<DOC>
[110th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:44277.wais]
POST KATRINA HEALTH CARE IN THE
NEW ORLEANS REGION: PROGRESS AND
CONTINUING CONCERNS--PART II
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
AUGUST 1, 2007
__________
Serial No. 110-62
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
POST KATRINA HEALTH CARE IN THE NEW ORLEANS REGION: PROGRESS AND
CONTINUING CONCERNS--PART II
----------
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COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts Ranking Member
RICK BOUCHER, Virginia RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey FRED UPTON, Michigan
BART GORDON, Tennessee CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia
ANNA G. ESHOO, California ED WHITFIELD, Kentucky
BART STUPAK, Michigan BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico
GENE GREEN, Texas JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado CHARLES W. ``CHIP'' PICKERING,
Vice Chairman Mississippi
LOIS CAPPS, California VITO FOSSELLA, New York
MICHAEL F. DOYLE, Pennsylvania STEVE BUYER, Indiana
JANE HARMAN, California GEORGE RADANOVICH, California
TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois MARY BONO, California
HILDA L. SOLIS, California GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska
JAY INSLEE, Washington MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York TIM MURPHY, Pennsylvania
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
______
Professional Staff
Dennis B. Fitzgibbons, Chief of Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
David L. Cavicke, Minority Staff Director
(ii)
Subcommittee on Oversight and Investigations
BART STUPAK, Michigan, Chairman
DIANA DeGETTE, Colorado ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana Ranking Member
Vice Chairman GREG WALDEN, Oregon
HENRY A. WAXMAN, California MIKE FERGUSON, New Jersey
GENE GREEN, Texas TIM MURPHY, Pennsylvania
MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
----------
Page
Hon. Bart Stupak, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 3
Hon. Charlie Melancon, a Representative in Congress from the
State of Louisiana, opening statement.......................... 4
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 7
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 8
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 9
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 9
Hon. Jan Schakowsky, a Representative in Congress from the State
of Illinois, prepared statement................................ 11
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 13
Witnesses
Ray Nagin, mayor, city of New Orleans, New Orleans, LA........... 15
Prepared statement........................................... 18
Frederick P. Cerise, M.D., secretary, Louisiana Department of
Health and Hospitals........................................... 35
Prepared statement........................................... 38
Elizabeth Richter, acting director, Center for Management,
Centers for Medicare and Medicaid Services..................... 61
Prepared statement........................................... 63
Answers to submitted questions............................... 296
Robert L. Neary, executive-in-charge, Office of Construction and
Facilities Management, U.S. Department of Veterans Affairs..... 75
Prepared statement........................................... 77
Julie Catellier, director, Southeast Louisiana Veterans Health
Care System.................................................... 85
Prepared statement........................................... 87
Clayton Williams, director, urban health initiatives, Louisiana
Public Health Institute........................................ 91
Prepared statement........................................... 93
Kim M. Boyle, chairman, health care committee, Louisiana Recovery
Authority...................................................... 96
Prepared statement........................................... 99
Diane Rowland, executive vice president, Henry J. Kaiser
Foundation; executive director, Kaiser Commission on Medicaid
and the Uninsured, Washington, DC.............................. 146
Prepared statement........................................... 148
Mark J. Peters, M.D., president and chief executive officer, East
Jefferson General Hospital, Metairie, LA....................... 166
Prepared statement........................................... 169
Leslie D. Hirsch, president and chief executive officer, Touro
Infirmary, New Orleans, LA..................................... 179
Prepared statement........................................... 181
Patrick J. Quinlan, M.D., chief executive officer, Ochsner Health
System, New Orleans, LA........................................ 198
Prepared statement........................................... 201
Gary Muller, president and chief executive officer, West
Jefferson Medical Center, Marrero, LA.......................... 222
Prepared statement........................................... 224
Mel Lagarde, III, president and chief executive officer, Hospital
Corporation of America, Delta Division, New Orleans, LA........ 226
Prepared statement........................................... 228
Larry Hollier, M.D., chancellor, LSU Sciences Center; dean,
School of Medicine............................................. 240
Prepared statement........................................... 241
Alan Miller, M.D., interim senior vice president, health
sciences, Tulane University Health Sciences Center, New
Orleans, LA.................................................... 244
Prepared statement........................................... 246
Gary Q. Peck, M.D., American Academy of Pediatrics............... 260
Prepared statement........................................... 263
Submitted Material
Michael O. Leavitt, Secretary, Department of Health and Human
Services, letter of March 21, 2007 to Messrs. Stupak and
Whitfield...................................................... 287
Department of Health and Human Services news release of May 24,
2007, ``HHS Announces Additional $195 Million in Grants for
Gulf Coast Region''............................................ 289
Leslie Eaton, the New York Times, July 24, 20007, ``New Orleans
Recovery is Slowed by Closed Hospitals''....................... 291
Committee exhibit binder......................................... 305
POST KATRINA HEALTH CARE IN THE NEW ORLEANS REGION: PROGRESS AND
CONTINUING CONCERNS--PART II
----------
WEDNESDAY, AUGUST 1, 2007
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:30 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Bart
Stupak (chairman) presiding.
Members present: Representatives DeGette, Melancon, Green,
Schakowsky, Whitfield, Walden, Burgess, and Blackburn.
Also present: Representative Jefferson, Delegate
Christensen.
Staff present: Chris Knauer, Kristine Blackwood, Scott
Schloegel, John Sopko, Angie Davis, Kyle Chapman, Alan
Slobodin, Peter Spencer, and Garrett Golding.
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. This meeting will come to order. Today we have
a hearing on Post Katrina Health Care in the New Orleans
Region: Progress and Continuing Concerns, Part II. This
hearing, on the eve of the second anniversary of Hurricane
Katrina landfall, is a follow-up to the subcommittee's March 13
hearing, which examined the immediate health care needs of
citizens in the New Orleans region. Our hearing will touch on
issues involving not just the immediate health care needs of
the region but also some of the long-term plans that Federal
and State officials have for rebuilding the large hospitals in
New Orleans that were lost because of Hurricane Katrina. The
Nation has much to learn from the people of New Orleans about
the long and difficult road to full recovery after a major
disaster. Katrina brought us the unprecedented experience of
having a major American city health care system shatter
overnight. Surviving the disaster and its immediate aftermath,
while difficult enough, now appears less daunting than
regaining a fully functioning and well-balanced health care
infrastructure for the region. Fortunately, hospital workers no
longer have to pump IVs and heart machines by hand to keep
patients alive in a darkened hospital.
But the area's health care system remains vulnerable and
overwhelmed and much work remains to be done. Since our hearing
in March some progress has been made in the four Katrina
affected parishes known as region 1. Following our March
hearing Health and Human Services Secretary Leavitt released
$100 million in Deficit Reduction Act funds for public and not-
for-profit clinics that provide primary care to low income and
uninsured regions of region 1, uninsured residents of region 1.
This targeted infusion of funds will help restore and expand
access to outpatient primary care including medical and mental
health services, substance abuse treatment, oral health care,
and optomic health care. HHS also provided an additional $35
million to Louisiana for workforce development and retention
and an additional $26 million direct funding to providers at
acute hospitals, psychiatric hospitals, skilled nursing
facilities, and community mental health facilities.
The subcommittee is still not clear as to exactly how these
funds will be distributed, and we look forward to flushing that
issue out in today's questions. While we have had some
improvements since our March hearing there are still serious
challenges facing local, State, and Federal public health
officials. A similar degree of focus and effort needs to go
towards stabilizing the graduate medical education GME programs
in New Orleans. The whole State of Louisiana relies on GME
assistance for developing of its future health care workforce.
Louisiana State University historically trains 75 percent of
all health care professionals in the State through its medical
school in downtown New Orleans.
Tulane University's School of Medicine, also headquartered
in downtown New Orleans, trains much of the balance of the
health care workers for Louisiana. The Federal and State funds
that support medical training are funneled through teaching
hospitals like LSU's Big Charity and several other hospitals
destroyed by Katrina. Without their principal teaching hospital
to provide the necessary case concentration needed for
accreditation, LSU and Tulane have had to close some of their
medical specialty training programs.
At the same time, because of the cumbersome manner in which
Medicare reimburses hospitals for hosting medical residents at
their facility, the medical schools have had to enter into
torturous and expensive negotiations with other hospitals so
that residents may continue their training. Meanwhile, although
host hospitals receive relief from Medicare's 3-year rolling
average rule in the first year after the hurricane that relief
of the 3-year rolling average expired in 2006 causing
reimbursement shortages. Until LSU can build a new training
hospital these other hospitals should be able to host medical
residents without incurring a financial penalty.
I again urge the Secretary to engage academic and public
health officials in the State to develop a fair way to insure
that medical training can continue in the region at an adequate
level. Likewise, I urge Secretary Leavitt to meet with the
representatives from the local private hospitals who will
testify today. Hospitals in the four Katrina-affected parishes
report that they are incurring substantial increased costs of
doing business that continue to disable the system and limit
patient access to reliable health care. Hospital
representatives will tell us of the financial pressures they
face due to labor costs driven up by serious shortages of
nursing and other personnel.
I am concerned that this labor shortage may have multiple
weakening effects on an already fragile system. For instance,
LSU has reported that it is difficult to open additional
hospital beds at its rehabilitative university hospital
facility due to lack of nurses. This in turn increases the
burden on private hospitals and independent providers who are
already treating unprecedented numbers of uninsured since Big
Charity's closure. These challenges deserve the attention and
leadership from our public health officials, and I hope the
Secretary will lead efforts to address structural imbalance in
the health care economy in the New Orleans region.
Finally, we have seen plans to build two of New Orleans'
most important facilities, LSU's Academic Medical Center and
the VA Hospital, mired in emotional and political debates. I
believe the community in the New Orleans area needs as much
clarity and transparency with respect to decisions being made
regarding these two hospitals as soon as possible. It is
difficult enough for low income and uninsured members of the
community and veterans in the region to obtain convenient and
consistent hospital care without these critical facilities up
and running. Their wait should not be made harder by
unnecessary delays and backroom politics.
In closing, I would like to thank the Republican members
and the staff for their continued bipartisan approach to this
investigation. I would also like to mention the leadership of
my vice chairman of this subcommittee, Mr. Melancon, for his
tireless effort to insure that rebuilding the health care
system of New Orleans remains a priority for this Congress. You
have my personal assurance that this subcommittee will continue
to monitor the progress and push wherever necessary to see the
region's health care needs are met. That concludes my opening
statement. I next turn to my friend, the ranking member of the
subcommittee, Mr. Whitfield, from Kentucky for an opening
statement, please.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. Chairman Stupak, thanks very much. All of us
are quite excited about this third hearing on health care needs
and the situation in New Orleans and the surrounding area as a
result of the devastation of Katrina. I remember last March
when we had this hearing it was some 18 months after the storm,
and hundreds of millions of dollars had been sent to the region
and at that time there was still a lot of gridlock and
stagnation. I remember I walked away from that hearing with the
impression that there had been so much focus by different
advocates on what reforms needed to take place in health care
that the immediate needs were sort of placed on the back
burner. I think we have 15 witnesses, and we genuinely
appreciate all of you for being here because you are the ones
involved in the trenches trying to address these problems. I
know that people are always skeptical and scared when the
Congress comes forth and says what can we do to help you, but
that is really why we have these hearings for you all to give
us some idea of how we can we be helpful and what can we do.
And I know after Chairman Stupak's March hearing, as he
said, we were quite excited that Secretary Leavitt came forward
and did release about $160 million to help strengthen community
health centers and primary care facilities as well as to
support health provider recruitment and retention and to aid
the hospital's financial situation. It is my understanding that
we will hear this morning that there have been policy
developments toward improved coordination of future care
delivery, and most of the key State and regional players have
developed a common vision for long-term rebuilding, which
should help expedite the recovery and will encourage more
health professionals to return to the region.
And by all accounts this is welcome news, positive news,
and we are excited about that. But we also are quite concerned
about these stories and about how the hospitals are facing dire
financial needs and have continuing significant losses and then
the stability and medical educational situation and the
challenges faced by private practice physicians and the overall
shortage of health care providers. So we want to be sure that
the Federal Government, the Department of Health and Human
Services, and the Congress is responsive. And as Chairman
Stupak said, this is and has been a totally bipartisan effort
because all of us want to do everything we can to help improve
the health delivery system in New Orleans.
And once again, I want to thank all of you for being here.
As I said, you are the ones in the trenches. You are the ones
facing every day problems. Constituents come to you with their
complaints, and we look forward to hearing your testimony and
hopefully can help move us down the road to solving this
problem and having a more effective health care delivery
system. And I yield back the balance of my time.
Mr. Stupak. I thank the gentleman. Mr. Melancon for opening
statement, please.
OPENING STATEMENT OF HON. CHARLIE MELANCON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Melancon. Thank you, Mr. Chairman. We are now on the
eve of the second anniversary of Hurricane Katrina. Nearly 2
years later we find ourselves in this room with much work still
ahead. This committee made a commitment that it would continue
to examine the collapse of the health care system in the
greater New Orleans region, and this is the next installment
towards that effort. As Chairman Stupak, Chairman Dingell, and
previous chairman, Mr. Whitfield, said before: this body will
work hard to show the people in the Katrina affected area by
insuring that this government move things forward and see to it
that the relevant Federal agencies continue to provide the
necessary relief. This hearing is part of that process.
The testimony at our March 13 hearing on this topic
revealed the landscape with citizens of the New Orleans region
struggling to use a health care system comparable to what one
might find in a developing country. Those without insurance
were forced to wait in long lines at city sponsored health care
fairs or volunteer clinics just to see a doctor and dentist.
Health care workers told committee staff of families sleeping
in cars outside the clinics to insure placement on a waiting
list. Examples such as a diabetic being able to access even a
few days worth of insulin were reported regularly. The
committee was told how those with complicated chronic ailments,
such as heart disease or a mental health condition, had almost
no chance of locating a specialist if they lacked insurance.
Private hospitals were receiving large numbers of uninsured
patients and were unsure how they would avail those costs or
continue providing such services. Private physicians that were
trying to rebuild their businesses were finding it almost
impossible to do so because they were not being paid for the
care they rendered. The major hospitals that took care of the
poor and uninsured and the primary hospitals treating veterans
remained closed. The University Hospital, the small Charity
Hospital were so overwhelmed with patients it was often on
deferral. In fact, when our staff visited that hospital in
March much of the emergency room was dedicated as a holding
area for individuals needing critical psychiatric care.
What we are doing today remains crucial to rebuilding the
region. As recently reported by the New York Times just last
week, restoring health care services may be the most important
factor in restoring this region, and I would urge you to read
this article for New Orleans reviving health care systems or
said city's future. Today's hearing will attempt to highlight
not only what has been accomplished but also what more we need
to do in order to bring health care back to the region. I am
pleased to report that some progress has been made since our
last hearing on resolving key health care issues.
For example, HHS recently released nearly $135 million in
DRA dollars to the greater New Orleans region with the
objective of recruiting and retaining health care workers and
provide some relief to the many primary care clinics which may
play a key role in providing access to health care. From what
we have been told, this should allow them to operate for about
3 more years. This is a very positive development and I thank
the Department for making this money available. We look forward
to hearing from HHS, Louisiana Public Health Institute, and
Secretary Cerise regarding how this money will be spent and
what they hope it will accomplish.
Nevertheless, while funding primary care claims is a
particularly positive development, we are a long way from
restoring adequate health care for the region. As you will hear
today, many vexing health care challenges remain. These will
require the attention of policymakers at the State and Federal
level as well as this Congress.
Let me briefly summarize what appears to be among the most
pressing. First, due to high labor costs and labor shortages
the region's top five private hospitals report that they are
collectively losing considerable sums of money and that these
losses could ultimately result in a reduction of services.
Collectively, Ochsner, East and West Jefferson, Tulane, and
Touro report to our staff that they expect a combined loss of
$125 million in 2007. We are told this loss is expected to go
to over $400 million over the next several years.
As reported to staff, these losses are due to extraordinary
high labor costs associated with staffing hospital beds and
continued uncompensated care costs. The solution to this
problem remains unclear. At a minimum, however, I believe that
this concern must be investigated to understand its potential
impact on the region's health care services. I will ask
representatives from both the State and Federal Governments
what they know about this claim and how it should be evaluated
or verified. I will also explore with key agencies what kind of
relief might be made available to these hospitals should these
claims hold merit. I will ask the U.S. Government
Accountability Office, HHS, Office of Inspector General or some
other objective third party entity to evaluate the concerns
voiced by the five private hospitals that will testify today.
What they will describe is a potential new storm on the
health care horizon for this area. It is a problem that
deserves a thorough review and I look forward to hearing from
my witnesses on how to best approach this. Second, the region's
two primary teaching schools, Tulane and LSU, continue to
struggle to keep their medical programs alive, and much of this
relates to the current structure of the graduate medical
education payments made by Medicare. Prior to Katrina both
Tulane and LSU were both training residents at several regional
hospitals. The one site where both of these schools had the
largest concentration of residents, however, was the Medical
Center of New Orleans, commonly referred to as ``Charity.''
According to both universities during this period of total
and partial closure after Katrina, the medical schools remained
responsible for the education of the residents and for paying
the salaries and benefits of the residents despite being unable
to receive reimbursement from the closed hospital. This ongoing
arrangement has created a number of financial difficulties for
both Tulane and LSU. Given that the bulk of all of Louisiana
health care workers are trained in these two institutions, it
is critical that we explore with HHS ways to remedy at least
some of the burden placed on the universities by current GME
rules. These rules are extremely complicated.
I will look forward to discussing with CMS what tools might
be made available that may provide both flexibility and relief
to these two institutions, at least until a new medical center
is built. The third major problem we hope to examine is the
continued debacle of rebuilding a major public hospital to
replace Big Charity and determine the new location of the VA's
proposed hospital, which may or may not be part of that deal.
Unfortunately, both appear stymied by endless politics and
debate. As we all know, Big Charity once served many of the
regions working for it. Since its destruction many have had to
pursue a patchwork of options when seeking medical care.
As plans were being made to rebuild Charity, the VA, who
also lost its regional hospital in the flood, entered into an
Memorandum of Understanding with LSU to explore the possibility
that two hospitals would be rebuilt as a collaborative project.
While it was understood by certain stakeholders that this
project would soon be underway and that the VA would locate its
facilities downtown and in close proximity with LSU's
replacement facility, the plans for this project still remain
unclear. Currently, the VA is considering both the downtown
site, which is close to the existing health care facilities,
and a site located in Jefferson Parrish. I believe it is time
for the VA and the State to resolve this deal and to begin
building a hospital. Neither the citizens of Louisiana nor the
veterans are being served by this continuing delay. I intend to
explore with the VA and LSU the status of this proposal.
Moreover, because this project has been mired in continued
confusion and controversy, I am asking that the VA formally
brief this committee once a month as to the status of this
project. For all parties involved, I believe that both LSU and
VA's plans for building these two hospitals must be made
clearer than they have been thus far. Not a shovel's worth of
dirt has been lifted towards either hospital's construction and
that I find totally unacceptable. I would like to conclude by
first of all thanking my colleagues on this committee for the
continuing work they and their staffs have done and provided to
us helping torebuild this region.
This has been a continued effort and a continued bipartisan
endeavor. I know that it will continue. I would also like to
thank the many excellent witnesses providing testimony. Many of
you remain in the trenches and are truly the heroes that are
the most responsible for moving this effort forward. We are
making progress, and as tired and frustrated as we are at
times, I believe we will be successful. I do want to renew that
commitment that we have made to you before. We will use this
committee's resources to continue to examine this important
area and assist you in what you are all trying to do in any way
legally possible. That concludes my remarks, and I thank you,
Mr. Chairman.
Mr. Stupak. I thank the gentleman. Mr. Walden from Oregon,
please.
Mr. Walden. Mr. Chairman, I am going to waive my opening
statement. I know we have got a busy day on the floor and
probably a few interruptions so it would be nice to hear from
the witnesses. Thank you, sir.
Mr. Stupak. OK. Thank you. Ms. DeGette.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you, Mr. Chairman. I just want to
welcome our witnesses today, particularly the mayor and others.
Many of you who I have been working with for the last 2 years
on the health care situation in Louisiana, as the chairman and
the ranking member know, we went to New Orleans 6 months after
the terrible tragedy, and we have been going back and we have
been talking to people ever since. We are really committed to
working with you to try to rectify the terrible health care
situation that followed the hurricane. It really is an American
tragedy what has happened, and we need to work together to make
sure that this situation is rectified.
I have been frustrated, as my colleagues have, by the slow
lack of progress and lack of communication between various
governmental agencies, including Federal agencies, and remain
committed with the other members of this committee to insuring
that this problem is resolved and resolved quickly. Mr.
Chairman, I want to apologize. I won't be able to stay for the
whole hearing because I am the chief deputy whip in charge of
the SCHIP bill which will be up on the floor momentarily, so I
too want to hear the testimony of the witnesses and yield back
the balance of my time.
Mr. Stupak. I thank the gentlelady for her statement.
SCHIP, the Children's Health Initiative Program is on the floor
today. All of us have worked on that legislation. It came
through our Energy and Commerce Committee. The bill is on the
floor, and I am sure members on both sides of the dais will be
going down and making their comments, conclusions, whatever
they would like, on the bill, but we appreciate everyone being
here. So we will be moving in and out. No disrespect to our
witnesses. Mr. Burgess, I am sure you want something to say on
what I had to say or else at least an opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. I am going to forego saying something I wanted
to say on what you had to say. I am actually going to forego an
opening statement as well. We have important testimony to hear
today. There is a lot going on on the floor, and I am anxious
to hear from our witnesses. I am glad to see Dr. Peters and Mr.
Muller back here from my first visit down to the area in
October 2005 and understanding the problems that face them. Ms.
