University Health Conway operators issued breach of contract after missing payments

KNOE 8 News
KNOE 8 News
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MONROE, La. (KNOE) - Late Monday night, Governor John Bel Edwards and LSU Medical Center issued a breach of contract notice to Building our Region's Future. BRF is currently the operators for University Health Conway in Monroe and University Health in Shreveport.

Last week Governor Edwards sat down with lawmakers in Monroe to discuss this issue. Lawmakers say BRF is behind on three payments to the LSU Medical Center in Shreveport.

BRF says "the Department of Administration and LSU have demanded that the hospitals pay increased amounts to LSU, despite net reductions and funding from the state that have cost the hospitals tens of millions of dollars annually."

“Given these enormous cuts, we are not going to prioritize paying LSU ahead of the needs of our patients. And we are not going to pay LSU for services that they cannot document or that are based on faulty invoices and cannot be supported as reflecting true fair market value,” BRF issued in a press release.

Senator Mike Walsworth says something has to change for the betterment of patients in Northeast Louisiana.

"We do believe there are some changes that need to be made and see if B-R-F possibly can find a partner that is used to running hospitals and maybe can bring in some expertise that maybe they're lacking," Walsworth says.

Walsworth says there has been some discussion of linking BRF with Ochsner Health System out of New Orleans.

Walsworth says this decision will not affect employees.

"We don't believe it's going to affect any employees. We got that commitment from the governor. That was one of the last things that I brought up. I wanted to make sure there are pensions and retirements. We want to make sure they are taken care of. And the governor said absolutely," he says.

BRF full statement:

BRF and University Health announced today that they expect to favorably resolve the issues raised in a Notice of Breach sent to them last night by LSU, and expect to continue in their role as owners and operators of the hospitals in Shreveport and Monroe.

“While we are very disappointed in the actions of LSU and the Division of Administration, we remain committed to try to work with them to resolve our differences for the benefit of the people of north Louisiana,” said Steve Skrivanos, Chair of University Health.

BRF and University Health are currently engaged in discussions with Ochsner Health regarding potential collaboration to move their efforts forward. The state has encouraged these efforts. BRF and University Health strongly disagree with the positions taken by LSU, and is prepared, if necessary, to fight those issues out successfully.

“We will resist any effort to interfere with our successful effort to improve patient care and access for the residents of north Louisiana,” said Skrivanos.

The dispute between University Health, LSU and the Division of Administration concerns, among other things, the funding of the hospital and LSU. Data shows that this funding grossly discriminates against North Louisiana.

The Cooperative Endeavor Agreement that was executed in 2013 required adequate funding by the state. Yet the privatized hospital in New Orleans, University Medical Center, receives more than three times as many dollars per patient from the state as does University Health. It is set to receive more than $130 million more than University Health for FY18 despite having about half the patients.

“North Louisiana hospitals get only 32 cents per patient for every dollar received by New Orleans. We will fight for a funding model that treats the citizens of north Louisiana fairly, and provides for adequate health care for those who need it most,” said Malcolm Murchison, Chair of BRF.

This action follows disagreements between University Health, the Division of Administration and LSU regarding a potential MOU modifying the Cooperative Endeavor Agreement between the parties. The DOA and LSU had threatened a notice of breach if University Health would not agree to their demands.

The MOU demanded by DOA and LSU contains at least nine different positions not contained in the MOU signed by University Medical Center in New Orleans. University Health and BRF have offered to sign an MOU along the lines of the New Orleans agreement, but DOA and LSU have refused to negotiate concerning University Health’s proposals.

Most of the other privatized hospitals have also been unable to reach agreement with DOA and LSU on a new MOU. The DOA and LSU have demanded that the hospitals pay increased amounts to LSU, despite net reductions and funding from the state that have cost the hospitals tens of millions of dollars annually.

“Given these enormous cuts, we are not going to prioritize paying LSU ahead of the needs of our patients. And we are not going to pay LSU for services that they cannot document or that are based on faulty invoices and cannot be supported as reflecting true fair market value,” said Skrivanos.

The state’s failure to fund University Health as promised and LSU’s failure to document its claims have caused University Health to withhold payments to LSU, pending resolution of these issues. Furthermore, since July 1, University Health has expended in excess of $50mm on behalf of the state - and is growing at $688,000 per day - but does not expect reimbursement until mid-October.

The notice of breach does not seek any immediate termination of University Health. It institutes a 60 day process of consultation to try to resolve the parties’ differences. “While we are very disappointed in the actions of the Division of Administration and LSU, we remain committed to try to work with them to resolve our differences for the benefit of the people of north Louisiana,” said Skrivanos.

Absent resolution of the issues, a lengthy lawsuit would likely ensue. In 2015, LSU filed a lawsuit to terminate University Health, and the lawsuit was dismissed because LSU was found to not have adequately cooperated to try to resolve the disputes.

In 2016, Governor Edwards announced that the state would file a notice of breach against University Health, but the disputes were resolved. Under University Health, the hospitals in Shreveport and Monroe have drastically reduced wait times for patient visits, obtained national certification as a Level 1 Trauma Center and primary stroke center, started programs in heart failure and (in Monroe) invasive cardiology and orthopedics, and made major improvements to the hospital facilities.