Summary

Among the challenges facing New Orleans in the aftermath of Hurricane Katrina is the significant destruction and disruption of health care services. Hurricane Katrina, which made landfall near the Louisiana-Mississippi border on the morning of August 29, 2005, and the subsequent flooding caused by the failure of the New Orleans levee system resulted in one of the largest natural disasters to hit the U.S. Among other things, the hurricane resulted in the sudden closure of hospitals and loss of other health care providers, including one of the largest hospitals in the area, Medical Center of Louisiana at New Orleans (MCLNO), which suffered extensive damage and remains closed. MCLNO, consisting of Charity and University Hospitals, is part of the statewide Louisiana State University (LSU) system and served as the primary safety net hospital for many local residents. About half of its patients were uninsured, and about one-third were covered by Medicaid. Furthermore, MCLNO also served as a major teaching hospital and the only Level I trauma center in the area. The availability of health care services is one of the factors that can affect whether and how quickly residents return to the area. To conduct our review, we obtained information on (1) estimates of the availability of health care services; (2) efforts by state and local officials to plan for the rebuilding of the health care system; and (3) assessments of the damage to the MCLNO facilities, cost estimates for repair or replacement, and the costs that are eligible for federal funding.

Since Hurricane Katrina hit New Orleans, the health care infrastructure was severely damaged and the availability of health services declined significantly. The area's only Level I trauma unit was closed, and the number of staffed hospital beds in the City of New Orleans was estimated to be about 80 percent less in February 2006 than before Hurricane Katrina, according to figures reported by hospitals. At the time of our visit, many safety net clinics in the city were closed, and those that were open were reported to have limited capacity. Relatively little was known about the status of physicians and other health care workers. Efforts to rebuild the health care system were being affected by several factors, including uncertainty about how quickly the population would return and how a future health care system should be configured, particularly since some experts noted that New Orleans had an oversupply of hospital beds before Hurricane Katrina. Residents are expected to return to the area slowly, and their return will be affected by the availability of housing and other services. Uncertainty about how quickly the population would return to New Orleans, as well as who would return, was making it difficult for local officials to plan the restoration of health services. Although various planning efforts were completed or underway, at the time of our visit no clear consensus had emerged. The MCLNO facilities, which were either in poor physical condition or needed significant repairs prior to Hurricane Katrina, sustained significant damage from the hurricane. Prior to the disaster, both hospital facilities had documented deficiencies and were having difficulty meeting health care standards. Because they were affected by the disaster, the facilities are eligible for federal aid under the Public Assistance program managed by FEMA. FEMA's estimate for repairing the damage was considerably lower than an LSU estimate prepared by ADAMS, a consultant to LSU. Because the lower FEMA estimate determines federal funding, LSU is likely to receive less federal funds than it expected. The LSU repair estimate of $117.4 million for University Hospital and $257.7 million for Charity Hospital, which included correcting some pre-disaster condition deficiencies, exceeded 50 percent of the buildings' replacement value and indicated that replacement of the facilities was the best option. However, FEMA's estimate of $12.4 million for University Hospital and $23.9 million for Charity Hospital, which included only those repairs required to return the facilities to pre-disaster condition, totaled significantly less than 50 percent of each building's replacement value. Although FEMA has decided that these facilities are only eligible for reimbursement of repair costs, should LSU repair the facilities, the total reimbursement could increase as additional problems are discovered. Therefore, given the uncertainty about the ultimate amount of the federal contribution and the uncertainty of how a future health care system should be configured, LSU faces a complicated decision about whether to repair Charity and University hospitals or build a new facility.