DeGette called it an American tragedy. I would say it is a
bureaucratic nightmare. And I still, frankly, do not understand
where the logjam is. I don't know whether the logjam is here. I
don't know whether the logjam is at the State. I don't know
whether the logjam is at some point in the city. But clearly
the work of this committee has to be to identify and unwind
that logjam and get the dollars going to the people who need
them.
At the end of the 106th Congress last year, we had put $100
billion towards this effort, and to find that we are still not
receiving dollars on the ground to me is a source of enormous
frustration. I go home and hear from angry constituents that
you are spending too much money, and then I come to this
committee and find that the money hasn't been spent at all. And
that leaves me with an internal state of perplexion that really
has to be resolved quickly for my continued good health. I want
to work with this group today. I am anxious to hear your
stories, and I will yield back, Mr. Chairman, and would hear
from the witnesses.
Mr. Stupak. Thank you, Mr. Burgess. Ms. Schakowsky from
Illinois.
Ms. Schakowsky. Thank you, Mr. Chairman. I am going to put
my statement in the record. I just want to say I was able to go
with this committee to have a similar hearing, in New Orleans
months after the storm. I was shocked then, even more surprised
now, that not enough is done. I feel responsibility that the
Federal Government has missed the boat here and that we have to
do better. I wanted to thank Mr. Melancon for all of his work
for keeping this issue on the top of the agenda here in
Congress, and now I am looking forward to some progress being
made. And your testimony will be very important to help us do
that. Thank you. I yield back.
Mr. Stupak. Thank you. Mrs. Blackburn, opening statement?
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman. I do have a brief
opening statement I will submit for the record, but in the
interest of time, I do want to say welcome to our witnesses. I
want to say thank you to those that have worked since our very
first hearing that we did in New Orleans to address this
situation. One of the components of leadership is when you have
a situation such as what happened with Katrina, one of the
things you have to do is admit we did things wrong. And I think
when you look at how the health care situation was addressed in
Louisiana the plans that were not made, the things that were
left undone as you looked at a readiness plan, when you looked
at how you were going to secure your infrastructure, the
admission of that as having been a mistake, and then the
agreement and establish a health care network that is going to
be beneficial for your citizens. I think that is an important
step.
So as we move forward, I look forward to your continuing
testimony, to your continuing work, and certainly to seeing all
of yourebuild a health care system that will deliver accessible
and affordable health care for the citizens of Louisiana. I do
say welcome to the mayor. Some of us were here until about 3
o'clock this morning for the Rules Committee hearing for SCHIP,
and I think we would be wishing that you had brought along some
beignets and coffee with you to help us get through this as we
take the SCHIP bill directly to the floor as we see that happen
today.
But some of us were here a little bit later, and Mr.
Pallone was also here through the evening, so we thank you and
I yield back, Mr. Chairman.
Mr. Stupak. Thank you. That concludes the opening
statements by members of the subcommittee.
Any other statements for the record will be accepted at
this time.
[The prepared statements follow:]
Prepared Statement of Hon. John D. Dingell, a Representative in
Congress from the State of Michigan
Today, we will hear from public health leaders and
representatives from the New Orleans area who are helping the
brave citizens of that region rebuild their lives and their
communities. We should pay close attention to the lessons they
can teach us about the tenacity and creativity it takes for a
health care system to recover from a national disaster.
At our last hearing on this topic, I promised that we
would focus on stabilizing the health care crisis in the New
Orleans area and that we would keep our focus on that issue
until the system is stable. This is the second in a series of
oversight hearings on these issues, and I assure you, it will
not be the last.
Four and a half months ago, we heard testimony from
doctors and clinic administrators about people lining up in
their cars overnight, simply so they could get attention to
basic health needs such as prescription eyeglasses and asthma
medicine from health care professionals working in tents with
flashlights. Their stories described a landscape we might see
in third world countries, not one we could imagine here in our
own country.
I am pleased that Secretary Leavitt took to heart the
moving testimony we heard, and released $100 million in
discretionary Deficit Reduction Act monies to target primary
care in the greater New Orleans region. I thank the Secretary.
These much-needed funds will soon flow to clinics in the
greater New Orleans area that provide primary and preventive
care--such as vaccinations, pre-natal checkups, and basic first
aid--to poor and uninsured patients.
These funds will help fill in some--but certainly not
all--of the holes in what is left of a shattered health care
system in the New Orleans region. As we will hear today, that
system is still precarious as we mark the 2-year anniversary of
Hurricane Katrina. If the system were a patient, we might say
it is still in the Intensive Care Unit. We will hear from
today's witnesses that the area's economic recovery is stalled
because the health care system remains fragmented and
overwhelmed.
<bullet> There continue to be critical shortages of
professional health care workers;
<bullet> Doctors are having difficulty sustaining their
practices and are moving out of a city that desperately needs
them;
<bullet> Graduate medical education programs are struggling
to survive so they can continue to train the State's future
healthcare workforce; and
<bullet> Private hospitals report they are hemorrhaging red
ink in the post-Katrina economic environment.
Meanwhile, 2 years have passed since Veterans Affairs and
the State lost their major hospitals in downtown New Orleans.
However, not a shovel of dirt has been lifted to rebuild them.
That is a simply outrageous situation for our country.
The people in the New Orleans region, and the wounded and
maimed veterans returning to their homes, deserve to have these
vital institutions rebuilt and rebuilt now. Likewise, the
citizens of New Orleans need to have their public hospital
rebuilt and rebuilt now. The uncertainty, particularly with
respect to the VA's plans, is almost as damaging as the absence
of the hospitals themselves.
I wish to thank our subcommittee chairman, Representative
Bart Stupak, and our subcommittee vice chairman, Representative
Charlie Melancon, for their leadership on these issues. Mr.
Melancon has been heavily engaged in helping his own district,
which is adjacent to the four New Orleans parishes, recover
from these storms. I look forward to hearing from our witnesses
today about the path ahead.
----------
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Mr. Stupak. Let me call forward our first panel of
witnesses. The Honorable Ray Nagin, mayor of New Orleans; Dr.
Frederick Cerise, Louisiana Secretary of Health and Hospitals;
Ms. Elizabeth Richter, Acting Director, Center for Medicare
Management at CMS; Mr. Robert Neary with the Veterans
Administration Office of Construction and Facilities, and he is
accompanied by Ms. Julie Catellier; Mr. Clayton Williams,
Louisiana Public Health Institute; and Ms. Kim Boyle, Louisiana
Recovery Authority.
It is the policy of the subcommittee to take all testimony
under oath. Please be advised that the witnesses have the right
under the rules of the House to be advised by counsel during
their testimony. Do any of you wish to be represented by
counsel? Everyone seems to be shaking their head no.
[Witnesses sworn.]
Mr. Stupak. Thank you. Let the record reflect that the
witnesses replied in the affirmative. You are now under oath.
We will begin with the opening statement of Mayor Nagin. If you
would, please begin your opening statement. We have 5 minutes
for opening statements. If it is longer, we will make it part
of the record, but we have a large panel here and if we keep it
to 5 minutes that would be great. Mayor, thank you and welcome.
STATEMENT OF RAY NAGIN, MAYOR, CITY OF NEW ORLEANS, NEW
ORLEANS, LA
Mr. Nagin. Thank you. Good morning to the Chair,
Congressman Bart Stupak, Ranking Member Ed Whitfield, Vice
Chair Charlie Melancon, distinguished members and guests of the
House Committee on Energy and Commerce Subcommittee on
Oversight and Investigations. Thank you for calling this
hearing today on the progress and continued challenges we face
in providing basic and quality health care to meet our
citizens' needs and provide what they deserve. We are grateful
for your support of our continued efforts during the last 2
years. And we thank the American people and our friends
throughout the world for their donations of resources, labor,
prayers and positive thoughts as we continue to rebuild.
Most of all, I want to thank you for following up on the
issues and the needs discussed in your March hearing on this
topic. The attention you have brought to these issues has
helped us to begin to repair critical aspects of our health
care delivery system, which was decimated by Hurricane Katrina
and the subsequent flooding. Ladies and gentlemen of this
committee, this is my 28th lobbying trip and appearance before
a committee since Katrina. I must admit I was a little
reluctant to come up today because I am getting pretty weary
about continuing trips up here and testifying and going over
some of the same things over and over, but I think this is a
very important day to be up here to make sure that everyone
around the Nation, including this committee, continues to
understand the challenges that we face.
But I must be frank with you. I keep hearing about this
$100 billion that has been allocated to the city of New
Orleans. I keep hearing about this $100 billion that has been
allocated to the Gulf Coast for recovery, but I have seen very
little of that money in the city of New Orleans. And in essence
the city of New Orleans is suffering in many different ways. We
are in recovery, and our citizens are working in spite of the
odds, but we are suffering, ladies and gentlemen, from
financial malnutrition, and we need an acute infusion of
resources into our environment to help us to overcome this
incredible challenge that I don't think many people still
understand.
Our city was totally devastated after Katrina, and after 2
years we are still trying to recover. It was unprecedented. But
our citizens, as we sit here testifying and talking about this,
they continue to suffer. We have increased mortality rates. We
have increased stress levels throughout the city of New Orleans
and the region, and we have many compounded mental health
problems that are not being adequately addressed. A study by
Dr. Kevin Stephens, the city's health director, documented a 47
percent increase in deaths in the city of New Orleans. I repeat
that, 47 percent increase in deaths in the city of New Orleans.
The State has a smaller number that they have presented but
whether you believe it is 20 percent or 47 percent deaths are
up in the city of New Orleans and it is growing at an alarming
rate.
Our Orleans Parish coroner, Dr. Frank Minard, told the
Associated Press he sees every death that happens in the city
of New Orleans, that he has no doubt that Katrina, the after
effects of Katrina, is killing our residents. These deaths have
taken the form of pre-existing medical conditions that are made
worse by the stress of living here in the city and in this area
after the storm. It also is showing up in the elderly, many of
them who are growing weary and tired and exhausted and too
defeated and they are just giving up. Your committee has done
some good work, and I must continue to applaud you. After your
last meeting, which was recently, Secretary of Health and Human
Services Michael Leavitt invoked his authority, you didn't have
to do anything, under the Deficit Reduction Act of 2005 to make
$100 million available to restore and expand access to primary
health care for all those reasons.
But, guess what, that money has taken the normal route that
it always takes. It may or may not leave the Federal
Government. It may or may not hit the State government. And it
definitely is having a long time getting to the city of New
Orleans. And if there is anything that this committee can do,
and if there is anything this Congress can do, you can put a
speedway to getting funds directly to the devastated areas, and
this would help this recovery tremendously. We have been 23, 24
months of going through this dance where money flows from the
Federal Government to the State government and gets stuck and
does not get to the people who need the money.
I am off script and I know that is very damaging sometimes
for me. But this is my 28th trip to this Nation's Capitol, a
mayor of a city that has been totally devastated, and I am
getting really upset about this because we are getting ready to
go to the second anniversary of the biggest natural and man-
made disaster, and I still do not have adequate health care in
my community. Our hospitals are still shuttered for the most
part. The one that is open you have to wait hours and hours and
hours to get emergency care. There is no substantial mental
health care happening in the city of New Orleans. There is very
little substance abuse and many of our citizens are self-
medicating, which is a nice term I am going to use, to take
care of what they can't handle, the day-to-day struggle of our
city.
Now we are 300,000 strong. Our citizens are doing
incredible work in spite of not having the resources that they
need but it shouldn't be this hard in the greatest country in
the world. And I am pretty sick of it. The VA hospital, if we
can get a decision on the VA hospital, that would stabilize the
health care community in our city, but we keep going around
this dance with RSVP and now the city of New Orleans is in a
position where it is competing with the surrounding parish for
this facility. We wouldn't be here if it wasn't for the failure
of the Federal levee system that was supposed to protect New
Orleans, and now I am sitting in the city of New Orleans
competing with the surrounding parish to bring a facility back
that should be downtown in the city of New Orleans, and I have
to go through this ridiculous process.
That is what we deal with in the city of New Orleans and 47
percent more people are dying in the city of New Orleans
because of this thing that we are going through. I implore, I
ask, I beg this committee to really do something to help us. I
am not sure where my city is going to be at the end of the day.
It is coming back but I am losing people every day. Since I
started talking, I probably lost a citizen in the city of New
Orleans, and we need this committee, we need this Congress to
help us. Thank you.
[The prepared statement of Mr. Nagin follows:]
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Mr. Stupak. Thank you, Mr. Mayor. Mr. Cerise, opening
statement, please, 5 minutes.
TESTIMONY OF FREDERICK P. CERISE, M.D., M.P.H., SECRETARY,
LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS
Dr. Cerise. Mr. Chairman and members of the committee,
thank you for the opportunity to testify on the status of
Louisiana's health care system. I am Fred Cerise, Secretary of
the Louisiana Department of Health and Hospitals. Today my
comments will center around three areas, new Federal and State
commitment, continuing needs, and sustaining some of the
momentum that has begun with State and Federal relief. In the 2
years since Katrina hit, New Orleans has accomplished much
through local, Federal, and State investments. Recent Federal
actions include the allocation of the remaining DRA funds.
Louisiana received $161 billion which is targeted at workforce
recruitment and retention, stabilization to hospitals, and
primary care stabilization and expansion.
I will note that the workforce recruitment and retention
effort is ongoing. Out of the $50 million that has been
allocated for that $11 billion in recruitment offers have been
made. Over 100 people have been recruited back to the area as a
result of that work. There was an award of $2.5 million in HRSA
grants to increase access to health care services in the area
and the extension of social services block grant funding to
September 2009. Those are things we asked of this committee and
HHS, and you responded and we appreciate the attention to those
requests that we have made.
I think it is also important to note that Louisiana has
stepped forward with significant State investments in health
care. Over a billion dollars in new State and matched funds
were dedicated to programs including several proposals put
forth by the redesign collaborative such as expanded insurance
coverage to children, and individuals with disabilities,
Medicaid rate increases to retain access to services, health
information technology investments building on Federal grants,
the establishment of a quality forum, and funds for a medical
home systems pilot program.
In addition, there is new funding to replace expiring
Federal relief to expand and restructure mental health care
delivery and to replace an academic medical center in
conjunction with the VA in downtown New Orleans. The VA's
return to the city, as the mayor mentioned, is a critical piece
to the city's recovery. Extensive planning among LSU, Tulane,
and the VA has occurred over the past 18 months. In addition to
providing high quality care to veterans, this joint venture
will save American taxpayers an estimated $400 million in long-
term operational costs while serving as a centerpiece of a
vibrant, academic teaching center and a bio-sciences research
cell.
We need an expedient decision to rebuild on the land
currently being assembled in New Orleans so that both the LSU
and the VA can focus more directly on returning vital services
to the region. For the next few minutes, I will outline a few
of our continuing and new issues, those surrounding graduate
medical education, hospitals, and care for the uninsured. In
response to the previous hearing, I convened a graduate medical
education stakeholder group which the group identified as its
major ongoing concern an extension of the 3-year rolling
average exemption for the medical schools and hospitals which
step forth to assist the residency program post Katrina. HHS
advised that Federal legislation would be required to address
this issue.
Estimates from the hospital place the cost of $10 million
to $15 million over the next 4 years. This is a complex area,
as many of you know, in which we will need a commitment of
solution oriented, active engagement by CMS in crafting a
satisfactory resolution. In terms of the hospitals it, was made
clear in the March hearing that the hospitals in the New
Orleans area were struggling with uncompensated care. In
response to that issue, the State revised its existing $120
million community hospital uncompensated care pool to allow
more funds to flow to the New Orleans area hospitals and has
continued to support in this fiscal year through this pool and
through Medicaid rate increases.
However, the State has been notified by the hospitals that
they continue to have a significant need for additional funding
beyond UCC and beyond the previously estimated Medicare wage
index projections. The State has not conducted a detailed
analysis of the individual hospital's profits and losses. I
agree with Representative Melancon's recommendation that an
independent third party, such as GAO or some other party,
conduct this detailed analysis to identify documented needs and
identify ways to insure viability of these important community
resources. And then finally as the State continues to recover,
please note that we are doing so with an eye towards long-term
systems redesign.
Louisiana recently received notice, this was on July 23, so
the State is not sitting on these funds, we recently received
notice of the $100 million primary care stabilization grant. We
believe this large investment in primary care should be
leveraged to result in approved delivery system. If these funds
are properly deployed, we should expect to see significant
relief on emergency departments in the region and improved
preventive services for residents. The State, with its local
partner, who you will hear from, hopes that as we work through
details with HHS the opportunity to place explicit requirements
for access, care coordination and quality, and IT will be made
available.
Above all, the State wants to insure that this Federal
investment is sustainable and coordinated with State
programming. We know that this increase in primary care, for
instance, and the capacity will generate more demand for
specialty services for which there is no ready funding
available. We once again request the ability to use Federal
funds to support these physician services. The State has been
informed by CMS that flexibility in the use of the DSH funds
will be considered only in the scope of a larger waiver request
that ultimately shifts DSH funds to the purchase of insurance
for uninsured individuals. Although coverage is a desirable
goal of the State, we have done extensive analysis of this
proposal and concluded that we have insufficient funds in the
DSH program today to adequately cover the target population.
Currently, the State is criticized for supporting a
centralized institutional base system of care. However, Federal
rules dictate this approach. The rule, which is waivable,
paradoxically results in more patients relying on emergency
rooms for non-emergent care. DSH funds require a State match
and have a Federal cap. This simple waiver would require no
additional Federal funds that is not already available to the
State today, and I urge you to prevail upon the administration
to allow the State to use DSH funds, up to but not in excess of
our cap, as a way to provide critically necessary physician
services today. Along with traditional Medicaid, this will
allow us to sustain the care once the primary care grant
expires.
So I will end here. Thank you for the opportunity to
testify and for your ongoing commitment to the recovery of the
region, and Ilook forward to the discussion.
[The prepared statement of Dr. Cerise follows:]
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Mr. Stupak. Thank you. Ms. Richter, 5 minutes, please,
opening statement.
TESTIMONY OF ELIZABETH RICHTER, ACTING DIRECTOR, CENTER FOR
MEDICARE MANAGEMENT, CENTERS FOR MEDICARE AND MEDICAID SERVICES
Ms. Richter. Mr. Chairman and members of the subcommittee,
I am pleased to be here today to discuss post-Katrina health
care and the actions the Centers for Medicare and Medicaid
Services have taken to help rebuild the Louisiana healthcare
system. I am Elizabeth Richter, the acting director of the
Center for Medicare Management at CMS and I am pleased to be
joined today by Rear Admiral Kenneth P. Moritsugu, the Acting
Surgeon General, to help answer any questions you might have
about broader Health and Human Services actions.
I will focus on two issues the subcommittee asked CMS to
address, which are graduate medical education payment, and the
Medicare area wage index. Since the first days after Hurricane
Katrina, CMS has worked diligently to address issues related to
medical residents displaced by the disaster. In particular, CMS
has moved quickly to provide flexible funding through all
available means of Medicare GME payment in three ways. First,
the New Orleans hospitals asked CMS for a way in which host
hospitals taking on displaced residents could receive payment
for the training they were providing. In response, CMS
immediately issued a provision in the existing regulations
which allows hospitals that have closed programs to temporarily
transfer their allotment of full-time equivalent residents paid
for under the Medicare Program to the hospitals hosting the
displaced residents.
As a result, host hospitals that were already training
residents at or above their cap could receive payment for
training additional residents displaced by the hurricane. Our
second initiative in order to provide relief where the programs
have not or are no longer closed was to use the rule making
process to publish a new regulation to allow closed hospitals
an adjustment to their FTE count. The new rule allows the host
hospitals to receive financial relief for the additional
medical residents they have taken on in the wake of the
disaster. The new regulations establish a new kind of emergency
affiliation agreement to facilitate the sharing of residents
between hospital situations where special waiver has been
implemented in an emergency area during an emergency period.
As a result, Katrina-affected hospitals were able to
temporarily transfer residents anywhere in the country. Host
hospitals were then able to receive payment without regard to
the otherwise existing rules that affiliations be limited by
geography and we also relaxed the shared rotational arrangement
requirement. Under usual GME payment rules, a hospital is paid
in the current year based on a 3-year rolling average count of
residents. Therefore, the third action we took was to allow
displaced residents from August 29, 2005 to June 30, 2006, to
be excluded from the rolling average calculation.
As a result, payment will be made in full in 1-year for the
period when host hospitals would have expected the closed
program provision to apply. CMS has been advised by our Office
of General Counsel that the 3-year rolling average cannot
otherwise be waived without a change in the law, thus
exhausting CMS authority within the GME rules. CMS has
authority to conduct demonstrations in cases where certain
payment rules warrant the study to help achieve more efficient
and effective administration of the Medicare Program. For
example, there is currently an ongoing demonstration examining
the effect of managing resident slots at the State level.
Towards that end, CMS welcomes the opportunity to share
information about the demonstration process.
In the meantime, CMS remains committed to providing
technical solutions within its authority to any concerns
related to GME. I have reviewed the paper submitted by LSU and
Tulane, and would be happy to comment in response to any
questions you may have about their particular GME concerns. CMS
has also been responsive to concerns about providers' requests
for an increase in the area wage index to be reflective of
reported increases in wage rates for health care facility
staff. The wage index is a relative value based on wage data
reported from hospitals across the country. There is a uniform
national process for updating the wage index that will not be
based on post-storm data until fiscal year 2010.
Given the data collection, auditing, and budget neutrality
requirements under the current wage index structure provides
certain limitations, HHS recognized the rapid rise in wages in
this affected area, and thus directed approximately $98 million
of the $160 million in DRA provider stabilization grants be
made available to compensate Louisiana providers for higher
wage cost before the wage index is based on post-storm wage
data. CMS would very much like to understand the impact of the
grant funds, and if they are having their intended impact of
offsetting the cost of persistent higher wages in Louisiana,
including how wage issues are impacting other payers, namely,
Medicaid and private pay patients.
