ATLANTA -- The Louisiana Legislature this week approved placing the state's struggling charity hospital system under a health authority that would be authorized to sell about $300 million of revenue bonds for badly needed upkeep.
The bill, expected to be signed Mondays by Gov. Buddy Roemer, removes the decrepit system of nine charity hospitals from the state's Department of Health and Hospitals and transfers control to local boards operating under the Louisiana Health Care Authority. Each of the boards will develop policy and annual operating budgets of the individual hospitals.
This bill is "very important to the state and to the taxpayers and to the people too poor to be sick," Gov. Roemer said. "Plus, if we don't do this system right we'll lose economic development in New Orleans and Alexandria and Baton Rouge that we need." Peyton Smith, a spokesman for Gov. Roemer, said the governor would sign the bill in a special ceremony on Monday.
The authority was set up by the Legislature last year, however, its functions were not specified until passage of the bll on Monday.
According to the version of the bill, the authority can "issue and sell bonds, notes, or other evidences of indebtedness in one or more series to fund the cost of equipping, renovating, replacing, improving and/or constructing medical centers and improvements and facilities related thereto."
However, debt service on bonds is limited to $8.5 million per fiscal year for equipment purchases and $30 million for renovation and construction -- allowing for total issuance of about $300 million of 30-year debt at today's interest rates.
Debt service, which is not backed by the state's general obligation pledge, is "payable from fees, rates, rentals, charges or grants received by the authority or other receipts, income or revenue sources."
Nine at-large members are appointed by the governor subject to Senate approval, but once the board is constituted, it has the ability to independently set policy, funding, and sell bonds for the charity hospital system.
In particular, state officials hope the authority can spearhead revitalization of the Medical Center of Louisiana at New Orleans -- the largest hospital in the system -- and two other major facilities, one in Alexandria and the other in Baton Rouge.
The legislation also contains a provision to let the state negotiate with any experienced nonprofit organization "for the construction, leasing, and management of one of nine facilities." According to a legislative staffer, this would allow the authority to find a contractor to manage or rebuild the huge 52-year-old facility in New Orleans. A replacement structure, which could be financed with tax-exempts, could cost as much as $200 million.
A last-minute filibsuter failed to block a 22-to-16 vote of approval for the bill Monday. Meanwhile, the Louisiana Legislature continued to work toward a budget even as the new fiscal year began the same day. Under state law, Louisiana can proceed without a budget insofar as it has cash resources. Constitutionally, the Legislature must be finished by July 8, with first payment due June 12.