Louisiana Teaching Hospital Successfully Navigates Ownership Change

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Cindy-Nuesslein-thumbCindy Nuesslein, Chief Executive Officer

Over the course of five months in 2013, Interim LSU Hospital (ILH) in New Orleans, La., experienced significant changes in operations and ownership through a public-private partnership.

During those five months, the organization went from being a state-managed hospital facing deep budget cuts and layoffs to being a privately managed, not-for-profit facility. This transformation occurred without any interruption in patient care.

By the summer of 2015, the hospital will move two blocks from its current location into an all-new, state-of-the-art facility.

Switching ownership from state to private

In Louisiana, the state ran a hospital system of 10 facilities, but in 2012, it realized the arrangement was no longer viable because of changes in state and federal funding. The state then began seeking private partners to take over operation and management of these facilities.

ILH is a large academic medical center that is vitally important to the teaching missions of Louisiana State University New Orleans Schools of Medicine, Nursing, Dental Medicine and Allied Health Professions and Tulane University School of Medicine. ILH also has affiliations with Xavier and Dillard Universities, Delgado Community College, the University of New Orleans, and others.

In June 2013, University Medical Center Management Corporation, of which LCMC Health is the sole member, took over operations of the facility and appointed Cindy Nuesslein, the longtime vice president of operations for Children’s Hospital in New Orleans, as chief executive officer of ILH. LCMC is currently a system of four hospitals, with additional hospitals to be added in the near future.

Nuesslein said before the private partnership occurred, the state was going to cut the size of the organization in half, which would have dealt a crushing blow to all of the schools that rely on these facilities for training.

At ILH, the hospital and staff has made a remarkable transition in such a short time without patient care or employee morale suffering.

As the state was seeking private partners, employees of the facilities were in limbo about the fate of their jobs. During the ILH transition, all 2,000 employees were laid off and 1,800 were rehired by ILH. Many of those not rehired retired or found other opportunities, thereby greatly minimizing the economic impact to the local community.

In addition to onboarding employees, in just nine short months the hospital has opened more acute-care and psychiatric beds, expanded emergency services, and built up employee and medical-staff engagement.

“This has been such a unique environment, and the staff is truly remarkable,” Nuesslein said. “Everyone is committed and energized, and I feel we are all driving toward a common goal, which is to run a world-class academic medical center.”

That camaraderie continues as the hospital looks to open a new facility in the summer of next year.

Transitioning to a new facility

ILH, formerly known as University Hospital, was originally one of two teaching hospitals part of the Medical Center of Louisiana at New Orleans. When the second hospital, Charity Hospital, closed following Hurricane Katrina, all of its operations were moved to ILH.

The hospital has active residency and fellowship programs for two local medical schools and one dental school. Education is a vital part of the hospital’s mission and service to the New Orleans community.

The new hospital, currently under construction between Canal Street and Tulane Avenue, is a $1.3 billion investment.

Nuesslein said that ILH was resource-poor for a long time, so the new University Medical Center will have all-new technology and medical equipment. One of the biggest challenges for now is determining where to invest capital dollars during the transition period.

“We are developing a short-term capital investment strategy to help grow without wasting resources,” Nuesslein said. “We are only spending where it is absolutely necessary, and we are making sure we can take any new equipment with us in 14 months.”

One example of this strategy is the decision to purchase a da Vinci Surgical System with a teaching module. Residency programs require training on the system, and no facility in the region has the teaching module. Therefore, Nuesslein said ILH felt this was a necessary investment for patients and trainees.

ILH is still in the early stages of reviewing information technology, which is another significant aspect of the transition planning. The hospital inherited many disparate systems and is assessing how to integrate those applications.

One of the primary concerns of any transition is ensuring that employees and medical staff are prepared and that patients will not experience any interruption in care. If invoices or billing have to be delayed during the transition, Nuesslein said that would be acceptable.

What would be vital, she added, is ensuring the staff will have everything they need to care for the patients, since maintaining a cooperative, patient-centric spirit will be key to the coming transition.

Nuesslein feels confident in her people.

“LCMC Health is a respected organization,” she said. “We are well-known for taking care of people in the right way, and we realize it is an honor and privilege to care for the people who cross our doors. We are all working toward the common goal of doing what’s right for the right reasons.”

by Patricia Chaney

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