Due to the complex nature of the data issues across payers
and programs, CMS also recommends an outside entity lead a
thorough assessment of the issues the hospitals have raised
across all HHS programs along private payers.
In conclusion, since the March 13, 2007, hearing before
this subcommittee, HHS has made $195 million in supplemental
grant funding for health care rebuilding and provider
stabilization efforts in the Gulf Coast region. Secretary
Leavitt has made a personal investment and focus of energy on
rebuilding of the Louisiana health care system, supported by
continuous technical expertise offered by CMS and senior
officials throughout HHS.
CMS will continue to make relevant expertise available to
the State as the two work together toward the goal of a high-
functioning, sustainable health care infrastructure. Thank you,
and Dr. Moritsugu and I would be happy to answer any questions
you may have.
[The prepared statement of Ms. Richter follows:]
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Mr. Stupak. Thank you. Mr. Neary, please, for an opening
statement.
TESTIMONY OF ROBERT L. NEARY, EXECUTIVE-IN-CHARGE, OFFICE OF
CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF
VETERANS AFFAIRS
Mr. Neary. Good morning, Mr. Chairman, and members of the
committee, thank you. I am pleased to appear before the
committee today to discuss plans for the design and
construction of a new VA medical center in New Orleans. In
broad terms, the VA intends to construct a state of the art
hospital in the New Orleans metropolitan area requiring
approximately 1 million square feet to include 140 hospital
beds, outpatient clinic capacity to receive 410,000 visits per
year, a 60-bed nursing home, appropriate parking, and
mitigation features to protect the medical center against
natural and man-made threats. The VA presently has been
appropriated $625 million of which $300 million has been
authorized by the Congress, and we have requested the full
authorization be enacted during this session.
In February 2006 the VA and LSU entered into a Memorandum
of Understanding to establish a mutually beneficial
relationship to foster discussions regarding the future of VA
and LSU medical care. The MOU led first to the establishment of
a Collaborative Opportunity Study Group in March 2006 and then
a planning group in September 2006. Work of the study group
completed in June concluded that there were potential cost
savings associated with a joint medical complex. The planning
group then began to further develop the degree to which VA and
LSU should collaborate. The planning group's report is due in
September 2007.
Subsequent to receiving that report, VA and the State will
be positioned to make decisions on the extent of collaboration
going forward in both programmatic and physical terms. We will
then know specifically what will be built and by whom. In March
the Department determined that a review of alternative sites
would be undertaken. That search identified two viable sites
meeting all of the requirements. Ochsner Health Systems
proposed a site of about 50 acres approximately 4 miles from
downtown New Orleans. Later it was determined that only 28
acres were available, however. The New Orleans Regional
Planning Commission in conjunction with the city, State of
Louisiana, and several parishes proposed acquiring
approximately 34 acres downtown adjacent to the site of the
proposed LSU medical campus.
My full statement contains a map outlining the site search
and maps of the two sites. These two sites are currently under
evaluation. Each site is rated according to established
criteria, which includes such factors as proximity to
affiliated medical schools, proximity to veteran population,
access to highways and major streets, site characteristics
including wetland and flood plain status and the existence of
any environmental issues. In addition, VA has contracted to
study the site from the perspective of suitability for
construction and any characteristics which would impact the
cost at each location. We are particularly interested in the
potential for future flooding and what steps could be taken to
mitigate against a repeat of the flooding of 2005.
The VA is also required under the National Environmental
Policy Act to assess the environmental implications of locating
the new facilities at each location. A consultant will complete
the appropriate environmental studies in accordance with NEPA
and the Comprehensive Environmental Response, Compensation and
Liability Act. The construction of these facilities is a high
priority for VA. This is a large and complicated project,
however, that will take time to design and construct. Our plan
would enable construction to begin in February 2009 with
completion in July 2012. A graphic of a more detailed schedule
is included in my full statement.
That concludes my oral statement. I would like to add that
Congressman Melancon, in his opening remarks, asked that the VA
commit to brief the committee on a monthly basis so I would say
that we would be pleased to do that as long as that served the
committee's purposes. Thank you very much.
[The prepared statement of Mr. Neary follows:]
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Mr. Stupak. Thank you. Ms. Catellier, are you going to do
an opening statement?
TESTIMONY OF JULIE CATELLIER, DIRECTOR, SOUTHEAST LOUISIANA
VETERANS HEALTH CARE SYSTEM
Ms. Catellier. Mr. Chairman, thank you for the opportunity
to be here. We have made significant progress in the past 23
months in meeting veterans' health care needs. Three new
clinics opened in Slidell, Hammond, and St. John Parish, for a
total of six permanent outpatient facilities. Eighty percent of
our patients drive 30 minutes or less to receive their primary
and general mental health care, which are offered at every
location. Patients requiring complex care are referred to other
VAs or cares obtained within the community. Plans are
progressing to lease space for specialty care and ambulatory
surgery. The ability to perform in-house procedures and
surgeries will significantly reduce our costs. This year we
will spend nearly $25 million for purchased care compared to
$2.4 million pre-Katrina, a 10-fold increase.
Laboratory services have been enhanced and currently are
centralized in Baton Rouge. Pharmacy services exist at all our
clinics and a $3.5 million project for a new pharmacy in New
Orleans will be completed early next year. A diagnostic imaging
center will open in New Orleans this fall providing the full
range of radiology services. Dental care has been expanded to
two locations, and currently there are no patients on the
waiting list. In order to deliver patient focus, family-
friendly care, we tripled staff in our community and home care
program. This includes a unique hospital-at-home program where
clinician teams visit patients in their home to both shorten
hospital stays or to avoid the need for hospitalization
altogether.
The home-based primary care program has grown from an
average of 95 patients enrolled on any given day to 125, a 32
percent increase. This is one example of how VA is reinventing
care to meet the specialized needs of veterans post-Katrina. We
recently implemented a new program through an agreement with
our affiliate which allows VA physicians to admit and manage
the inpatient hospitalization of veterans at the Tulane
University Hospital. Veterans responded favorably to this
initiative because it allows them to remain near their families
in their communities while being treated by their personal VA
team. In the past month, 45 patients were admitted to this
program. To the best of our knowledge, this hasn't been done
elsewhere in the country.
Over half of our patients are diagnosed with a mental
health disorder. Specialized mental health programs, including
PTSD and substance abuse treatment are currently provided, and
we are still acquiring additional space to expand those
services. Psychiatric beds in metropolitan New Orleans are
critically limited. Therefore, VA patients requiring inpatient
care are most often transported by ambulance to VAs in
Alexandria and Shreveport. This year we expect to admit 225
patients for acute psychiatric hospitalization. A significant
challenge for our mental health programs is the loss of nine
psychiatrists or 41 percent of our pre-Katrina strength as a
result of relocation. Patients are grateful for the
Government's response and are seeking care with us in record
numbers.
We served over 30,000 veterans through June of this year.
Of those, over 4,000 were new. On average, 1,000 outpatients
are seen daily in our system. We project that by year end
35,000 will be treated. That is 90 percent of our pre-Katrina
level. There are currently 76 physician residents compared to
120 pre-Katrina. To maintain the stability of our residency
training programs and meet our obligation to educate America's
physicians, we are working with our academic affiliates to
place medical staff and residents at facilities throughout VISN
16 until our full clinical program's return. I would be remiss
if I didn't address the issue of recruitment and retention of
professional staff.
As a direct result of Hurricane Katrina, 57 physicians and
70 nurses left our employment. These losses and the subsequent
challenges and recruiting positions have resulted in delays in
some of our specialty clinics. Losses include 90 percent of our
orthopedists, over 60 percent of our otolaryngologists, half of
our ophthalmologists, neurosurgeons, and rheumatologists.
Lucrative recruitment packages have been drafted in an attempt
to attract qualified professionals. A recent offer for a
physician to move to New Orleans required a salary at the top
of the pay scale, 3 consecutive years of annual $30,000
recruitment incentives, and full moving expenses. The applicant
declined.
Louisiana veterans have every right to receive high quality
health care they deserve and have come to expect, and it is my
job to deliver it. Thank you for allowing me this opportunity,
and I look forward to answering your questions.
[The prepared statement of Ms. Catellier follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Mr. Williams, for your opening statement,
please, sir.
TESTIMONY OF CLAYTON WILLIAMS, DIRECTOR, URBAN HEALTH
INITIATIVES, LOUISIANA PUBLIC HEALTH INSTITUTE
Mr. Williams. Mr. Chairman and members of the subcommittee,
thank you for this opportunity to provide an update on the
stabilization and expansion of a coordinated system of primary
care clinics in the greater New Orleans region, and thank you
for all you have done thus far to support our rebuilding
efforts. The Louisiana Public Health Institute or LPHI is a
private, not-for-profit organization with a mission to promote
and improve the health and quality of life in Louisiana through
public-private partnering. As it relates to the recovery of the
health care delivery system, our focus has been on working with
health care providers with a mission or mandate to provide
access to everyone regardless of their ability to pay primarily
through its support of the partnership for access to health
care or PATH, which I have directed for the past 6 years.
If all the components of the health care system were
rebuilt as they were prior to Hurricane Katrina the people of
greater New Orleans will likely be doomed to the same poor
health outcomes that we have historically experienced, nearly
the worst in the country. There is evidence that suggests we
are even worse off than before the storm in some areas which
makes the situation even more urgent. Therefore, now is the
time to get it right and perhaps in so doing glean some lessons
that will be of value for the rest of the country. Working
closely with its partners, LPHI is striving to achieve a new
health care system with a foundation of a network of public and
private primary care clinics to facilitate access to the right
care delivered in the right place at the right time to advance
quality and reduce the cost of care.
We don't need to start from scratch towards this vision. In
the four-parish region there are currently 27 fixed site
primary care clinics of varying size and scope delivering
discounted services to everyone regardless of their ability to
pay. The heroic group of leaders that have managed to establish
these critical community resources in Katrina's wake should be
commended. Since January, 2006, these clinics provided for more
than 120,000 patient visits. While they have accomplished a
great deal after Katrina, they are still in need of much
support as they expand to meet the growing needs. We estimate
that 35 additional primary care physicians will be required to
meet the needs of the uninsured in the four-parish region.
Since the March 13 hearing, the Federal Government has done a
remarkable job of addressing the need for primary care.
The announcement of the $100 million primary care access
and stabilization grant on May 23 is evidence of the
extraordinary work done by the subcommittee, HHS, including
officials from CMS, HRSA, and SAMHSA to address this concern.
We offer our sincere thanks to all in the Federal Government
who made this happen. After responding to a public
announcement, LPHI was chosen as the State's local partner in
administering the grant, and I serve as the director of this
program for LPHI. Since the announcement of the grant, LPHI,
DHH, and HHS have worked steadily and tirelessly to put the
pieces in place.
As a result, we anticipate that the first payments to
stabilize these clinics will be awarded by September of this
year. The principal goal is to demonstrate increased access to
primary care, behavioral health care, and related services.
This grant represents an opportunity to do much more than
simply distribute funds to primary care clinics assuming we can
work together to address the many other areas of need. As the
State's local partner administering the grant, LPHI is
committed to establishing robust administrative systems to
insure Federal funds are spent appropriately, working to
advance the goals of the grant in an inclusive and transparent
way with all major stakeholders, maximizing opportunities to
insure the grant program is designed as a bridge to a well-
organized and sustainable system of care and providing
technical assistance and incentives to advance quality and
efficiency.
LPHI takes very seriously its role as steward of taxpayer
dollars, and therefore we will request an opportunity to share
our proposed fiscal controls for up front review by the HHS
Inspector General. And we and our partners have several areas
of need that will have to be addressedto insure our success in
alleviating the health care issues that persist in the region.
LPHI will require assistance in either gaining approval for use
of grant dollars to establish necessary health information
systems or in securing additional funding for this purpose.
Robust, standardized, fully implemented and network information
systems need to be in place in the participating primary care
clinics if we are to be successful in achieving, measuring, and
reporting results as required in the terms and conditions of
the grant.
Despite this reality, health information systems are not
allowable expenses under the grant terms and conditions. There
are other opportunities to build mechanisms into the grant to
help drive the development of a high quality, organized, and
sustainable system of care. LPHI, DHH, and our partners will
require continued flexibility from HHS as these program
components are developed, so we can maximize the opportunities
to build in incentives and performance requirements. Accessible
and high quality primary care is an important part of a health
system but good primary care must include linkages to timely
diagnostic, specialty, and inpatient services, and there are
several looming concerns in the health care system beyond
primary care that I would like to express.
We strongly emphasize the importance of continued and
enhanced attention to helping alleviate critical health care
workforce shortages; No. 2. flexibility in establishing payment
mechanisms for necessary specialty care providers; No. 3,
insuring the viability of our community hospitals; and, No. 4,
providing support for the development of a new academic medical
center to serve the region. In conclusion, it has been an honor
and a privilege for LPHI to participate in today's hearing.
Thank you for your outstanding leadership and responsiveness,
and for your continued support of our efforts to rebuild a
healthier, greater New Orleans. I welcome your questions.
[The prepared statement of Mr. Williams follows:]
Testimony of Clayton Williams
Mr. Chairman and members of the subcommittee, thank you for
this opportunity to provide an update on the stabilization and
expansion of a coordinated system of primary care clinics in
Greater New Orleans, and thank you for all you and the Congress
have done thus far to support our rebuilding efforts.
I. Louisiana Public Health Institute (LPHI) Background
The Louisiana Public Health Institute was established in
1997 and is one of 25 Public Health Institutes nationally. LPHI
is private not-for-profit organization with a mission to
promote and improve the health and quality of life in Louisiana
through public-private partnering at the community, parish and
state levels.
LPHI maintains a population-level focus on health
improvement, and recognizes the relative importance of
addressing all determinants of health through its programming--
from social, to environmental, to the influences that can be
realized through the healthcare delivery system. LPHI places an
emphasis on promoting equity and reducing racial and economic
disparities in health outcomes.
As it relates to the recovery of the healthcare delivery
system in Greater New Orleans, our focus has been on working
with healthcare providers with a mission or mandate to provide
access to everyone regardless of their ability to pay. For the
past six years, LPHI has advanced its work in this area
primarily through its support of the Partnership for Access to
Healthcare (PATH), which includes most of the public and
private healthcare providers in the region that have
historically provided healthcare to people falling below 200
percent of the Federal Poverty Level.
Since the day after Katrina and the breaches in the levy
system that caused catastrophic flooding throughout the region,
LPHI has been very active in recovery. In partnership with
governmental, non-profit and private sector stakeholders at all
levels, LPHI has:
<bullet> Convened the Greater New Orleans Health Planning
Group which created the first comprehensive framework for
rebuilding the health system of the region (Framework for
Rebuilding a Healthier Greater New Orleans);
<bullet> Created StayHealthyLA.org in partnership with the
Louisiana Department of Health and Hospitals;
<bullet> Conducted operations for the Louisiana Health and
Population Survey on behalf of the LA Department of Health and
Hospitals and the LA Recovery Authority, the first household
population survey of parishes most affected by hurricanes
Katrina and Rita (with technical assistance from the U.S.
Census Bureau and the US Centers for Disease Control and
Prevention); and
<bullet> Following the immediate aftermath, supported the
recovery of community-based healthcare services (PATH and the
Health Services Recovery Council), school-based health centers
(School Health Connection) and behavioral health services
(Behavioral Health Action Network).
II. Primary Care Recovery and Expansion In the Greater New Orleans Area
If all components of the health system were rebuilt as they
were prior to Hurricane Katrina, the people of Greater New
Orleans will likely be doomed to the same poor health outcomes
that we have historically experienced--nearly the worst in the
country. Therefore, we agree with all previous major consensus
planning efforts that NOW is the time to get it right, and
perhaps in so doing glean some lessons that will be of value to
the rest of the country. It is not too late to achieve this if
we stay aligned at the local, state and Federal levels in our
pursuit of healthcare equity, quality and efficiency for the
people of Greater New Orleans.
LPHI holds a fundamental belief in a healthcare system with
a foundation of a public/private network of neighborhood-based
primary care clinics to facilitate access to the right care,
delivered in the right place at the right time to advance
quality and reduce the cost of care at all levels. These
neighborhood clinics should be portals to diagnostic,
specialty, and acute care, and be linked to other supportive
services through a coordinated system, and be under-girded by
robust information systems. Advancing this vision is central to
our approach to rebuilding.
The Greater New Orleans region does not need to start from
scratch to advance towards this vision. In the four-parish
region, there are currently 27 fixed-site primary care clinics,
of varying size and scope, delivering discounted services to
everyone, regardless of their ability to pay. Most have been
participants in the collaborative efforts of PATH's Regional
Ambulatory Planning Committee which is staffed and supported by
LPHI. These clinics include federally Qualified Health Centers,
school-based health centers, hospital-based clinics of the
Medical Center of Louisiana, university sponsored primary care
clinics, private not-for-profit health centers, and faith-based
organizations.
The heroic group of leaders that have managed to establish
these critical community resources in Katrina's wake should be
commended. Since January 2006, these clinics provided for more
than 120,000 patient visits.--In addition to primary
healthcare, they provide preventive health services, obstetrics
and gynecology, behavioral health, and some specialty care.
While they have accomplished a great deal since Katrina, they
are still in need of much support as they expand to meet the
growing needs of the people of the region. We estimate that 35
additional primary care physicians will be required to meet the
needs of the uninsured in the four-parish Greater New Orleans
area.
III. LPHI's Administration of the Primary Care Access and Stabilization
Grant
The March 13, 2007 testimony to this Subcommittee from
stakeholders at all levels emphasized the need for resources to
support primary care for the people of Greater New Orleans,
with an emphasis on the low-income un- and under-insured. Since
those hearings, the Federal Government has done a remarkable
job of addressing short-term stabilization needs and continuing
efforts to expand existing primary care clinics. On May 24, the
Secretary of the Louisiana Department of Health and Hospitals
(DHH), Dr. Cerise, received a letter from the Acting
Administrator of the US Center for Medicare and Medicaid
Services (CMS), the Honorable Leslie Norwalk, announcing the
availability of $100 million to stabilize and expand primary
care clinics and behavioral health services. The announcement
of the Primary Care Access and Stabilization Grant availability
is evidence of the extraordinary work done by the Congress,
this Subcommittee, and the Department of Health and Human
Services, including officials from CMS, Health Resources and
Services Administration and the Substance Abuse and Mental
Health Services Administration to address this concern of the
people of Greater New Orleans. We in Greater New Orleans would
like to offer our sincere thanks to all in the Federal
Government who made this happen.
By responding to a public announcement, the Louisiana
Public Health Institute was chosen as the State's local partner
in administering the grant, and I serve as the director of this
program for LPHI. Since the announcement, LPHI, DHH and HHS
have worked steadily to put the pieces in place, and we have
reached the following critical milestones:
<bullet> LPHI was chosen as the state's local partner in
administering the grant.
<bullet> An application to CMS was completed and submitted
by DHH with assistance from LPHI.
<bullet> The Cooperative Endeavor Agreement between LPHI
and DHH has been fully executed.
<bullet> HHS issued the official Notice of Award on July
23, 2007.
<bullet> The eligibility screening process and methodology
for determining initial base payments to clinics has been
finalized.
<bullet> LPHI released the Request for Applications to
participate in the grant on July 27th, and a public meeting to
address questions about the grant program and application
process is scheduled for August 3, 2007.
In the midst of the State's Legislative Session, the DHH
staff worked tirelessly with LPHI to put critical elements in
place to ensure timely distribution of funds to stabilize the
primary care providers of the region. It is anticipated that
the initial base payments to clinics will be announced by
September of this year.
The principal goals of the Primary Care Access and
Stabilization Grant are to demonstrate increased access to
primary care, behavioral health care, and other related
services; and to ensure greater numbers of low income un- and
under-insured individuals are being served in Orleans,
Jefferson, St. Bernard and Plaquemines parishes.
In its role as the State's local partner in administering
the Primary Care Access and Stabilization Grant, LPHI has
committed to: Establish robust administrative systems and
controls to ensure the Federal funds are spent appropriately by
all sub-recipients to achieve the goals of the grant;
<bullet> Work to advance the goals of the grant in an
inclusive and transparent way with all major stakeholders;
<bullet>Pursue complementary resources to maximize the
impact of Federal grant funds towards improving the health of
the people of Greater New Orleans as they return;
<bullet> Maximize opportunities to ensure the grant program
is designed as a bridge to a well-organized and sustainable
system of care for the people of Greater New Orleans;
<bullet> Provide technical assistance and incentives to
advance quality and efficiency among participating sub-
awardees; and
<bullet> Regularly convene forums among sub-recipients for
region-wide health planning and coordination.
This grant represents an opportunity to do much more than
simply distribute funds to primary care clinics. Working
closely with the healthcare providers in the region and DHH, we
are committed to building in mechanisms that will help create
an organized system of care that continue to serve the people
of the region well beyond the three year grant period (granted,
many other areas of concern for the healthcare system must be
successfully addressed concurrently if we are to be
successful).
With this in mind, LPHI intends to use a portion of its
administrative budget and other complementary resources to
establish a Scientific Advisory Committee made up of local and
national experts to anchor this program in best practices as
the program is designed and implemented. In addition, we will
continue to convene a stakeholder group to provide a mechanism
for input on critical program decision-making, allow for
regular communication among sub-grantees, and provide a forum
for data-driven planning as sub-grantees grow primary care
capacity in the region.
LPHI takes very seriously its role as steward of taxpayer
dollars. Therefore, we will request an opportunity to share our
proposed fiscal controls and program integrity plans for up-
front review by the Department of Health and Human Service's
Inspector General. As a responsible public health agency, we
believe a pinch of prevention is worth a pound of cure in
administration as well as healthcare delivery.
