.
The letter to Dr. John George, president and CEO of BRF, Stephen Skrivanos, chairman of the board for BRF Hospital Holdings LLC doing business as University Health System, and Dan Snyder, CEO of BRF Hospital Holdiings LLC, reads:
"Please be advised that the State of Louisiana, through the Division of Administration (DOA), joins in and expressly adopts the Notice of Breach letter dated September 11, 2017, issued by LSU pursuant to Section 13.4(a) of the above-referenced Cooperative Endeavor Agreement (CEA). The DOA has determined that the CEA is failing to achieve a public purpose as required by state law, including the Constitution. Please be advised that the DOA will fully participate in seeking to resolve the issues raised by LSU in the Notice of Breach letter, and failure to resolve such issues will necessarily result in enforcement of the remedies provided by Section 13.4(d) of the CEA."
BRF now has 45 days to correct the problems outlined in the breach-of-contract notifications.
A statement released by Edwards' spokesman Richard Carbo says:
"This notice to BRF does not change the state's commitment to resolve this issue as quickly as possible. Gov. Edwards is committed to protecting medical education and providing for quality medical care in North Louisiana, and we are hopeful that BRF will work to resolve the issues in the notice of breach. This notice requires that the problems outlined be addressed in the next 45 days, and we will continue those discussions."
Gov. Edwards was in Bossier City on Thursday and told KSLA he believes this issue will be resolved.
"The notice that was served on BRF is a notice to enter into a period of time to cure the problem and I believe that's going to happen," he said.
Dardenne said Tuesday that, among the issues, the quality of patient care at the Shreveport hospital is poor and that BRF is slow to pay its bills, including to LSU doctors who work at the two hospitals.
BRF officials say the Edwards administration and LSU want the hospitals to prioritize paying the medical school ahead of the needs of patients.
The hospital operator also disagrees with LSU's claims that it has failed to develop a sustainable business model that ensures the financial stability of the two the hospitals and the university medical school that provides the doctors for the facilities.
The company's leaders Tuesday called the breach-of-contract notifications disappointing and said they are prepared to fight in court any attempt to remove BRF as the hospitals' manager.
Skrivanos said BRF is negotiating with the state and is "optimistic about a successful outcome."
"I will resign and walk away before I sign an MOU that discriminates against the people in this room. It's an outrage!" he said.
BRF also disclosed Tuesday that it and University Health are in discussions with Ochsner Health regarding potential collaboration. "The state has encouraged these efforts," BRF said.
Earlier this month, BRF announced that its Entrepreneurial Accelerator Program and Segue Science Management have partnered to open Segue Science Labs in Shreveport's InterTech Science Park. Segue Science Management is a private company headed by Drs. Jim Cardelli and Alana Gray, two former researchers at LSU Health Sciences Center-Shreveport.
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