IV. Moving Forward
We have several areas of need that will need to be
addressed to ensure our region's success in alleviating the
healthcare issues that persist in the region:
We will require assistance in either gaining approval for
use of grant dollars to establish necessary health information
systems, and/or in securing additional funding for this
purpose. Robust, standardized, fully implemented and networked
information systems need to be in place in the participating
primary care clinics if we are to be successful in achieving,
measuring and reporting results as required in the terms and
conditions of the grant. Despite this reality, health
information systems are not an allowable expense under the
grant terms and conditions.
There are at least two more opportunities to build
mechanisms into the Primary Care Access and Stabilization
Ggrant to help drive the development of a high quality,
organized, and sustainable system of care for the uninsured in
the region. One is the development of the sub-contracts between
LPHI and the participating clinic sub-awardees, and the other
is the design of the methodology for making supplemental
payments to them. LPHI and DHH will require flexibility from
HHS as these program components are developed so we can
maximize the opportunities to build in incentives and
performance requirements that will help us improve access to
sustainable high quality and comprehensive primary care.
Accessible and high quality primary care is an important
part of a high performing health system, but good primary care
must include linkages to timely diagnostic, specialty and
inpatient services. There are several looming concerns in the
healthcare system beyond primary care that I would like to
express. We strongly emphasize the importance of: 1) continued
and enhanced attention to helping Greater New Orleans alleviate
critical healthcare workforce shortages; 2) flexibility in
establishing payment mechanisms for necessary specialty care
providers; 3) ensuring the viability of our community
hospitals; and 4) providing support for the development of a
new academic medical center to serve the region.
It has been an honor and privilege for LPHI to participate
in today's hearing. Thank you for your outstanding leadership
and responsiveness in the months since the March hearings, and
for your continued support of our efforts to rebuild a
healthier Greater New Orleans. I welcome your questions.
----------
Mr. Stupak. Thank you. Ms. Boyle, your opening statement,
please.
TESTIMONY OF KIM M. BOYLE, CHAIRMAN, HEALTH CARE COMMITTEE,
LOUISIANA RECOVERY AUTHORITY
Ms. Boyle. Chairman Stupak, Ranking Member Whitfield,
members of the subcommittee, at this critical time in the
rebuilding of the great city of New Orleans, it is an honor and
privilege for me to testify this morning as a volunteer member
of the Board of Directors of the Louisiana Recovery Authority
as Chair of the LRA's health care committee, but also as a
life-long resident of New Orleans. Thank you for the
opportunity to bring to your attention the most pressing issues
to address as we all work with your critical assistance to
rebuild a sustainable health care system in the New Orleans
region. Consistent with Congressman Melancon's inquiries, I
cannot stress enough the monumental importance of the planned
joint Medical Center of Louisiana in New Orleans and the
Veterans Affairs medical center in downtown New Orleans to the
sustainability of our health care system to the delivery of
quality health care services to our citizens, and to the
overall recovery, and more importantly rebuilding of our
community.
Second, we continue to need your help to address the
immediate barriers that continue to plague the comprehensive
restoration of health care services in the New Orleans region.
As all of you are aware, Katrina was by far the single most
devastating disaster in American history and Rita ranks third
on the all time list, 1,500 lives lost, 1.3 million American
citizens displaced, 200,000 homes destroyed, and 64,000 people
who remain in FEMA trailers. The storms and the failure of the
Federal levee system caused an estimated $100 billion in
damages to homes, property, businesses, and infrastructure in
Louisiana alone. Federal investments in Louisiana's recovery
have been generous and crucial, and I would like to personally
thank all of you and the members of the subcommittee for your
persistent and consistent support of Louisiana's recovery.
However, considerable needs remain unfunded. Federal
commitments total $110 billion for recovery and rebuilding in
five of the Gulf Coast States that were impacted by Katrina,
Rita, and Wilma. Out of this $110 billion a little over $60
billion was committed to Louisiana but half of that was used to
fund immediate disaster relief services and insurance payments
to policy holders under the National Flood Insurance Program.
$26.4 billion is available to Louisiana for rebuilding critical
services and infrastructure. Unfortunately, that is far short
of our needs in such an unprecedented catastrophe. Therefore, I
am here today to address what we can and should do to get the
New Orleans region's health care system on its feet. I do not
believe that anyone can dispute that the health care system's
speedy, comprehensive, and sustainable recovery is of paramount
importance to the future of the city and to south Louisiana
itself. Uncertainty and blunt concerns about health care access
has slowed our recovery, as well as rebuilding an undermined
public confidence about the ability to return home.
Business owners will not bring investments and employees to
a city without available health care services. The citizens
will not bring their children, elderly parents and family back
absent available health services. As all of you are aware, the
LRA's mandate from the beginning is building a stronger, safer,
and better Louisiana, and the plans for a joint MCLNO as well
as be a medical center in downtown New Orleans is a recovery
project without peer and is without question the best option
for the people of our city and the surrounding region.
Congresswoman Blackburn referred to an agreement to move
forward. The joint medical centers are integral to three
critical elements of community recovery and the benefits of
their co-location are innumerable.
First, to address Congressman Melancon, the joint
facilities will serve as critical providers of high quality,
primary and specialty health care, and the MCLNO will also
offer the region's only level 1 trauma center, and will be home
to inpatient psychiatric care that is accessible by veterans.
As a member of the LRA and as a resident of New Orleans where I
grew up and I continue to live today, I am very concerned that
not relocating the VA to downtown New Orleans will negatively
impact the citizens of our region including our veterans, who
do not have the means to travel to other areas for treatment.
I am also concerned that relocating the VA could be
destructive to the quality of care and diversity of treatments
available at each institution by eliminating the sharing of
LSU, Tulane, and VA physicians that were so prevalent before
Katrina. The Louisiana American Legion specifically recognized
veterans who have been the beneficiaries of the close proximity
and the walking distance between the MCLNO and the VA downtown,
as well as beneficiaries of their joint medical research and
teaching. The facility, second, will anchor the region's
medical education including the LSU and Tulane medical schools,
graduate medical education, which many of you have addressed,
and research programs dependent on shared clinical space in
MCLNO and the VA.
Relocation of the VA would have a devastating impact on
medical education and research as well as the economy of the
city of New Orleans. Third, consistent with our philosophy of
rebuilding better and stronger the long-term economic revival
and diversity of the New Orleans region is dependent upon the
MCLNO and VA facilities serving as the clinical cornerstone of
the emerging downtown biomedical district. This will stabilize
this area. The plans include the development of a 60,000 square
foot biomedical research incubator and an $86 million Louisiana
cancer research center, which is a collaboration between LSU,
Tulane, and Xavier, which will be located adjacent to the new
joint hospitals.
Now let me paint a different picture. The failure of the VA
to return as a partner in the downtown biomedical district
could condemn a viable economic engine to an embarrassing urban
blight of abandoned empty buildings and have a devastating
impact on our economy. Losing the VA medical center as a
cornerstone of the biomedical district downtown will leave
central New Orleans with a dark future. For all the reasons I
have listed, what matters is that the pertinent leadership, a
broad range of stakeholders, and the citizenry at large agree
on what is best. Governor Blanco and the legislature have made
good on their commitment to this project and a diverse set of
community leaders have joined these State officials in strong
vocal support for this project which include the American
Legion, the Secretary of the Louisiana Department of Veterans
Affairs, the New Orleans Regional Planning Commission, as well
as the mayor, the Council, the Chamber, and many, many other
groups.
The citizens of New Orleans have also independently
identified the joint medical centers as critical to recovery
and have prioritized this initiative in the UNOP Plan, Unified
New Orleans Plan, the Louisiana Speaks Regional Plan. Finally,
I cannot emphasize enough what damage would be inflicted on the
progress of community recovery and the public psyche and
confidence if this partnership falls through. Our citizens are
focused on rebuilding, not building back what was there before
these devastating hurricanes, but rebuilding stronger, safer,
and better to benefit the community. It is clear that
rebuilding the VA medical center downtown would have the best
and most positive impact on community recovery and public
confidence in the future of this great city and state. Mr.
Chairman and members of this committee, thank you for your time
and attention today. I look forward to working with you as we
advance the resurrection and rebirth of one of America's
treasured regions. Thank you.
[The prepared statement of Ms. Boyle follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you. I want to recognize the delegate,
Donna Christensen, who is with us. She is not a member of our
committee but she has been an ardent supporter of rebuilding
the Gulf Coast regions, especially in the area of health care.
She is a member of the Democratic task force. We appreciate
your interest and being here with us today. Gene Green was
here. He had to leave. Again, we are going to be going back and
forth because we are in SCHIP on the floor today. Right now we
have two votes. It is probably going to take us about 15
minutes. Let us recess for 15 minutes. We will be back and then
we will start with questions with this panel. Hopefully it is
not a day where we are going to be bound around all day because
of procedural votes on the floor and we can get to our
questions. Fifteen-minute recess. Thank you.
[Recess.]
Mr. Stupak. For questions, Mr. Melancon is going to start
off, 5 minutes, and we will probably go more than one round. Go
ahead.
Mr. Melancon. Thank you, Mr. Chairman. Let me start, if I
could, with Mr. Neary. If you would, the first thing I need to
ask you, and there has been politics being played with this VA
Charity mess and what is going on with the site location and
all; I would like to ask you very honestly, have there been
people from the Hill, senators or representatives, that have
called and injected their opinions as to how the VA should be
proceeding in any way, shape or form, to your knowledge?
Mr. Neary. Mr. Melancon, there has been a significant
interest from the Louisiana delegation, of course, urging the
VA to proceed as rapidly as possible to reach a conclusion. And
other members of our oversight committees, I think have in
hearings and by letter, I think, have urged the VA to take
action to move as swiftly as possible to replace the VA medical
center.
Mr. Melancon. Has there been any one specifically directing
or trying to instruct you as to what to physically do with that
facility?
Mr. Neary. Not that I am aware. I am not aware of any
specific effort to direct us what to do with the facility.
Mr. Melancon. I would appreciate it if you would check with
the people in your office and find out. I don't think that is
necessarily and totally true, that no one has been
interjecting. You outlined that the VA is currently evaluating
two sites, one in downtown New Orleans and the other in East
Jefferson. On pages 5 and 6 of your testimony you outline a
number of criteria that would be used to evaluate those two
sites. Nonetheless, how does the VA intend to measure the cost
to the psyche of the city if you choose to abandon the downtown
location and move to a different parish? Isn't there
significant value that must be ascribed to the decision to
locate downtown? Doesn't this send a positive message that the
Federal Government is willing to commit to rebuilding in the
city? Similarly, what is the cost associated with moving the
hospital to Jefferson Parish? Aren't you really saying you
don't have faith in the city, the levees, maybe the Corps of
Engineers or their ability to rebuild if you make that
decision? And how are you accounting for the costs associated
with the message that such a choice would send to the
community? And let me preface before you say that I had not
really intended on injecting myself into this debate but the
more I look at it, I think as Ms. Boyle states, it is a recipe
for disaster to start stripping the economic engines out of the
heart of New Orleans.
I have a lot of respect for the people and the elected
officials and such of Jefferson Parish. They were very
fortunate in a comparative way than were Orleans, and I just
don't think that we ought to be playing political politics with
a facility as important as the VA hospital. If you could
respond to my question, please.
Mr. Neary. Certainly, Mr. Melancon, thank you for that
question. I think the best way for me to respond is to say that
I am certainly not an expert in urban development and what
contribution or project in the downtown area might make, but I
certainly respect the opinions of a number of people who are
here today who express the view that this project is critical
to be in the downtown area. We do not have a cost or a value at
this point that we think would contribute negatively or
positively to a decision to locate elsewhere other than the
downtown site, but we certainly recognize the value as has been
said by others here of our association with the medical
schools, Tulane, Louisiana State University, and literally
medical schools all over America where we have close
affiliations. We understand that value to the VA and will not
lose sight of that as we move forward.
Mr. Melancon. I have a letter here to Mr. Nicholson from
the Governor, the legislature, the mayor, university
presidents, and on down the line in Louisiana stating what they
want. That is why I am still questioning why we are still
debating it. Ms. Boyle, do you have any comments on what is
going on with it?
Ms. Boyle. Thank you, Congressman. I guess my primary
comment would have been to focus on the letter that you have. I
think that is the July 27 letter that is signed by Governor
Blanco, Mayor Nagin, members of the city council, but more
importantly for purposes of what the relevant stakeholders
actually want is the fact that the American Legion, in its June
convention, unanimously passed a resolution saying that they
wanted the downtown site because of the synergy between the VA
hospital as well as LSU and Tulane being there, as well as the
fact that Major General Hunt Downer, who is head of the
Louisiana's Department of Veterans Affairs, has signed on to
that letter as being critical.
So I think if you look at what the citizens of New Orleans
want as reflected in the UNOP plan what members of the State
citizenry wants as reflected in Louisiana Speaks but more
importantly as what the elected leadership appoints leadership
and people actually represent what veterans want, I think the
downtown site makes the most sense from every shape, form or
fashion economically, delivery of quality health care, and more
importantly the synergies that exist between those two medical
graduate education programs, the VA hospital, and then the
upcoming Louisiana Cancer Research Center.
Mr. Melancon. What message do you think would be sent by
not putting the facility down there?
Ms. Boyle. I think the message that will be sent to the
citizens of New Orleans will be extremely damaging and
devastating. The citizens believe that this is something that
needs to happen. And I know you are aware of this fact,
Congressman Melancon, but in the UNOP Plan, United New Orleans
Plan, that was the No. 1 priority. That was the only thing that
was unanimously agreed upon by the thousands of citizens who
participated in that neighborhood planning process that we
needed to have the VA in conjunction with Tulane and LSU
downtown. And I think if the VA bluntly pulls out and moves to
another parish, it will be extremely damaging to our public
confidence in rebuilding the city to our psyche in rebuilding
the city, and it will be very detrimental to the economic
vitality of the city of New Orleans.
Mr. Melancon. Mayor, I have let you sit quietly too long.
What are your comments about this?
Mr. Nagin. Congressman, it is obvious that this is a
significant economic tool for the city of New Orleans, and for
the reason if they were to leave and not come downtown, I think
it has the potential to cause a domino effect that would
threaten maybe LSU's need for a teaching hospital downtown,
which could further threaten Tulane University's will to stay
downtown. It could start a domino effect that could decimate
our medical district. Just the construction costs of this
facility alone are estimated to be at least $600 million.
And the combined LSU and VA hospital could create 20,000
jobs. If LSU and the VA leave, I think there are estimates that
there are at least 4,000 to 5,000 related families that would
move from the downtown area. It would be devastating, and it
would be very counter to the President's pledge in Jackson
Square that said he would do everything it took to rebuild the
city of New Orleans.
Mr. Melancon. Thank you. Mr. Neary, this letter that was
addressed to the VA from all the players that are affected, or
not all of them but the major players in Louisiana are saying
this is what we want. There was, I understand it, at one point
some question about a plan or putting up the money, the State
has put up their money, so they put their money where their
mouth is. How soon can we move to get this thing started and
why do we need to keep studying?
Mr. Neary. Sir, as I indicated in my statement, we are
required by law to complete environmental due diligence. We are
doing that now and----
Mr. Melancon. If you were building a new facility, not
replacing a facility.
Mr. Neary. This facility that we are planning to build,
whether we build it on the original 37 acres that LSU and the
State had identified, whether we were to build it on the
adjacent parcel that has been proposed or elsewhere, we are
required to comply with those environmental laws and are in the
process of doing that.
Mr. Melancon. So how long before you are going to get that
completed so you can break ground?
Mr. Neary. That takes about 4 months to complete.
Mr. Melacon. So that will put us about January when you
will be ready to break ground?
Mr. Neary. Well, no, sir. The facility will require design.
First of all, there needs to be an acquisition of the property.
Mr. Melancon. I will take just an announcement in January
then.
Mr. Neary. I would hope that there can be an announcement
before January personally.
Mr. Melancon. That would be better. We look forward to an
October hearing maybe. Thank you.
Mr. Stupak. Mr. Whitfield, questions?
Mr. Whitfield. Thank you. Mayor Nagin, I know that you and
Ms. Boyle both stress that the No. 1 priority that you would
have is locating the VA hospital in downtown New Orleans. And
we all certainly understand the sense of frustration that you
have had as the mayor and other people have had working on this
issue in New Orleans. But if you were asked to list two or
three things in addition to locating a VA hospital in New
Orleans that you think would be most beneficial and helpful to
improving the health delivery system in New Orleans, what would
those be?
Mr. Nagin. To improving the health care delivery system?
Mr. Whitfield. Yes.
Mr. Nagin. Besides the VA and the LSU complex, I am very
concerned about our private hospitals, and their inability to
get uncompensated care done on a timely basis and at a
reasonable compensation level. That to me is threatening the
entire system in a different way but it is equally as
devastating because many of our private hospitals are funding
this care on their balance sheets. The second area that I would
also ask for assistance is if there was a national call out to
physicians and experts in the medical field that could come
down and provide the critical services and fill the gaps that
we would need on a year or 2-year basis and if there was some
type of program to accommodate that.
Mr. Whitfield. So when you say on a timely basis you are
really referring to the fact that there are not enough
physicians or health care workers there to actually see people
today?
Mr. Nagin. Yes, sir.
Mr. Whitfield. So there are not enough providers to meet
the needs right now?
Mr. Nagin. Yes, sir.
Mr. Whitfield. Now, Ms. Boyle, would you agree with the
assessment, if I were to ask you to list two or three things
that need to be done immediately to help improve the situation
other than locating the VA hospital in New Orleans, what would
you say?
Ms. Boyle. Yes, Congressman Whitfield, I would agree with
the mayor's assessment, and I guess I would phrase it as such.
The labor shortage, I think, is extremely dramatic. I think Dr.
Cerise spoke about that a little bit during his testimony, and
I think on the second panel that will be discussed in more
detail, but the labor shortage is really the root cause of the
deficient capacity as well as the mounting financial pressure
that plagues the region's health care system. And it is a
problem on all levels. Many of our elderly people, and I have
elderly parents who are back in the city with me, many of our
elderly citizens are having a hard time accessing good quality
health care, not through any fault of the hospitals that are
providing care. I think they are doing a yeoman's job and they
are going almost above and beyond the call of duty, but there
is a very, very strong labor shortage.
The mayor talked about the UCC issue. There is also the
issue of community-based primary care which Mr. Williams can
address certainly in more detail than I can, but for many of
our citizens, I think that is going to be critical to
rebuilding because, as you know, prior to the storm many of our
citizens had to access emergency care through what is called
the Charity, and we need to move away from that system into
having the community-based primary care system and the graduate
medical programs which obviously Dr. Miller and Dr. Hollier
will talk about on the second panel.
Mr. Whitfield. Now how many community health centers are
operating right now in New Orleans?
Ms. Boyle. I am going to defer to Mr. Williams on that
number, sir.
Mr. Williams. In the four-parish region there are 27
primary care facilities, and there are mobile units as well.
Mr. Whitfield. How many community health centers?
Mr. Williams. How many federally-qualified centers?
Mr. Whitfield. Yes.
Mr. Williams. I need to get back to you with that exact
number.
Mr. Whitfield. OK. Now, Mr. Williams, your organization is
the one really responsible for the dispensing of the $100
million in DRA funds, is that correct?
Mr. Williams. In partnership with the Department of Health
and Hospitals, yes.
Mr. Whitfield. And how does the disbursement work? Have you
received the $100 million yet or is it in dribbles?
Mr. Williams. We received the notice of grant award, or the
State received the notice of grant award, from HHS on July 23.
So next week, and we have already publicly announced it to the
providers of the region. We are having a public meeting on
Friday. We will have all of the applications for eligibility by
the end of next week, and hopefully have funds to those
providers by September.
Mr. Whitfield. But the official announcement was only on
July 23?
Mr. Williams. The notice of award from the Federal
Government was on July 23. There was quite a bit that had to
happen behind the scenes in order to make that possible.
Mr. Whitfield. Thank you.
Mr. Stupak. Thank you, Mr. Whitfield. Mr. Neary, if I may
go to exhibit No. 18 in the black book. This is the July 27,
2007, letter that Mr. Melancon mentioned that we have been
talking about here. It seems like it is signed by every leader
in Louisiana saying, ``put this VA hospital downtown.'' My
question is, who is going to respond to this letter, and who
makes the decision whether or not the VA hospital goes
downtown?
Mr. Neary. When we complete the environmental review work
and we have----
Mr. Stupak. No, no. Who makes the decision whether the VA
hospital goes downtown?
Mr. Neary. The Secretary of Veterans Affairs.
Mr. Stupak. So right now that would be Mr. Nicholson,
right?
Mr. Neary. Yes, sir.
Mr. Stupak. So we should be going after Mr. Nicholson to
get this thing moved, right?
Mr. Neary. And I have spoken with Mr. Nicholson recently.
He is very anxious to move this project forward as quickly as
possible.
Mr. Stupak. Then why are you looking at two sites? Why
aren't you just looking at the downtown site for your
environmental aspect? Why do have to look at two sites and
waste money? Everyone is telling you to put it downtown but you
are looking at a different site.
Mr. Neary. Sir, there was a point in time when the site at
Canal and I-10 that had been identified by the State prior to
the storm, it became evident that that site was simply not
workable. It doesn't have sufficient----
Mr. Stupak. That was before the storm. We are talking about
after the storm.
Mr. Neary. After the storm----
Mr. Stupak. They are all saying go downtown, so why are we
looking at another site?
Mr. Neary. The studies that are going on both in terms of--
--
Mr. Stupak. That is just wasting time. If everyone says you
go downtown why don't you study downtown and see if you can go
there. If it doesn't work, then go. If I follow your timeline
the soonest we are going to have a VA hospital in New Orleans,
is 5 years, and that is if everything goes well. We know how
quickly the Government moves. So it will be more than 5 years.
It will probably be 10 years. So why don't we just cut to the
chase, why don't we start studying this site that everyone
agrees upon. The State of Louisiana has said we will put up the
$300 million because the CDBG money last time when we were in
New Orleans having our hearing in January 2006 HUD started
screwing around with the money there. So New Orleans said we
are sick of this game. We will give you the 300, we will put
down the 300. We are willing to build it. We want it downtown.
So why do we have these continual delays?
Mr. Neary. Under the law the Secretary is not permitted to
make that decision----
Mr. Stupak. But the law doesn't say the Secretary has to
look at two sites. He can look at one site if he wishes.
Mr. Neary. Agencies are strongly encouraged to look at all
available options when----
Mr. Stupak. The law doesn't say strongly encourage. The law
doesn't say you have to look at more than one site, does it?
They just have to do a NEPA study on the proposed site,
correct?
Mr. Neary. That is correct.
Mr. Stupak. When will that NEPA study be done?
Mr. Neary. Approximately 4 months.
Mr. Stupak. All right. It can't be done any sooner than
that?
Mr. Neary. The studies normally take 6 to 8 months, and we
have it on an accelerated basis.
Mr. Stupak. All right. Let me ask Mr. Williams. Mr.
Williams, you said there is $100 million that was pledged to
this area for the Louisiana LPHI. That is what you run, right?
Mr. Williams. Louisiana Public Health Institute, LPHI.
Mr. Stupak. LPHI. You said they should be seeing some of
that money by September?
Mr. Williams. Yes, if we stay on the schedule.
Mr. Stupak. When the mayor says I haven't seen any money,
the $100 million he is talking about, it is coming through your
organization, right?
Mr. Williams. That is correct.
Mr. Stupak. So after September 1, 30 days or so, the mayor
should see some money, right?
Mr. Williams. Yes. They are already determined eligible.
Mr. Stupak. Do you anticipate any roadblocks, any problems
with moving that money?
Mr. Williams. No.
Mr. Stupak. Is it real money or is it funny money? Do you
actually have it coming to you or do you have to start applying
for paperwork as of September 1 to get the money?
Mr. Williams. We have a contract with the State, and the
notice has come from the Federal Government. We need to get the
State legislature to budget the money through their process,
and that is going to happen in the middle of August. Then we
need to establish a contract with the city of New Orleans and
there shouldn't be any further delay. They have $4 million
carved out of the $100 million that they are already determined
eligible for us, so it shouldn't--I don't anticipate any
roadblocks.
Mr. Stupak. OK. So September 1 we should see some money
flowing to the mayor. Ms. Richter, there has been some
testimony, and there will be some later today, in particular
one CEO has provided written testimony to this committee
regarding the impending financial pressures they are facing,
and in that statement they say due to the continued closure of
Charity Hospital, as well as several other hospitals, these
five hospitals provide 95 percent of the hospital-based
services in the metropolitan area. The five hospitals expect a
combined loss of $135 million in 2007. This loss will grow to
$405 million in 2009. What does Secretary Leavitt think of
those numbers?
Ms. Richter. I think, as I said, we are concerned about
that. We want to understand better----
Mr. Stupak. You are concerned, but what are you going to do
about it? We are all concerned. But you have some power to do
something. What are you going to do?
Ms. Richter. Our short-term response really was in the
provider stabilization grants that we already----
Mr. Stupak. That was short term. We are 2 years out from
this hurricane. What are we doing to help alleviate this? You
have talked increased costs. Have you provided more money for
increased labor costs? Nurses are more expensive, physicians
are more expensive, insurance to even insure the hospital has
gone sky high. Have you looked at any of these to do something?
You mentioned in your testimony there are waivers that could be
given but you haven't provided any other than the initial
waivers. Why can't we continue these waivers? This area is
still being devastated.
Ms. Richter. Are you referring to the GME waivers?
Mr. Stupak. GME, a couple others you had, the DSH
hospitals, all these waivers that HHS controls. It seems like
it is pulling teeth every time you come here. You say you look
at it. We get a nice letter saying we are going to respond and
nothing ever happens, and now you see hospitals losing $405
million by 2009. They can't stay open like that.
Ms. Richter. I myself can't speak to Medicaid
disproportionate share issues that were raised.
Mr. Stupak. How about the area of wage index. According to
your testimony, it will be fiscal year 2010 before it will be
updated. Now, can't we waive that because it costs more money
to provide services in New Orleans, because it is a premium to
have a nurse or a doctor down there so the area wage index
which they base their reimbursements on you say won't be
updated until fiscal year 2010? That is 3 years from now. Can
that be waived? Can't you do that sooner?
Ms. Richter. Medicare is designed as a national program----
Mr. Stupak. Yes, but what is the Secretary's proposal in
helping out with this shortfall?
Ms. Richter. Well, again, as I said the short-term response
that was within the Secretary's ability was the provider
stabilization----
Mr. Stupak. I know the short-term, but we are 2 years out
now. What is his long-term response?
Ms. Richter. I think as far as other things that could be
done, we will have to get back to you on that.
Mr. Stupak. Well, what about GME? You wanted to talk about
GME, the 3-year rolling average.
Ms. Richter. Yes.
Mr. Stupak. Yes. You waived it for 1 year. You stopped it
in 2006. Why can't you waive it again? We are still having this
trouble with the GME.
Ms. Richter. We have talked extensively with our Office of
General Counsel, and they say that the----
Mr. Stupak. But the mayor is getting tired of talking. He
has been here 28 times. He hears this talk.
Ms. Richter. I understand, Mr. Stupak.I am sorry about
that,but the statute is very clear about the 3-year----
Mr. Stupak. But there is a waiver. There is a waiver in
that statute, and you have a right to exercise it if you wanted
to.
Ms. Richter. There is no explicit waiver within the 3-year
rolling average portion which was why----
Mr. Stupak. Under emergency circumstances you can waive it.
Ms. Richter. Just for closed programs, programs that are
completely closed.
Mr. Stupak. You would agree with me medical service in New
Orleans is still an emergency situation, isn't it?
Ms. Richter. That is not the way the statute or the
regulations are written.
Mr. Stupak. I am not asking about the statute. I am asking
you, do you believe the medical situation in New Orleans is
still an emergency situation?
Ms. Richter. Yes, but----
Mr. Stupak. Great. Now it is an emergency situation. I have
established that. Now you can get a waiver, can't you, if you
yourself believe there is an emergency situation. You got a
waiver under GME, that 3-year rolling.
Ms. Richter. The emergency provisions are limited to
entirely closed programs. That is the only situation we can----
Mr. Stupak. Has the Secretary brought forth any legislation
to address the issues, whether I need a 3-year waiver on the
GME, I need a waiver on this wage index, have they proposed any
of these if the waivers are only for a short period of time to
correct the inequities we are seeing in Louisiana so they have
a full working health care system? Has the Secretary brought
forth any legislation like that?
Ms. Richter. Not legislation. We have discussed extensively
with various representatives of the interests in Louisiana,
both the hospitals, the medical schools, with Dr. Cerise and
with others the possibility of doing a Medicare demonstration
that could in a budget neutral way that could alter some of
them.
Mr. Stupak. We don't want demonstrations. We want health
care. We have 3 minutes left to vote. I hate to do this to you
but we are going to have to run and vote. We will be right
back. It is only one vote, and when we get there they will
spring another surprise on us, right? So we will be back as
soon as we can. We will be in recess. We will be right back.
Mayor Nagin, I know you are dying to answer some of these
questions. I will give you a chance as soon as I get back.
[Recess.]
Mr. Stupak. Let me again apologize for the interruptions.
While these procedural games are being played on the House
floor today, they are frustrating to us, but they are pale in
comparison to the frustrations you must feel in New Orleans so
we thank you for your patience, and I assure you that we will
continue this hearing and get through this, and despite our
continued interruptions we are going to stay with this issue no
matter how long it takes. Congressman Jefferson, he is here. As
you know, he has been at every other hearing we have had. He
knows too well the problems you are facing, and we appreciate
him coming to the hearing and sitting in. Thank you.
I was ending with Ms. Richter and I talked about how she
was going to talk about a demonstration project. We will get to
that later because my time is up, as Mr. Burgess informed me,
but I know Mayor Nagin wanted to say something either on the VA
hospital or on that $100 million that is going to come to you
by September. Not all of it, right, Mr. Williams? But some of
it is going to come. You wanted to say something, and I said
before I broke that I would give you an opportunity.
Mr. Nagin. The only thing I want to say is if the check is
in the mail, we look forward to receiving it.
Mr. Stupak. Very good. The check is in the mail from the
Federal Government. OK. The gentleman from Texas, Mr. Burgess,
please.
Mr. Burgess. Thank you, Mr. Chairman. I scarcely know where
to start. Let me start with you, mayor, since you spoke last. I
referenced a logjam. You said you are stuck. Can you put your
finger on where the problem is? If we are going to exert
maximum congressional committee authority to fix the problem,
where do we exercise it?
Mr. Nagin. Well, I think there are many good people, good,
competent people, working on these problems, but unfortunately
many of the laws are not written in a way that allow the
flexibility that is needed for a disaster of this magnitude, so
I would advocate a look at the laws associated with emergencies
and making sure those laws are written in a manner where the
Secretary can exercise some latitude in expediting funds. The
second thing I would also point out is that there is this route
that money must travel, and once you get it through the Federal
bureaucracy then you are dealing with the State bureaucracy
before you even get to a local bureaucracy. And those three
elements tend to slow down the delivery of resources because
government is traditionally not built for speed.
Mr. Burgess. Yes, how can you straighten out that route?
How can you take all the curves out of there?
Mr. Nagin. Well, there are several ways that are already
written----
Mr. Burgess. Let me ask you this. Do you have Mr.
Melancon's private cell number? Can you just call him up and
say, ``I am having trouble with this, can you fix it?''
Mr. Nagin. Yes, I can call him. I can call his wife. I know
how to get him. Absolutely. I have both cell phones. So that
helps.
Mr. Burgess. Are you doing that?
Mr. Nagin. Oh, yes. Yes.
Mr. Burgess. OK. And they have been responsive to you?
Mr. Nagin. He is very responsive.
Mr. Burgess. I just got to tell you. I am a public servant,
you are a public servant. I depend upon my constituency for the
continuation of my employment as do you. I frankly don't
understand why no one in an elective office has been held
accountable. We beat ourselves up up here. We will beat up the
Federal agencies some more in just a minute which is
appropriate but at the same time from just the grass roots
phenomenon, I don't get it.
Mr. Nagin. Well, you are not alone in not getting it. And
the only thing I can point to is nothing like this has ever
happened before so we all are inventing solutions but
unfortunately whereas we invent solutions, we always go back to
laws that were created prior to a disaster like this.
Mr. Burgess. Well, let me go to Ms. Richter. Let us talk
about the laws just a little bit. You reference the wage index
relief or the mayor did, through the wage index relief through
the Deficit Reduction Act, but that was broadly dispensed
throughout the State, maybe a little too broadly, and then went
to some areas that weren't in as big a crisis as the Orleans
parish, so do you need--does the Secretary need--the mayor said
the Secretary may need some legislative fix, some latitude.
Does the Secretary have all the tools he needs in order to get
the money where it needs to be and not broadly disbursed to
areas that are less in need? Do you need something from us in
order to be able to do that? The other reference was made to
this will be 2010 before there is more latitude. Is there
anything we can do to condense that time frame? Is there
anything we can do again to straighten out the curves in the
road so the Secretary can get the money where it is needed?
Ms. Richter. I think I will say that we will probably have
to respond to that for the record for HHS issues broadly.
Certainly I think understanding the cost structure now, the
summary data that the hospitals had in their testimony is a
good starting place, but I think as several people have
mentioned today having a better understanding of what is
driving the costs and how the costs vary across the different
payers to what extent it is a Medicare issue, to what extent it
is an uncompensated care issue, to what extent it is something
else I think would be very helpful to understand better where
healp would be best targeted, and so I think that is a critical
piece as well.
Mr. Burgess. Well, I do look forward to that response in
writing. And let me just ask you this. I know HHS is not a
business and doesn't function as a business, but if it were a
business and wanted to go to its customer and ask how are we
doing, who would the customer be? Would the customer be Mayor
Nagin? Is the customer us up here? Who would the customer be?
How would you gauge whether or not you are doing an effective
job?
Ms. Richter. I think we have a lot of customers. I think
first and foremost the Medicare beneficiaries as far as our
program, Medicaid----
Mr. Burgess. OK. The Medicare beneficiaries.
Ms. Richter. The beneficiaries, the providers that would
work with----
Mr. Burgess. Would the Medicare beneficiaries in the city
of New Orleans, how would they respond to the question are we
doing a good job?
Ms. Richter. I would not presume to answer.
Mr. Burgess. I wouldn't either but I think we can impugn an
answer to that, and I don't think it is good and that pains me
and I am sure it bothers people at the agency, and I do want to
see us do our jobs better. Still no mistake about it, I think
there is a lot of inertia on the ground and I heard a lot of
talk about the discussion about the VA hospital, and I know
Charity wants to build a new facility. Are we sacrificing the
short-term improvement for what is happening with these larger
projects? Are we sacrificing taking care of the patients for
the sake of economic development in downtown New Orleans? Does
anybody have an answer or a response to that? Dr. Cerise, do
you have a feeling about that one way or the other?
Dr. Cerise. Are we sacrificing care of patients for
economic development?
Mr. Burgess. Well, postponing being able to do--here I have
got a piece of paper that says there was $101 million left on
the table end of fiscal year 2006. That doesn't sound like a
good thing to leave money on the table here. We have been force
feeding you dollars up here. Again, I get criticized for that
back in Texas, and yet you guys aren't getting the help you
need, and there is money left on the table. And why is there
money left on the table? I don't know the reason but I am
hearing today that, well, we are working about different sites
and competing sites with the VA, we are worried about what
Charity is ultimately going to look like, what it resurrects
from the ashes, but are we sacrificing what we should be doing
in the short term for what may happen in the long term and as a
consequence are patients suffering because we have our eye more
on economic development or economic redevelopment rather than
on patient care.
Dr. Cerise. I don't think so. I think those things are
happening in parallel. I am not familiar with the $101 million
number. I know that there are some grant funds. For instance,
we got an extension in the social service block grant funding
that we asked for assistance with and you all helped us with
that. That is a factor that you have heard people talk about
workforce here, and having funds and then getting those funds
out to people. For instance, we have got mental health dollars
in the city that we will have unspent because of workforce
issues because we are trying to--you just can't go hire 300
social workers tomorrow.
Mr. Burgess. Let me ask you about the workforce since that
was brought up in the remaining time I have left, Mr. Chairman.
How are you going to staff a new VA hospital and a brand new
Charity Hospital if the workforce issues are so critical? What
are you going to do to be able to overcome that? We build these
gleaming new towers to medical science and if no one fills the
halls that is a problem.
Dr. Cerise. Yes, that is a good question. There is going to
be--first there is a significant period of time when that
construction is going to happen and their expectations of
population coming back and rebuilding the infrastructure. In
addition, a fair amount of that space, and I think LSU could
probably talk to this better, is going to be transitioned over
from their interim hospital or temporary facility, at least on
the State side of that facility, so some of that activity will
move over.
Mr. Burgess. And where do you get the people to put in the
clinics and the offices to take care of the patients?
Dr. Cerise. And that is the work that is ongoing right now,
the $50 million in workforce funds that we all are spending in
the past 3 months. $11 million of those have been committed to
over 127, I think about 127 positions, so they are just active
trying to get people back into the area.
Mr. Burgess. It is a long-term solution. Are you actively
going into the high schools and colleges and trying to identify
those people who would like a health care career whose families
live in the area who aren't going to be pulled out by outside
interests?
Dr. Cerise. Absolutely. A great point. Funds have been put
into our allied health programs to train more of our own nurses
particularly but other allied health programs also realizing
that we are not going to be able--everybody in the country is
struggling with the workforce not to the same degree so we are
not going to be able to pull them all in. We have to do a
better job of growing our own and that work is underway.
Mr. Stupak. The gentleman's time is expired. Mr. Melancon
for questions. We are going to go a second round here.
Mr. Melancon. Mr. Burgess, I guess that is one of those
things if you build it, it will come. But being serious, let me
ask, Ms. Richter, where is the Secretary today?
Ms. Richter. He is in New Orleans for a long-standing
commitment; he had to make a presentation.
Mr. Melancon. Does he have any policy people down there
with him?
Ms. Richter. He does, I believe.
Mr. Melancon. I just wondered. We heard in your testimony
discussion of the GME program and how it functions.
Unfortunately, what does not come across in your testimony is a
clear understanding of that the region's concerns are regarding
this program and what options are available to address them.
Now it is my understanding that the Secretary has a point
person that is constantly on the ground to deal with ongoing
health care issues, Sonya Madison, maybe, is that correct?
Ms. Richter. She is with him.
Mr. Melancon. OK. So she is with him and you aren't. So
what is Ms. Madison or whoever the Secretary has appointed
saying to CMS are the main concerns of the med schools
involving GME, and moreover what is this point person
suggesting as policy approaches to address the GME issues in
that region?
Ms. Richter. I think the information that we are getting
about the concerns of the medical schools especially are very
consistent with the white paper that they submitted to the
subcommittee. They are very concerned about the 3-year rolling
average again as I stated. Our general counsel believes we have
no flexibility in that area so we understand their concerns but
we don't believe we have any flexibility within the GME program
to address those. They are also very concerned about the
affiliation agreements that they need to sign in order to
reallocate their residents to the hospitals where they can best
serve folks from the hospitals that are either closed or
partially closed.
A lot of those requirements really are an artifact of the
fact that our----
Mr. Melancon. Sorry to interrupt you, but I keep hearing
the reasons why we are not moving forward. What you first need
to do is go back and lock the * * * * * * * attorneys in a
room and start talking to each other, the people that are
policy people, and what it is that they brought you and suggest
and what it is that the program doesn't allow you to do and
find out how you solve the problem, and if you can't solve it
you need to bring it to us here in the Congress and say this is
what it is going to take to move things forward. We have been 2
years. Nobody is doing that. Mr. Cerise, have you all had any
discussions where they said, OK, sit down with us and let us
see if we can find some common ground to make it work?
Dr. Cerise. We have certainly had discussions about this.
We haven't been able to solve this 3-year rolling----
Mr. Melancon. And when you come back, basically you come
back with some answers or suggestions or just technical gobbley
gook of how the program runs.
Dr. Cerise. This one certainly is complex. We don't have a
good pathway to how to solve this.
Mr. Melancon. I am looking, Ms. Richter, at your testimony
and on page 2 and on page 3, would you please bring that to the
Secretary and ask him to read it and tell him if he can tell me
exactly what it is that is in there because I will be damned if
I can figure it all out. The Government and this Congress and
the people that are here serving in Washington are here to take
leadership. We have got a catastrophic event that occurred 2
years ago, and if there are some people that don't want to
rebuild New Orleans or don't want to rebuild the VA or don't
want to rebuild the Charity or anything else, please stand up
and tell us and quit playing games with the people in
Louisiana, and you can send that message straight back to the
Secretary because we have had enough time to move things
forward and to find some common ground or at least to bring us
some suggestions of what we can do legislatively to try and
solve the problems.
Do we have any suggestions from the Department? Has the
State given any suggestions to the Department?
Ms. Richter. I think the main suggestion that we have made
to people that I mentioned in my opening remarks is that it may
be appropriate for discussing whether a Medicare demonstration
could address some of the regulations and rules that right now
seem to be standing in the way of the situation, and we have
already--I have already asked folks to make sure that that
happens quickly.
Mr. Melancon. How long have we been having those
discussions within the Department?
Ms. Richter. We have had discussions on this issue
internally and with people in Louisiana and the affected areas
for a long time about demonstrations.
Mr. Melancon. A year?
Ms. Richter. We have taken different----
Mr. Melancon. Would a year be a reasonable time to say?
Ms. Richter. I think it may have been longer than that. I
think that Dr. Cerise said----
Mr. Melancon. You can have a baby in 9 months. What
legislation do you think the Secretary will support? Does
anybody have--do you all meet with him, do you advise him? What
is he saying?
Ms. Richter. We would have to get back to you on that. We
would be happy to.
Mr. Melancon. When do you need to get back to me? Can you
get back to me next week? I would ask you to go back and ask
the Secretary when he can get back to us, please, with a formal
letter and to give us an explanation what it is that the
Department is doing. I would like some timelines on it, and I
would like to know precisely what our expectations can be or
should be. I think I have overrun my time. I yield back.
Mr. Stupak. By nodding your head that was a yes, and then,
Mr. Melancon, you will get a letter back to him?
Ms. Richter. Yes. We will talk to people when we get back
about timelines and things and get back to you quickly about
that.
Mr. Stupak. Mr. Whitfield for questions, please.
Mr. Whitfield. Mr. Neary, back in February 2006, Secretary
Nicholson issued a report to Congress about among other things
the VA hospital in New Orleans, and in that report it said the
VA believes that a new facility can and should be built within
the city proper. Could you tell me if that position has changed
at the Department or not?
Mr. Neary. I think, as you know, we have narrowed the
potential opportunities, potential sites, that we are looking
at to two; one of them is downtown, one of them is in Jefferson
Parish just across the line from Orleans Parish.
Mr. Whitfield. We are assuming since they said this in the
report that that must still be their goal to have it in the
city of New Orleans. That was in the report to Congress in
2006. Ms. Richter, Mayor Nagin and Ms. Boyle and others who
live in New Orleans talk about the lack of health care
providers, and he talked about a national call to bring
physicians in and not able to provide health care on a timely
basis. What about the public health service, are there
physicians being sent there to assist in this effort or what is
the situation on that?
Ms. Richter. If I could ask Dr. Moritsugu.
Mr. Whitfield. OK.
Mr. Stupak. Doctor, before you answer you have to be sworn
in.
[Witness sworn.]
Mr. Stupak. Go ahead, Doctor. If you would spell your name,
please, and then answer the question.
Dr. Moritsugu. Yes. My name is Kenneth Moritsugu. I am the
Acting Surgeon General of the United States, and I understand
the question, sir. Thank you very much, Congressman, for the
question. As you are probably aware, the United States Public
Health Service leaned forward and responded on behalf of the
Department during the immediate crisis situation. We have
continued to have presence within New Orleans although on a
much lower level because the intent of the United States Public
Health Service Commissioned Corps was never meant to be a
longstanding presence in large numbers within the area. If
anything, one might argue that that would be counter productive
to the economic recovery of the area because by having external
providers in the area, we would probably be taking services or
providing services that otherwise private sector individuals
would be providing.
And so we have been very careful in terms of providing that
recovery assistance but not necessarily being there in large
numbers.
Mr. Whitfield. But since everyone is saying that they don't
have enough health care providers, can you on your own
initiative provide additional physicians there for a period of
time without any legal problems for the health service?
Dr. Moritsugu. It is possible for us to assign health care
providers to areas within the authority of the United States
Public Health Service, sir.
Mr. Whitfield. And so why haven't you done that?
Dr. Moritsugu. Well, again, working together with the local
and State leadership, we have been trying to make sure that we
balance what I described earlier was coming in and otherwise
undercutting the strategies to develop a robust community of
providers who would settle there and remain there. If I might,
sir, there are other resources obviously that might be
available in addition to the Commissioned Corps of the United
States Public Health Service that I think the Secretary and the
mayor and the local communities have also been looking at.
For example, the medical reserve corps who are a number of
volunteers in the immediate area who in fact respond----
Mr. Whitfield. Well, I know there are a lot of options but
there does not seem to be the number there to meet it.
Secretary Cerise, this has got to be one of your priorities.
How do you address it?
Dr. Cerise. Well, I appreciate the approach that was
described because early on we did run through a transition
phase where we had local providers who wanted to come back, and
it was this balance between having people come in to provide
the services and then being able to pay our own people to come
back. We are at a different point right now. In fact, just over
the past week or so we restarted the conversations with the
Public Health Service to look if it is possible to deploy some
teams to help provide some immediate relief while we take
advantage of the workforce development grants that we have got
to recruit people in, so as we grow our own and kind of replace
those teams because we are in this position where we continue
to have the workforce shortage.
So I think it is something that we have begun to re-
explore. We went through that phase where you had a lot of
bodies on the ground. We thought we could transition to local
providers, but we continue to have a gap in a number of areas
and so I appreciate Jean Bennett in your office, who has been
with us over the past week talking to us about how we might do
that.
Mr. Stupak. The gentleman's time has expired. If I may just
follow-up on that, Mr. Under Secretary, you heard the mayor
testify there is a 47 percent increase in the deaths in New
Orleans. Senior citizens have just given up and are dying.
There is increased stress and increased mental health problems.
Mr. Secretary, wouldn't you consider that a public health
issue?
Dr. Cerise. There is no doubt that we have got gaps in the
delivery system down in New Orleans so we do have a public
health----
Mr. Stupak. Dr. Moritsugu, could you answer that? It is a
public health issue in New Orleans, is it not?
Dr. Moritsugu. Yes, it is, sir.
Mr. Stupak. Well, would you consider it an emergency health
situation with 47 percent increase in deaths since before?
Dr. Moritsugu. I would consider it an emergency situation,
sir.
Mr. Stupak. OK. Then in an emergency situation can you go
to the President or the Secretary of Health and Human Services
to get some of this red tape cleared up to get the services
they need down in New Orleans?
Dr. Moritsugu. If you are talking about the assignment of
Commissioned Corps officers to provide short-term relief, that
is certainly possible at the request of the local communities.
Mr. Stupak. OK. So Mayor Nagin would just have to request
you to bring in more mental health people to help out with the
mental health aspect of it?
Dr. Moritsugu. Assuming we had those resources that we
could bring in, sir.
Mr. Stupak. Do you have mental health resources? We heard
testimony that nine people left in one mental health facility
here at the VA. Do you have those resources available?
Dr. Moritsugu. We have mental health resources. I am not
exactly certain the extent of the absolute need but would be
willing to enter into discussions with Mayor Nagin and with the
Secretary.
Mr. Stupak. OK. We don't like long discussions.
Dr. Moritsugu. I understand, sir.
Mr. Stupak. OK. Very good, very good. Thank you. Ms.
Richter, you said for the last year you have been discussing
about doing a pilot program or demonstration project. Why can't
you use your demonstration project you used in Utah when they
had problems for graduate medical education, GME, you ended up
allowing--CMS allowed the States to receive the money and then
they disbursed it to the hospitals. Why can't that system work
here in Louisiana?
Ms. Richter. That is certainly a model that we would be
prepared to discuss with the hospitals.
Mr. Stupak. I don't want discussions. You have been talking
about it for a year.
Ms. Richter. Demonstrations are voluntary under the
Medicare statute and the hospital----
Mr. Stupak. OK. So if Mr. Cerise would ask that, you would
do that, use the Utah model? You already got it demonstrated.
It worked in Utah. Why can't it work in Louisiana?
Ms. Richter. The hospitals would have to agree to
particpate in it and there are differences. Utah, for instance,
has one medical school and so there are different issues in
Louisiana because of the two medical schools and the
interrelationship between them.
Mr. Stupak. But the money wouldn't be going to the medical
schools. It would be going to the State to reimburse for the
residents so we don't have to have this 3-year rolling average
because they are at different hospitals who have not been part
of this GME before. That is what happened in Utah. Why can't it
work in Louisiana? Mr. Cerise, could it work in Louisiana?
Dr. Cerise. We have had discussions of that. There are
potential----
Mr. Stupak. So you talked about the Utah plan?
Dr. Cerise. We had someone from Utah come down and speak to
folks in Louisiana.
Mr. Stupak. So it won't work?
Dr. Cerise. There are issues with hospitals that own slots
right now that would be put at risk with a model like that so
you would have to have broad agreement to do that. And so what
is being proposed on this 3-year rolling average is something
that is less--I would say less risky for the hospitals and much
more straightforward, and that is for a limited time period
give relief of these partial payments as residents move from
one site to the other.
Mr. Stupak. It could be tweaked. It could be worked out,
right? The issue is the money going to the hospital that
doesn't have established GME, therefore, they are on a 3-year
average. They get about one-third of the money they should be
receiving so why can't we just give it to the State like you
did in Utah where they have a program and you just send it to
the hospitals? The hospitals are willing to do this but they
don't want to do it at two-thirds hit.
Dr. Cerise. We are certainly open to solutions that will
allow the 3-year rolling average issue to be adequately
addressed in the program. If the State can play a role in that,
we would welcome the ability to do that.
Mr. Stupak. Ms. Richter, Dr. Cerise testified at our last
hearing that the State has been seeking a waiver so it can use
the DSH money that I talked about earlier, mentioned that to
you earlier, that otherwise would go through the State's public
health system, and it uses this DSH money to support physicians
seeking to keep their practices open in the area. Why can't CMS
work with the State on making that happen?
Ms. Richter. I really don't have the ability to respond to
that right now. It is not a Medicare issue, but I would be
happy to get you a response.
[Ms. Richter responded for the record:]
Although HHS has made considerable strides in addressing
the continued health system recovery problems in the greater
New Orleans area, the Department is currently not in favor of
approving the use of Medicaid disproportionate share funds for
physician reimbursement in region 1 because such funding is not
consistent with the Medicaid statute.
Section 1923(g)(1)(A) of the Social Security Act imposes a
cap or hospital-specific limit on the amount of DSH payments
that may be made to a hospital in a fiscal year. This annual
payment is equal to a hospital's uncompensated costs of
furnishing hospital services to persons eligible for Medicaid
or who have no source of third party coverage. The components
of the hospital-specific DSH limits were further clarified in a
1994 all-State Medicaid Director letter to include the
unreimbursed costs of allowable inpatient and outpatient
hospital services. A recent decision from the Departmental
Appeals Board (Docket No. A-06-05, decision No. 2084, May 18,
2007) upheld this definition of allowable hospital costs under
the hospital specific limit. This decision upheld a
disallowance taken against a State that included physician
costs in their calculation of DSH eligible costs.
Generally, physician services are not recognized as
inpatient or outpatient hospital services. They are usually
separately billed and reimbursed under a fee schedule for
physician professional services. Moreover, under Medicare cost
and payment principles, physician services are recognized as
professional costs, nit hospital costs. Because of these
statutory limitations, Louisiana may not use DSH funding to pay
for uncompensated physician costs or other uncompensated costs
eligible under the hospital-specific DSH cost limit.
Mr. Stupak. OK. Who would be the person we would direct
this to? Whose desk does it fall on?
Ms. Richter. The Director of the Center for Medicare and
Medicaid State Operations is Dennis Smith. The Acting Deputy
Administrator is Herb Kuhn. The Secretary would also be an
appropriate person.
Mr. Stupak. OK. So Secretary Leavitt would be able to
answer that for us?
Ms. Richter. I would assume technical help----
Mr. Stupak. He is in New Orleans today, right, the
Secretary?
Ms. Richter. Yes, he is.
Mr. Stupak. Is it true that today HHS just announced
changes to the inpatient perspective payment system? Do you
know if they did that today, Health and Human Services
announced changes in perspective payment system?
Ms. Richter. It is imminent, yes.
Mr. Stupak. Believe me, they did, and that provides a major
source of Medicare revenue for the hospitals. Is Louisiana
going to take about $2 million, $3 million, $100 million, hit
underneath this program? Is the Secretary down there announcing
that program?
Ms. Richter. He is not announcing the inpatient perspective
payment system rule, I don't believe.
Mr. Stupak. So places like Louisiana are going to be cut,
right, underneath this new system?
Ms. Richter. I think you are referring to the proposed
rule. I don't believe that the final rule has been announced
yet, and I can't really comment on----
Mr. Stupak. A proposed rule takes place, right, takes
precedent there over the current rule?
Ms. Richter. The current rule is modified in response to
the public comment and we can't really say what is in it until
it is announced.
Mr. Stupak. Well, take it back to the Secretary if they put
in the inpatient perspective payment system as proposed today
that is a $300 million hit for Louisiana, it goes contrary to
the President's promise to restore this area. Mr. Melancon, you
had a question?
Mr. Melancon. Yes, I just needed to ask, is Ms. Madison the
person that is on the ground that is supposed to be the person
that is working between Louisiana's hospitals and medical
center, the VA, and whoever else to solve the problems?
Ms. Richter. She is certainly the Secretary's
representative, yes.
Mr. Melancon. Does she not talk to you all?
Ms. Richter. We talk.
Mr. Melancon. Do you talk about Louisiana?
Ms. Richter. Yes, we do, sir.
Mr. Melancon. We are 2 years out. Is the sense of urgency
gone?
Ms. Richter. I don't believe it is, sir. I think it takes
time to work something out as complex as the Medicare Program
but I don't think it is for a lack of effort or lack of
interest.
Mr. Melancon. But I haven't seen anything put forward.
Local hospitals have come up with suggestions and thoughts that
they wanted to bring the people at CMS but we don't hear
anything after that. Are you all just--what actually happens
when you get an idea, when somebody brings you in a thought, a
suggestion, an idea of how to make something work? What is the
process from there?
Ms. Richter. I think we assess it both for policy reasons
and for legal reasons about what the appropriate response would
be. I would say that I think the Department----
Mr. Melancon. Is there a step in there that says take
action? Would you please go back and see to get one in there.
That seems to be the problem. Bureaucracy wants to talk but we
need to be doing more than talking. In a statement from Dr.
Quinlan with Ochsner, he had addressed issues affecting the
hospitals and long-term what our needs are. I don't think this
is a new piece at all, and I just wonder have you seen it, have
you read it, have you discussed it, have you taken any action
on it?
Ms. Richter. I read it recently when I got a copy of it in
the past several days. I think we are aware of their concerns.
We discuss things frequently, both Ms. Madison and her staff,
working through the entire Department, not just the Medicare
Program to address issues of concern to health care providers
in Louisiana. I think that the provider stabilization, the
workforce fulfillment, all the DRA grants are an example of the
Department taking action and aggressive action within its
capabilities to respond to some of the crises in the area. The
$100 million primary care grant that was announced on July 23
is an example of that.
Mr. Melancon. A while ago we talked about responding. What
I would like for the Secretary to respond to is the red ink
that is bleeding at these hospitals and what it is that the
Department proposes to do or suggests that we do, or help to do
so that we can solve this problem. We have to solve the GME,
and I would like to see in writing what it is that he suggests
we do or hope that we do and give that to us in writing, and
with the DSH dollars to compensate physicians. You ought to
bring the folks down here to meet with our staff. They seem to
move more in 6 months than the Department has moved in 2 years,
and I would hope that if maybe you can meet with them, we could
help you all find ways to solve the problems or to suggest to
us ways that we can help solve the problems, so if you could
take those suggestions. And, Mr. Chairman, I would like to ask
that that be given back to us within probably some time in
September and if you would consider an October, November
hearing with the Secretary.
Mr. Stupak. We will certainly look forward to another
hearing on this whole issue, and I am sure that HHS will get
you those answers and that letter. Before I yield to Mr.
Burgess, Mr. Mayor, the Under Secretary indicated that if asked
he would be able to provide some services for you to cut down
on that 47 percent increase of deaths, the increased mental
health, the stress, and other things that senior citizens
giving up down in New Orleans. Hopefully you will take him up
on that offer.
Mr. Nagin. I heard an offer of sorts. I am not sure what
the offer is. It would be nice if we could get a letter from
them outlining exactly what is available so that we could
respond to it. If not, I will send a letter of request but I
heard if, maybe, possibly, we think we can.
Mr. Stupak. I would suggest, Mr. Under Secretary, if you
would, would you write the mayor and tell him what services you
could help out especially in the mental health area to cut down
on these deaths, 47 percent increase. We have to see what the
cause. What can we do? As you agree, it is a public health
emergency. That is what the corps is for. We should do it.
Mayor, you may want to express your concerns there. And if
necessary, the Energy and Commerce Committee, Subcommittee on
Oversight and Investigations will do a letter to try to keep
you guys all talking together. With that I will turn to Mr.
Burgess of Texas for questions, please.
Mr. Burgess. Thank you, Mr. Chairman. Is there anyone on
the panel who can speak to the state of the Louisiana State
budget currently? Is it a budget that--is the State budget in
crisis also or is it doing OK? Are Federal funds the only
source of funds to help Mayor Nagin, help the hospitals? Are
there any State funds available to restoration of health care
in New Orleans?
Dr. Cerise. There was roughly over a billion dollars in
health care related appropriations in the past legislative
session ranging from pure State funds for things like mental
health primarily to extend services not only in the New Orleans
area but around the State dealing with the Medicaid program and
being able to pay higher rates for providers of all sorts to be
able to address some of these issues that we are talking about
today, extending insurance coverage to individuals, so there
has been a significant investment of State funds coming out of
this past legislative session as well.
Mr. Burgess. Our investment was $100 billion and the State
spent a billion. That is a startling ratio but is the State
budget itself, is it in balance? Is the State able to do the
work that it is going to be required to do as far as
rebuilding?
Dr. Cerise. I am not the best person to talk to in terms of
rebuilding. The State budget is certainly in balance.
Mr. Burgess. Mr. Mayor, how is the city budget?
Mr. Nagin. The city budget is in balance but it is
primarily being balanced by the continuous support from the
Federal Government through community disaster loans.
Mr. Burgess. So the city is basically doing everything, all
that it can right now with the resources that it has available.
We really shouldn't look to the city to be able to provide any
additional help, is that correct?
Mr. Nagin. Yes, unless you want to buy some swamp land in
New Orleans east. We are using every available resource that we
have.
Mr. Burgess. If it is packaged along with the kind of
physicians deal that we heard about earlier maybe so. Let me
ask you this. We are sitting here. It is August 1. And we are
kind of in the middle of hurricane season, but we are just
coming up to the worst part of it. So I guess, Dr. Cerise, if I
could ask you, as bad as things are we all know they could be
made worse by another bad weekend so what are you doing
currently to prepare for that? Do we have some things that we
have done differently now where we won't look to see this same
sort of activity again? We have ways to get people out of the
hospitals that are there?
Dr. Cerise. Certainly there has been a large amount of work
that has been done at the local level, at the State level, and
at the Federal level, looking at the issues you are describing.
There have been laws enacted that put a different set of
requirements on our health care facilities in terms of how they
will have plans in place and report on those plans, more burden
put on the State agencies to monitor those plans to see if they
are actionable, and each individual plan can be carried out and
it is not relying on the same set of resources. And HHS has
given an enormous amount of support in this process as well
with the State putting people on the ground, looking at
individual facilities, counting people, counting assets that
you would need, and so we are counting on the local providers
to have primary responsibility, the local government----
Mr. Burgess. They are pretty stressed and you got a
workforce issue, right?
Dr. Cerise. What is that?
Mr. Burgess. If you are counting on local providers you got
a big workforce issue.
Dr. Cerise. Right, and to complete, where there are gaps
the State is being asked to address those gaps, and where we
realize there are gaps too big for the State to address we are
asking the Federal Government to address those gaps. And so I
do believe that we are in a much better place and we have
learned from the experience of Katrina, and I believe that we
are in a much better place if something were to happen this
weekend.
Mr. Burgess. I just have to tell you from the perspective
of someone who got a call in the middle of the night because a
friend of a friend who used to date someone who knew a mayor in
one of my towns called me and said, ``Can you help us get
patients out of New Orleans who are ventilator patients?'' And
I asked aid where are they and they said ``I-10 and the
causeway.'' That didn't make any sense to me until I saw the
news the next night and saw indeed that there were ventilator
patients at I-10 and the causeway. And I just have to tell you
that can't happen again.
I think in your position with the State, and certainly, I
know Mayor Nagin is sensitive to this as well, there has to be
a way to get the help to the people who need help because if
the same thing happens again your city is already in despair,
and you would have a lot more people who would need help
getting out of the tough situation. We didn't do a good job
last time. Let us be darned sure we are not caught in that same
maelstrom again. And that would be the only thing I would offer
additionally, Mr. Chairman. I will yield back. Thank you.
Mr. Stupak. Thank you, Mr. Burgess. That concludes the
questions of this panel. Let me thank each and every one on the
panel. Mr. Mayor, thank you for coming. I am sure we will be
seeing you again. We will keep on this issue. This panel is
excused. I would hope that Ms. Richter and the Surgeon General
Moritsugu would stay and listen to the second panel and answer
any additional questions that may arise and also to learn a
little bit more of the plight of these hospitals and providers
that are on our second panel. Thank you all for coming. We will
have the next panel.
I will call our second panel of witnesses to come forward.
Our second panel, we have Ms. Diane Rowland, Kaiser Family
Foundation; Mr. Mark Peters, West Jefferson Hospital; Mr.
Leslie Hirsch, Touro Infirmary; Mr. Patrick Quinlan, Ochsner
Health Systems; Mr. Gary Muller, West Jefferson Hospital; Mr.
Mel Lagarde, Tulane University Hospital, Chancellor Larry
Hollier, LSU Medical School; Dr. Alan Miller, Tulane University
Medical School; and Dr. Gary Peck. Would they all please come
forward? It is the policy of the subcommittee to take all
testimony under oath. Please be advised that witnesses have the
right under the rules of the House to be advised by counsel
during their testimony. Do any of you wish to be advised by
counsel? Seeing no one make an indication, I take it you do not
have counsel with you.
[Witnesses sworn.]
Mr. Stupak. Let the record reflect all the witnesses
answered in the affirmative. We will hear from this panel.
Before we do that, I am going to have to run down to the floor.
I have been asked to come to the floor on SCHIP. I am going to
ask Mr. Melancon to take the Chair. I will be back as soon as I
can but I have to run down. And with that, Dr. Rowland, would
you like to start with your opening statement, please, 5
minutes. Your full statement is part of the record. And please
give your opening statement.
TESTIMONY OF DIANE ROWLAND, EXECUTIVE VICE PRESIDENT, HENRY J.
KAISER FAMILY FOUNDATION; EXECUTIVE DIRECTOR, KAISER COMMISSION
ON MEDICAID AND THE UNINSURED, WASHINGTON, DC
Ms. Rowland. Thank you, Mr. Chairman, Mr. Whitfield, Mr.
Melancon, and members of the committee for this opportunity to
be with you today to focus increased attention on the health
care needs of the people of New Orleans. We have just completed
an analysis that looks at the health care challenges facing the
population based on a survey we conducted in the fall of 2006
of 1,500 adults over the age of 18 in Orleans, Jefferson, St.
Bernard, and Plaquemines Parishes. It was clear from the survey
responses that the priority of the population of the city of
New Orleans is to get medical facilities up and running. It was
their top priority after repairing levees. What we saw in this
survey is that nearly half of the residents report health care
coverage and access problems; key components of an accessible
quality health care system are not there.
One in four have no regular provider of care other than an
ER. Many face new health and mental health challenges and
problems since Katrina. One in 10 households with children
reported to us that they had a child in their home who was
troubled or not getting needed medical care. Even though some
of the most frail and vulnerable may not have been able to
return home to New Orleans, the population in the city still
faces physical and mental health challenges that underscore the
importance of improving the availability of services as well as
improving access to both health and mental health services.
Predominant among the health problems, health coverage
remains a major obstacle to obtaining access to health care.
One in four non-elderly adults in the area is uninsured. In
Orleans Parish, nearly a third of the adult population is
without health insurance and 70 percent of those uninsured are
African-Americans. There is also a brighter story in Louisiana,
however. The Medicaid and LaCHIP programs have helped to
provide coverage to children. So, we see no difference between
African-American households and white households in the percent
of uninsured children; less than 10 percent are uninsured
documenting the importance of health care coverage to both
reduce racial disparities as well as improve children's access.
For residents using the health care system, most report
that they had more difficulty with relocated doctors, fewer
hospitals open, and those open with strained capacity. One of
their major worries is that they will not be able to get the
health care they need in post-Katrina New Orleans. Many of the
previous users of Charity Hospital together with the broader
uninsured and Medicaid population were disproportionately
affected especially with the closure of Charity Hospital, but
they are not alone. What we saw was a leveling effect of
Katrina on all of the people of the New Orleans region,
reducing their access to health care services and further
creating barriers for them to obtain needed care especially
preventive health services that are so important to maintaining
health.
As the people struggle to rebuild their lives, establishing
a health care system that provides preventive and primary care
services and specialty care when needed is essential to
recovery efforts. Among the things that can be done and should
be considered are ways to broaden coverage especially for
adults to both promote their access to care but also to reduce
the uncompensated care burden, especially that physicians will
feel. This will help bolster financing for physician and clinic
services as well as hospital care. We need to be able to
provide alternatives to health care for those now relying on
ERs. The health care payment policy needs to be used as a tool
to help reshape the way health care is delivered by allowing
flexibility in the use of the Medicaid DSH funds for non-
institutional services and to reimburse physicians and by
providing additional support to rebuild the inpatient and
outpatient mental health services that are now facing chronic
shortages.
Obviously, investing in rebuilding a high quality health
workforce is a critical component for the health care system.
Facing the higher labor costs, the need for GME reforms as so
adequately discussed in the prior panel are critical to having
a health care system that will work for all residents of the
New Orleans region.
Determining the future scope and role for the public
hospital, the VA hospital, and the academic health centers is
essential both to establish a source of care for the poor and
uninsured as well as to enable recruitment and training of
health professionals so critical to a future health care
system.
I think, in closing, that we have learned many lessons from
the New Orleans experience, and one of them is that we are not
prepared to deal with the aftermath of a major disaster such as
the Katrina event and the failure of the levees in New Orleans.
We need a program that can respond quickly and that can provide
more than short-term assistance. Cobbling together little
solutions from programs like Medicare and Medicaid will not
respond to some of the most immediate needs and the longer term
needs that the city of New Orleans continues to face. So the
lesson that I take away from our work is that we need to look
in disasters at a way when the health care system has been
fractured to rebuild that system perhaps with more
demonstration authority and broader use today even of the
Medicare as well as the Medicaid waiver authority to get some
of these services going. The needs are great, and the time to
fix them is not just 1 year, but 2 or 3 years, so we need to
look at long-term solutions but also to provide immediate care
to address the needs of the population. Thank you.
[The prepared statement of Ms. Rowland follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon [presiding]. Thank you so much, Dr. Rowland. I
appreciate that. Mark Peters with the East Jefferson General
Hospital.
TESTIMONY OF MARK J. PETERS, M.D., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, EAST JEFFERSON GENERAL HOSPITAL, METAIRIE,
LA
Dr. Peters. Thank you. Good afternoon, Mr. Chairman and
committee members. I am Dr. Mark Peters. I am the president and
CEO of East Jefferson General Hospital located in Metairie,
Louisiana. I serve as the chairman of the Metropolitan Hospital
Council, as well as the current chairman of the Coalition of
Leaders for Louisiana Healthcare. And I have been designated to
present an overview of the specific problems facing five of the
hospitals testifying here today. East Jefferson is a publicly-
owned, not-for-profit hospital on the east bank of Jefferson
Parish adjacent to New Orleans. We are a 450-bed tertiary care
facility with more than 700 medical professionals. We employ
more than 3,000 people and are one of the largest employers of
the parish.
On behalf of the five hospitals represented here today from
the greater New Orleans region, East Jefferson, Ochsner Health
System, Touro Infirmary, Tulane Medical Center, and West
Jefferson Medical Center, we appreciate the opportunity to
speak to you about the severe and continuing consequence of
Hurricane Katrina on our five hospitals. The region's health
care infrastructure was decimated by Katrina and remains a very
fragile shell. Due to the continued closure of Charity
Hospital, as well as several other hospitals, these three
hospitals provide 95 percent of the hospital-based services in
the metropolitan area. We anticipate a combined loss of $135
million in 2007. This loss will grow to $405 million by 2009.
Nearly 2 years after Katrina, we testify today to share
with you one very simple message. Our hospitals need your help.
None of these five hospitals are financially secure. We are all
coping with cash, cost, and staff issues on a daily basis. Our
problems are similar even though we represent a broad spectrum
of health care delivery. We stand together today to implore you
to protect the patients in the New Orleans area from yet
another crisis, one that is immediate, preventable, and that
you can help us address. Over the past 2 years all five of our
hospitals have testified before this committee and numerous
other Louisiana and congressional committees explaining the
dire circumstances we face. We have all received some form of
Federal and State assistance but that assistance is simply not
enough to sustain us.
As the primary economic engines of the area these hospitals
are not only important because of the patients we serve but
also the people we employ and the economy we support. Without
continuing and sufficient Federal assistance these hospitals
must all consider making very difficult decisions that will
negatively impact the quality of care and services we provide
as well as employment to many in our region. As you will see,
on page 10 of my written testimony when we compare the first 5
months of 2005 to 2007 for these five hospitals, we have gone
from a $13 million profit to a loss of $56 million. That is a
negative swing of $70 million. Of that $70 million swing, $53
million went to labor costs alone.
Since the storm, our five hospitals have been working with
Members of Congress, our State Department of Health and
Hospitals, specifically the Louisiana Redesign Collaborative
and the U.S. Department of Health and Human Services, as well
as Chairman Donald Powell. I know that many members of this
committee visited our area, some to provide direct assistance,
others to learn, so that what happened to us never again
happens on American soil. For these efforts we are extremely
grateful. We are active and supportive partners in a long-term
redesign effort. However, all who have analyzed our region's
needs have reached the same logical conclusion, redesign must
first begin by addressing immediate needs.
While we have asked Congress to either adjust current
programs for unique circumstances or for specific targeted
funding neither approach has resulted in our financial
stability. Therefore, we five hospitals have identified five
problem areas and potential solutions for Congress'
consideration that each of us will detail in turn. We, of
course, gladly welcome your creative assistance on these or
other funding sources. Relief from wage costs, help with rising
non-labor costs, suspension of the 3-year rolling average for
graduate medical education, nursing immigration relief and help
recruiting and retaining nurses and physicians, and consistent,
adequate funding for uncompensated care.
The assistance from the Deficit Reduction Act for
uncompensated care and from CMS to alleviate the wage index
inadequacy was greatly appreciated. However, the funds were
distributed equally among 31 parishes and 65 hospitals. Some of
the hospitals that received funds are having very profitable
years while the hospitals in the New Orleans metropolitan area
struggle to remain financially viable. If the current Medicare
wage index is not extended to reflect actual costs, East
Jefferson General Hospital will continue to lose $2 million to
$3 million per month. Using our current appropriate cost my
hospital should see $18 million annually in wage index
assistance. Instead, we received a one-time, $5 million payment
through the DRA.
Moving forward, we need a predictable, multiple year
commitment to our region's health care providers. Also, our
Nation will be 1 million nurses short by 2020. The situation is
much worse for us. Before Katrina, East Jefferson had a 2
percent nursing vacancy. Now it is 12 percent or some 90
positions vacant. In 2006 we hired 60 American-trained,
Filipino nurses. Due to immigration caps and stalls, we
continue to wait for these new hires. These nurses will save us
$300,000 per month in labor costs or $3.6 million a year.
Filling all 90 positions would save East Jefferson $4.5 million
per year.
Every tragedy and disaster provides lessons to either avert
the next one or mitigate the consequences. This disaster is no
exception. I am often asked by my health care colleagues
throughout the Nation, how can I help my hospital financially
survive a disaster like this, a hurricane, an earthquake, a
floor or a tornado. I would advise them that it is their best,
long-term economic interest to close their doors. Why would I
offer this advice? It was in our community's best interest to
stay open and provide services to desperately needed. However,
considering our financial outlook my hospital would have been
better off closing than waiting for Federal and State relief.
This is an appalling dilemma to face. Choosing between
providing care for people in their time of greatest need or
insuring the long-term viability of the hospital. Doing the
right thing for our community meant that our hospital and the
patients we serve may soon become victims of Katrina again.
I urge you to use the lessons learned from Katrina to not
only protect our fragile health care infrastructure but to
adopt policies that improve disaster response in the future for
all Americans. Thank you for the opportunity of speaking.
[The prepared statement of Dr. Peters follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon. Thank you, Dr. Peters. I appreciate it.
Leslie Hirsch with Touro.
TESTIMONY OF LESLIE D. HIRSCH, FACHE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, TOURO INFIRMARY, NEW ORLEANS, LA
Mr. Hirsch. Mr. Chairman and members of the subcommittee,
thank you for inviting me to tell you about the continuing
health care crisis in New Orleans. Each of my colleagues here
today will speak to this crisis from their own perspective.
Mine is that of the president and CEO of Touro Infirmary, an
organization that in its 155 years of existence has overcome
such challenges as yellow fever epidemics, Civil War, and the
Great Depression. We are community based and not-for-profit.
But now Touro, along with the entire New Orleans Hospital
community, is facing a crisis unlike any other in our history
or for that matter in the history of American health care.
Never before has the entire medical infrastructure of a
major American city been in danger of collapse but that is
precisely what could happen if we continue on the present
course. After temporarily closing 3 days after Katrina and
opening less than 1 month later, we made the decision to forge
ahead to restore Touro's operations, irrespective of the
economic consequences. People were, and continue to be, in
urgent need of medical care, and for us it was then, and it is
now, a matter of mission and doing the right thing. That is our
job and we are proud of it. But 2 years have passed since the
greatest natural disaster in American history devastated the
New Orleans area, and Touro and other continue to play a
pivotal role in supporting New Orleans' recovery but the cost
is staggering and if unchecked puts our future viability in
jeopardy.
Since Katrina, Touro's operating losses have mounted
totaling many millions of dollars with no end in sight. Our
bond rating has suffered, increasing the cost of borrowing. We
are depleting cash reserves at an alarming and unsustainable
pace. In post-Katrina New Orleans, the economic fundamentals of
the health care market are broken. Our cumulative costs of
uncompensated care, personnel, property and casualty insurance,
and utilities have all dramatically increased and have outpaced
any rate increases or one-time grants that have been provided.
Touro's property and casualty insurance is up 342 percent.
Utilities are up 48 percent, post-Katrina. I believe, however,
that the unprecedented rise in the cost of health care
personnel is the biggest challenge and the most costly.
Recruiting and retaining nurses, physicians, and other health
professionals is a daily struggle for Touro and everyone else
at this table.
However, the nursing shortage has had the greatest impact
post-Katrina forcing us to heavily depend on contract labor, a
very expensive form of staffing. And at Touro, for the first 6
months of 2007, our costs of contract labor increased by $4.6
million over the same time period the year before. Our full
time equivalent contract registered nurse cost is dramatically
higher than when they are our own staff. Our costs went up 366
percent during that period. The Medicare wage index methodology
won't recognize this as previously mentioned until 2010, but
exacerbating the problem is that Medicare does not pay
hospitals their full cost nor does Medicaid, thus, our
hospitals are not paid full costs to begin with and we are
falling that much further behind.
Graduate medical education has been discussed at length
today, and I will keep my comments brief here, and simply just
say that we stepped up during a time of need when we needed to
protect the graduate medical education system in New Orleans,
and it was the right thing to do, but we are paying a heavy
price today. We have reduced several residents, about 12 going
into this academic year, but even with that this 3-year
averaging which must be addressed is still costing us nearly $4
million this year. During the last hearing, some of you
mentioned what has been done, and some of those comments have
been made here today. I would like to add to what Dr. Peters
just said about the provider stabilization grants.
In some respects it belies logic, and I think in retrospect
if we look at the present circumstance of our hospitals and the
losses that have mounted where was the logic and the
methodology of distributing $90 million to hospitals, more than
60 of them in 31 different areas designated by FEMA, different
parishes, and as was stated some of those very hospitals are
continuing to operate at a surplus. I don't begrudge them of
that. They should. Every organization needs to operate at a
surplus if it is going to continue to reinvest and move
forward. But those monies would have been better spent in New
Orleans. Touro received some $3.6 million of that money and for
that we are very appreciative. Our annual need is three times
that amount.
In closing, I just would simply like to say that I agree, I
won't repeat all the recommendations that Dr. Peters made, I
agree with everything that he said so I won't be redundant in
that respect. I will just simply say that the present situation
facing Touro as well as the other hospital in Orleans and
Jefferson Parishes is very critical. While I do not speak for
the other institutions, I can say that if some change in our
financial condition does not occur soon, we will be forced to
re-evaluate the level of services provided to the community. In
the long term we simply will be unable to sustain ourselves.
Thank you for the opportunity to be here today.
[The prepared statement of Mr. Hirsch follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon. Thank you, Mr. Hirsch. I appreciate it. Dr.
Quinlan, we have got one floor vote. It will probably be unless
something changes about 15 minutes so we will take a break and
then we will have--one procedural vote so we should be back in
about 15 minutes. Thank you.
[Recess.]
Mr. Melancon. I want to apologize for the delays. We are
having on the floor SCHIP which I think I don't need to explain
to most people in the medical field, and there is debate and
ongoing motions or as we would say commotions, so I think Mr.
Stupak is still on the floor to speak and we will just go ahead
and get started, and if he comes back I will move out of the
chairman's way. I think when we stopped Mr. Hirsch had given
testimony, and Dr. Quinlan was up to be next. And if you would,
please, Dr. Quinlan.
TESTIMONY OF PATRICK J. QUINLAN, M.D., CHIEF EXECUTIVE OFFICER,
OCHSNER HEALTH SYSTEM, NEW ORLEANS, LA
Dr. Quinlan. Thank you. We understand these things happen.
We appreciate your being here, and I want to thank the
committee members for their obvious interest and continued
commitment. The commitment is the part that I really feel that,
and that means a lot to us. And I would also like to recognize
the staffers whose involvement who clearly searched for
understanding and meaningful, timeful action, and that is why
they are recognized by the participants here. I would like to
just edit my comments today. Obviously, it is kind of a
difficult time for everybody and rely on my submitted testimony
for much of the detail of which most of you are exquisitely
already familiar, but I would like to take this time to focus
on the essential issues because often the more information we
get the more confusing things become, and I would like to
redirect the attention in the time we have to the plight of the
five hospitals that, as it was mentioned, take care of the bulk
of people in New Orleans, and I am talking about the region of
New Orleans.
Please focus on our immediate needs. If you took home one
statement that would be it, the immediate needs, the immediate
needs of our hospitals, the physicians and other health care
professionals. The system consists of more than the building.
It is all the people that work together to take care of people.
The critical nature of the short-term needs have been
recognized since the beginning by everyone. Unfortunately, it
has been more about words and deeds but has been relatively
lost in the search for long-term solutions. And you saw it
happen here today. Most of the efforts and energy was expended
about these long-term questions when we live with the immediate
needs on a daily basis, and the consequence of that misplaced
focus, I think has been expressed by my colleagues amply well
rather than repeating it. The consequences are severe.
Please lead the efforts to correct this problem. I felt the
emotion that has to be focused around the things that we talked
about or others and as the staffers have rightly done focusing
on what can we do soon to make the effects felt immediately.
Anything other than that is actually a distraction from the
immediate needs. We were reminded that the hurricane season is
upon us, and I promise you that in the event there is another
disaster the people sitting here at this table, these three
hospitals will be in the middle of it again. And unfortunately
I hope that the same results don't occur for everyone. I did
want to emphasize a few points that first there is virtually no
money at present that is available for clinical care givers.
Currently, and I will speak to my particular situation,
currently we employ about 600 physicians and more than 120
licensed mid-level health providers who receive no payment for
the care of the uninsured.
This acts as a significant drain for our health system
because the lack of funding for both hospitals and Ochsner
physicians and is a special problem for Ochsner. We have been
successful in the recruitment of physicians and nurses.
Currently we are bringing about 40 physicians on towards the
last half of the year so we continue to do our job in the
absence of payment. Second, well intended money to help our
hospitals is not reaching us on a timely basis. That is a
recurrent theme I know you have heard and will act on.
Specifically, only $21.9 million of the $1.4 billion allocated
by HHS and FEMA for Louisiana has reached the Ochsner Health
Care System, the largest system in the State with 9,000
employees, and who was really one of the anchor points in the
crisis and since then for the region, and I emphasize region.
Despite this generosity, we have experienced $65.5 million
of additional un-reimbursed operating losses from Katrina, and
that is the other issue is about operating losses. The problem
is that dollars intended to help us and the immediate folks
around us have gone to help a wide variety of providers who
were not as impacted by Hurricane Katrina as Ochsner and the
other hospitals testifying here today. These are important
things for us. I will emphasize that we need to address
Katrina-related expenses, specifically the cost of workers as
it has been repeatedly emphasized. This cost has exploded, as
well as the cost of utilities and insurance. These are direct
operating costs of which we have no control and to which we
have not contributed to any of the problems. You have heard
about GME reimbursement.
Immigration assistance is a real issue for us. Our system
has 300 open nursing positions. We too have hired additional
foreign nurses from the Philippines, and we have 100 now
waiting for visas. So, if we need special action to address the
critical issue of increasing the work pool, all we will do is
aggravate the inflation spiral, which is one of the major
contributors to our economic crisis today. Half of our expenses
are worker related. We need to blunt that spiral and new
workers are the only way in number that will affect that. And,
finally, we need to consider new mechanisms for distributing
appropriations in a way that is tied to things that are clearly
in the public interest, to promote those kind of behaviors that
are economically sound, and to and promote health for our
patients. That is it in brief. I do feel that in view of the
effect of the distraction of the downtown issues, I need to
make a few comments.
With regard to the VA, health care and economic recovery is
important to us all. All of us together. We must and we need to
find constructive solutions together rather than create an all
or nothing alternative. This should not be a contest as it was
characterized but I think in many ways it was accurately
characterized because we are the ones who represent those who
are in the middle which is the patients. It is easy to become
energized about this. It is easy to become frustrated. We all
have ample reason to be frustrated, but I find in my own
position frustration doesn't make me smarter. What I need to do
is settle down and find solutions together. I think Kaiser
Family did an important study for us all, and you notice it is
regional. New Orleans is a regional problem. The solutions have
to be regional in nature, not just in word but in deed, and
that is an essential issue here. Dollars and patients and
disease do not respect political boundaries.
We need to remember that because we are on the point. I
chair GNO, Inc. I live in New Orleans Parish. GNO, Inc. is a
development group, and I have spent a great deal of scarce time
to promote the development of the city in particular. And my
sentiments are simply that we have to learn to ask the right
questions and make sure our understandings are current so that
we don't find solutions that in fact don't fit the problem,
that don't solve the problem. One of the few things I have
learned as CEO is not that I have to find solutions. The art is
to find the right question so that when it is addressed the
problems are in fact resolved. So I would ask us to re-examine
the factual basis of all of these things to make sure they are
current and that what we do is consistent with those goals for
the region.
My major interest is in taking care of patients. That is
what we do, be they veterans or anybody else, so whatever
solutions we have need to go with those in mind. In particular
with regard to the VA it became evident to me as I was trying
to unravel this issue with everybody else that no one had asked
the veterans what they thought, so we did. Now we have been
criticized for asking the veterans. That escapes me. But that's
OK. I don't mind that kind of criticism because it is our duty
when you have a captive population to find out what their needs
are and meet them as quickly as possible. I hear the need for
speed, and we do it in a way that would be as accurate as
possible to remove bias, so we had two independent surveys of
1,200 veterans asking them where they wanted to get their care
and from whom they would get it.
That is a legitimate question and it is a kind of
thoughtful approach we need to engage in as we sort out these
problems so in terms of location for the VA which has become an
issue in itself what I would like to say is let us put it in
proper perspective of health care for everybody, economic
recovery for everybody, but not losing sight that they are all
patients. In my business as we do in our system is asking the
patients of how we are doing, what their interests and needs
are, and making sure that is first. And I hope that we can
reboot here in a sense and become constructive together. The
problem is too large and too complicated to attack successfully
in a piecemeal fashion. We will live with those consequences
long after we are all out of office and the consequences of
good decisions will be great, the consequences of poor
decisions will be lasting and destructive. So let us be
constructive and let us be current. Thank you.
[The prepared statement of Dr. Quinlan follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon. Thank you, Dr. Quinlan. Mr. Muller, if you
would be next, please.
TESTIMONY OF GARY MULLER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WEST JEFFERSON MEDICAL CENTER, MARRERO, LA
Mr. Muller. Good afternoon. It is a pleasure to be here. I
am Gary Muller, CEO at West Jefferson Medical Center, and I
feel like I am with my family who is the committee and who is
the staff of the committee and who are my colleagues, every one
of these people sitting at the table because we are 2 years
post-Katrina and our situation is getting worse and we are all
in this together to try to help to fix it. In the interest of
time and not reiterating what a lot of people have said, I am
going to focus on some issues that are specific to our common
goal of the five hospitals and continuing to focus on that
because that is the issue that is the problem. We can't get off
that.
West Jefferson was in good financial standing before
Hurricane Katrina, and I think your charts and the graphs you
have seen of the pre-Katrina numbers are specific to how good
it was in terms of making a business work before and how
horrible it is today. West Jefferson has had $48 million worth
of operating losses since Katrina and since this subcommittee
met, in March we have had $6 million more losses. If we were to
meet again in 4 months, we would have at least $6 million more.
We cannot continue like that. We are trying to solve our own
issues as best we can. From a CEO standpoint you can only
control so much, and what we can do is spend money wisely. We
have implemented business improvement plans. We have negotiated
with doctors in win-win situations to create cost savings
programs. This month West Jefferson became the first hospital
in Louisiana's history to receive the Energy Star award for
energy efficiency from the Environmental Protection Agency.
We can only trim costs so far. We have all done that. We
hope not to do anything that affects patient care but what we
need now is additional grant dollars and payment increases in
some of the areas we have talked about today. I would like to
explain to you five of the issues that are really a financial
crisis for Orleans and Jefferson Parishes. Again, get your
thinking down to the area. This is not a Louisiana problem. It
is Orleans and Jefferson. For example, high labor costs are
specific to us. Immediately after the storm we hired contract
nurses, and we had almost 100 of them. We spent $12 million
that year. The previous year we had spent $2 million, so we
were already in a negative $10 million, and we did that to
replace employees who left after Katrina but also to open more
beds. We felt that the public needed to have access to health
care. Nine hospitals closed. Three were left open. Several have
opened since then. But without us doing that, people literally
would not have been able to get care.
To keep the doctors and the nurses in New Orleans, we can
only do so much by hiring them but we are being put in a
difficult position because it is also the levees, the schools,
the businesses are not opening. What we are doing to get more
nurses in the future, we are partnering with Our Lady of the
Lake up in Baton Rouge, and they are going to open a nurse
training program on our campus to groom our own nurses because
we can't go and hire enough from the Philippines or from Texas
and Kansas City to bring into Louisiana. We need to grow our
own. We can do that but we need something like a wage index
adjustment because the wages have gone up 25 percent, and our
recruitment costs have gone up also.
West Jefferson predicted that without operating income that
our bond insurance companies would be asking questions why you
are not making money, and it might seem sort of obvious to all
of us on the team here, but they are very focused on making
sure bonds get paid so they put us in technical default of our
bonds at West Jefferson, and they put a mortgage on West
Jefferson. They actually have a mortgage. That is costing us
money, at least a million dollars in consultants and at least a
million dollars in interest during the year, plus we don't know
what they are going to do next. Now when they come in, they
don't provide services to the community. They cut costs. And we
are trying to do the best we can, and we continue to look at
utilities, supplies, and all the other things, so we are going
to continue to do that, andhope that we can get money to offset
our operating losses very soon.
So we are sort of a little different from everybody else in
that respect. We are under a lot of pressure. Non-paying
patients, the primary care clinics in our region received the
$100 million grant which we support, but you need to be aware
that this assistance should greatly increase the number of
clinic patients which is great. You need to also realize that
this will increase demand for inpatient and outpatient
specialty care services at our five hospitals and at LSU
further adding to our financial losses. In other words, if
somebody comes in as an unreferred, we call them, uninsured
patient to look for cancer care without insurance nobody else
in town has these services so we are the ones, we are going to
get into it even deeper with uninsured because of that.
Graduate medical education. We were proud to have opened
one of the two new teaching programs. The others continued, and
I think Touro expanded and others did. We are working with LSU
and Tulane to increase that, but we are losing money on that
because of the 3-year rolling average, and you guys are focused
on how to maybe get CMS to re-look at that. I can tell you, we
can't continue to take more residents without having the funds
to do it so we appreciate your help on that. Doctors, we made a
commitment to keep doctors by giving them a subsidy after
Katrina, and we had $2.5 million coming out of hospital funds
in those six. We have also chosen to pay our doctors in full
for their services in the emergency room, but it comes out of
West Jefferson's budget, which is not funded by anybody except
the funds that we have for patients. So it is deepening our
bottom line, but I think Dr. Burgess continues to try to help
us, but help doctors stay. We are doing all we can but we are
getting further behind but we feel that is a commitment to the
community.
We are facing a category 5 financial storm which can result
in the same thing. I think if it came again during August or
September this year it would be worse. Even if ground were
broken today on a new Charity Hospital, VA hospital, whatever,
we are all talking 6, 8, 10 years to do something. We just
can't hold out much longer. Again, our losses continue every
month as all the hospitals do here. We want to continue to
serve the community. We support everything you guys can come up
with. If we have other ideas, we will continue to come up with
those. I would welcome a GAO audit tomorrow. It can't be long.
I would ask them also to look at the funds that have previously
been spent and why they are not focused on region 1. They went
all over the State. A lot of the hospitals in the State are
doing very well. Let us spend the Government's money wisely and
focus any funds that come on our region, Orleans and Jefferson
Parishes.
We really appreciate every one of you all, your staff, our
colleagues here. We look forward to working into the future to
solve this problem. Thank you.
[The prepared statement of Mr. Muller follows:]
Testimony of Gary Muller
Mr. Chairman and members of the subcommittee, thank you
again for the opportunity to testify before you. Your continued
support and dedication to our cause is truly appreciated. We
are thankful for the work of your staff to maintain
conversation with us with concern for our deepening wounds.
Thank you, and the other members of Congress, for your visits
to the area and your understanding of the full and long-lasting
consequences of the most devastating natural disasters in
American history.
West Jefferson Medical Center is a 451 bed community
hospital located 10 miles from downtown New Orleans. After the
storm, we were one of only three hospitals in the entire area
to remain open- several hospitals, including Charity Hospital,
still remain closed. West Jefferson Medical Center was in good
financial standings before Hurricane Katrina with a projected
profit of $8 million in 2005. When I testified before you in
March, West Jefferson had incurred $48 million in Katrina-
related operating losses. That number has since increased to
$54 million- an additional loss of more than $6 million in only
4 months.
I want to assure you that I am here today to offer the
facts regarding the operations at West Jefferson Medical
Center. Our numbers have nothing to hide, our books are open
and we are confident that we have done everything in our power
to run our hospital in an efficient manner. We continue to
pursue that cause intensively. Currently, West Jefferson is
operating at 2 percent under its 2007 budget and loosing money
daily.
In fighting to provide the best possible care for our
patients while spending our money in an efficient manner, we
have implemented several business improvement plans and
negotiated with doctors to create cost-saving programs. This
month, West Jefferson Medical Center became the first hospital
in Louisiana's history to receive the Energy Star award for
energy efficiency awarded by the Environmental Protection
Agency. We continue to make great strides in this direction.
Fortunately, The West Bank of Jefferson Parish was not
flooded by Hurricane Katrina and West Jefferson Medical Center
was spared from extensive physical damage. However, West
Jefferson experienced a large increase in patient volume as
more than 1000 patient beds were closed in the New Orleans
area. To compound the problem with an increase in overall
patient volume, our hospital has also seen a 50 percent
increase in patients that are uninsured. So even as we struggle
to accommodate the increased patient load, fewer of these are
paying patients leaving us with much higher costs and more
losses.
The healthcare situation in Louisiana has an uncertain
future. However, these five hospitals testifying before you
today will continue to provide high quality services as long as
our doors remain open.
The other four CEOs and I, and all of the patients we
serve, are extremely grateful for Congress's response on behalf
of all America to Hurricane Katrina. However not enough of this
support has reached our hospitals, our doctors, our nurses, and
our patients to remedy our ongoing needs. We urge the congress
to review these existing allocations made to Katrina Disaster
Funds with the current healthcare crisis uppermost in mind.
I'd like to explain to you five of the issues that count
for some major financial issues faced by these five hospitals
from Orleans and Jefferson Parish.
We continue to suffer losses due to higher labor costs.
Immediately after the storm, we were forced to hire contact
laborers because so many of our healthcare workers evacuated.
At one time, we employed almost 100 agency or temporary, out-
of-region nurses to replace employees who left the area. In
2006 alone, these increased labor costs amounted to $12
million--double our costs in 2005. In summary, our nurses are
twice as expensive while the patients that we treat pay half
the cost. This is exactly why we continue to lose money.
In order to keep nurses and doctors from leaving a region
still struggling to reopen its schools, its stores and restore
its quality of life, we have had to boost recruitment and
retention packages by 25 percent. West Jefferson is also
opening a new nurse training program on our campus as a long-
term solution to the nursing shortage. While we have received a
one time grant to cover some of this additional labor cost, we
need an ongoing fix for this ongoing problem. As requested
before, we once again recognize the need for a Wage Index
Adjustment to help us manage the greatly increased cost of
labor.
Non-labor costs present unique issues for West Jefferson
Medical Center, but similar issues are shared by all five
hospitals. Because West Jefferson, as a public hospital,
remained open through the storm and immediately incurred
millions of dollars in losses, we received a Community Disaster
Loan. I'd like to take this opportunity to thank Congress for
the CDL that we received in February 2006 as it enabled us to
continue to provide services to the area. We'd also like to say
thank you for recent Congressional action allowing this loan to
be forgiven. We now find that FEMA regulations require us to
wait until 2009, three full years after the storm, to apply for
forgiveness. We hope Congress will urge the Administration to
grant forgiveness immediately to relieve the burden of interest
costs over the next three years.
We have incurred further financial strains as West
Jefferson Medical Center was recently declared in default of
its bond insurance requirements. As we predicted, the
operational losses since Hurricane Katrina, coupled with our
unpaid business interruption insurance claim, have placed us in
default with our bond insurers. This has resulted in the
insurers placing a mortgage on our hospital and implementing
other fees and restrictions on our operations. The impact of
continuing to carry the CDL interest and the default of our
bond insurance has added more than $2 million a year to our
costs. In addition, with other businesses in the area we share
increases in insurance rates, utilities, supplies and more. The
accumulation of these costs continues to contribute to our
millions in losses.
My hospital has also seen a significant increase in non-
paying Emergency Room patients. With overall patient volume
increases, Emergency Room wait time has peaked at around 14
hours. In addition, the average length of stay for patients has
increased from 6 to 7 days in just one year which further
increased costs. Primary Care Clinics in our region received an
additional $100 million grant recently, which we support. You
need to be aware that this assistance should greatly increase
the number of clinic patients. You need to also realize that
this will increase demand for inpatient and outpatient
specialist care services in our 5 hospital, further adding to
our financial losses from the uninsured.
Another shared concern is reimbursement associated with
Graduate Medical Education. West Jefferson Medical Center
became a teaching hospital after the hurricane in response to
the needs of displaced medical students in the region. We have
been supportive and understand the importance of our teaching
program but, like others, are being penalized by the current
GME reimbursement rules. Again, we lose money on every
resident, but think it is vital to keep training medical
personnel in our region as we depend on the vast majority
remaining here after they complete their studies. We ask that
the current reimbursement rules be reconsidered.
In line with strains felt nationwide concerning workforce
issues, we also face a similar but more severe problem.
Although we have felt these strains from physician shortages
for many years, currently, physicians are leaving our area at a
rapid rate. Our hospitals have to offer large recruitment and
retention packages to keep doctors and staff from leaving, and
even still, keeping those highly trained workers has proven to
be a very difficult task.
As mentioned earlier, West Jefferson is currently treating
more than twice as many uninsured patients than before the
hurricane, while only being reimbursed for 45 percent of our
costs. Every time an uninsured patient is admitted into our
hospital, we lose money as West Jefferson Medical Center is
only partially reimbursed for the treatment of these patients.
However, we have chosen to pay our doctors in full for their
services. This causes a deep and direct cut to our bottom line,
but our patients and community would suffer more without an
adequate number of doctors. As a public hospital it is our
charge to serve all those who come in our doors--but unlike
many public district hospitals that you may be familiar with,
we receive no dedicated revenue from our Parish government.
As chief executive officer of West Jefferson Medical
Center, I am faced with these and other financial issues
everyday. While we continue to offer vital services to the
community, I struggle with meeting the financial demands that
pull my hospital in multiple directions. Roughly two years ago,
Hurricane Katrina forced the closure of more than 1,000 beds in
New Orleans. We are now facing a Category Five financial storm
which could result in the same. Even if ground were broken
today on a new Charity hospital, our hospital would still have
to wait three to five years for the completion of this hospital
until some of these costs are alleviated.
Since the 4 months since I came before you in March, West
Jefferson has lost an additional $6 million. If I were allowed
to make a presentation before you again in 4 months, unless
changes are made, my story would be the same- more losses. Our
hospitals can only serve the community so long while facing
such mounting debt. I will leave it up to you to consider what
actions will need to be taken if this continues.
Once again, I offer many thanks to you, Mr. Chairman and
members of the subcommittee for your attentiveness and
understanding.
----------
Mr. Melancon. Thank you, Mr. Muller. Mr. Lagarde, if you
would.
TESTIMONY OF MEL LAGARDE, III, PRESIDENT/CEO, HOSPITAL
CORPORATION OF AMERICA, DELTA DIVISION, NEW ORLEANS, LA
Mr. Lagarde. Mr. Chairman, members of the committee and
staff, good afternoon. My name is Mel Lagarde. I am vice
chairman of the Partnership Board and managing partner for
Tulane University and Clinic, which is a two-hospital system
with clinics and facilities in both Jefferson and Orleans
Parish. Tulane University Hospital and Clinic is a joint
venture between Tulane University and HCA. For over 160 years
Tulane University Medical School has provided innovative
medical education, cutting edge research, and quality clinical
services to New Orleans. I was at the Tulane downtown campus
during Hurricane Katrina. I was directly involved in the
complete evacuation of all patients and employees from the
facility.
After being closed almost 6 months due to damage from
Hurricane Katrina, Tulane reopened our main campus in February
2006 and is providing services in the area most directly
impacted by the hurricane. As someone involved in the
overseeing the rebuild, I appreciate the opportunity to come
before you to discuss Tulane's experience in providing health
care to New Orleans after Katrina. Despite significant progress
during the last 2 years, the New Orleans health care system has
not recovered from Hurricane Katrina. Since then, these
coalition hospitals have provided approximately 95 percent of
the health care services in the New Orleans metropolitan area
providing patients with essential health care services despite
significant challenges including constrained resources, damaged
infrastructure, and significantly increasing cost.
After reopening one-quarter of our former size, we now
maintain 306 of our 335 pre-Katrina beds that are downtown in
Jefferson Parish campus. To date we have spent more than $250
million repairing and restoring Tulane. This represents an
important investment in the health of current and future New
Orleans residents and the recovery of the greater New Orleans
area. Tulane is the primary teaching hospital of the Tulane
University Medical School. Tulane Hospital and its patients are
essential to the education of medical students, residents, and
fellows who serve the New Orleans area. As the result of
significant work, we are currently providing training for 100
percent of our pre-Katrina resident positions. The success of
the medical school is closely linked to the success of Tulane
Hospital, and we are committed to maintaining that connection
into the future.
The reopening of Tulane has also provided access to health
care services for area veterans. After the Department of
Veterans Affairs medical center closed due to flooding from
Katrina, Tulane has granted staff privileges to VA physicians
and permits them to treat VA patients at Tulane. We hope our
support will permit the VA to rebuild in downtown New Orleans.
The coalition hospitals play a vital role in the recovery of
patient care needs in New Orleans and in the greater New
Orleans area. Although the Federal and State government have
provided recovery funds they are not adequate to address the
challenges faced by hospitals serving post-Katrina New Orleans.
The coalition hospitals' labor costs have skyrocketed as a
result of city wide shortages of doctors, nurses, and other
health care professionals.
On an adjusted basis, Tulane's salary expenses for the
first 5 months of 2007 as compared to 2005 are up 57 percent
and contract labor expenses are up 73 percent. Other expenses
have also increased for us. Our utility expenses are up 34
percent. Insurance is up 33 percent. And interest expense as a
result of borrowing in order to fund losses is up an extreme
1,000 percent. Since we resumed operation in February 2006,
Tulane has experienced operating losses every single month of
our operations. In 2007 Tulane experienced $24 million loss for
the first 5 months. All financial reports of Tulane University
Hospital and Clinic, we willingly support a GAO audit. We have
simply nothing to hide.
All the coalition hospitals have experienced similar losses
as a result of the critical shortage of help at providers and
the higher insurance and utility expenses, increased bad debt,
and sicker patients in post-Katrina New Orleans. Since
reopening net of business interruption insurance and the $5
million we received in Federal funding, we have incurred a loss
of $173 million. On behalf of Tulane and the other hospital
systems on this panel, I respectfully request that this
committee financially support this coalition for the next 3 to
5 years to permit the New Orleans health care sector to
recover. Specifically, I request that the committee support
funding by, one, redirecting existing Gulf Coast recovery funds
to our needs, two, continue the current Louisiana uncompensated
care cost formula of which approximately 70 percent is funded
by the Federal Government, and, three, suspending the 3-year
rolling average component for graduate medical education
payments.
Thank you members of the committee and staff for your time
and attention. I will be happy to respond to any questions.
Thank you.
[The prepared statement of Mr. Lagarde follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon. Thank you, Mr. Lagarde, I appreciate those
comments. Chancellor Hollier from LSU, if you would, for 5
minutes.
TESTIMONY OF LARRY H. HOLLIER, M.D., CHANCELLOR, LSU HEALTH
SCIENCES CENTER AND DEAN OF THE SCHOOL OF MEDICINE
Dr. Hollier. Chairman Melancon, Ranking Member Whitfield, I
am Dr. Larry Hollier, chancellor of the LSU Health Sciences
Center and Dean of the School of Medicine. I represent the
LSU's Schools of Medicine, Nursing, Dentistry, Allied Health,
Public Health, and Graduate Studies. I also represent the LSU
graduate medical education programs, the 10 LSU public
hospitals, and 36 health care clinics spread across our state.
When LSU representatives testified before this committee in
March they expressed apprehension over the future of graduate
medical education and health care delivery. Now while obstacles
remain and we look at what needs to be done, my message is that
solutions are evident, but we need your help to implement them.
Nonetheless, we are finally moving forward. Two years after
the storm, emergency rooms are still overwhelmed by patients
who believe they have no choice but to use the emergency room
for primary care. In an effort to relieve this demand, LSU is
deploying satellite health clinics throughout the New Orleans
area. These clinics are expected to be operational by October.
We also continue to experience in New Orleans a severe shortage
of mental health beds. While LSU is adding 33 psychiatric beds
in leased space the lack of mental health facilities will not
be substantially relieved until a new academic medical center
with a 68-bed behavioral health unit can open.
Private medical education is also a continuing concern. In
the floods following Katrina, LSU lost seven of its nine
teaching hospitals in New Orleans.
We had a desperate scramble then to find new places to
train our residents. We convinced very busy private hospitals
to take in our residents and become part of our academic
teaching network. They consented to do so in order to save our
medical education system in Louisiana even though they realized
that they were undertaking a financial burden for which they
had not been able to plan. For that year following the
hurricane, CMS granted a waiver that gave them full
reimbursement for their GME cost. However, that was only for 1
year. Since then they have been subjected to the 3-year rolling
average wherein only a portion of their GME costs are
reimbursed. This adversely impacts our ability to secure
adequate training slots for our residents.
We have repeatedly offered suggestions and requests to CMS
regarding ways to fix this problem but to no avail. Perhaps
this committee could urge CMS to give us a proposal to fix this
problem by some mechanism that is acceptable to them.
On another front LSU is participating in a medical home
demonstration project in New Orleans that will provide
coordinated patient care in satellite health clinics. We also
continue to forge partnerships with faith based clinics and
private hospitals to deliver primary care in the spirit of a
redesigned health care system. This initiative will utilize
health information technology to monitor quality, enhance
patient charting, and track prescriptions. Our faculty practice
has already purchased and started implementing an ambulatory
electronic health record, and we are making that available to
the various primary care clinics in the region to implement the
integration of the medical homes with the delivery of tertiary
care.
However, we need the ability to use DSH dollars to help pay
for physicians and clinic services. Without this flexibility
the medical home model of coordinated care through community
clinics will not become a reality in Louisiana.
We believe that the key to our ability to move beyond
recovery to revolutionizing Louisiana's health care system is
construction of a new LSU academic teaching hospital. As you
know, LSU and the State of Louisiana, in February 2006, signed
a Memorandum of Understanding with the Department of Veterans
Affairs to build a joint medical center in downtown New
Orleans. Land acquisition has been accelerated, architects have
been selected, and we are identifying the types of service that
will be provided by LSU, Tulane, and the VA and those that will
be shared.
Governor Blanco and the legislature meanwhile recently
substituted $300 million in State money for the Federal
Community Block Grants to insure that the State can meet VA's
construction time table. In short, Louisiana and LSU are ready
to go. So, while we are making steady progress mostly on our
own, we still need Federal help to complete our recovery and
reform. We need a firm and immediate commitment from the
administration, particularly the U.S. Department of Veterans
Affairs, for the construction of a new academic teaching
hospital. This new facility is critical to the future of
medical training programs at both LSU and Tulane. I believe
that is the only way to insure that we have an adequate supply
of skilled medical professionals in the future.
Contrary to assertions by some skeptics, this project is
the avenue of escape from what has been described by our
critics as a two-tiered health care system. It is the lynch pin
of a reformed health care system. Moreover, this project
represents the largest urban renewal project in the history of
New Orleans, a facility that will serve as a beacon of hope and
security for individuals and business seeking to return and to
rebuild. Thank you for your time, your interest, and your
assistance.
[The prepared statement of Dr. Hollier follows:]
Statement of Larry Hollier, M.D.
Chairman Stupak and distinguished members of the
Subcommittee, thank you for this opportunity to update you on
the painstaking progress being made as we continue to recover
from the impact of Hurricane Katrina on Louisiana State
University's professional medical education programs its ten
public hospitals, and 36 health care clinics spread around our
state.
When LSU representatives testified before this committee in
March, they expressed considerable apprehension over the future
of graduate medical education and health care delivery.
Today, on behalf of my colleagues, as Chancellor of the LSU
Health Sciences Center in New Orleans, my message is one of
hope that we are finally moving forward.
With the support of Louisiana's political leadership,
including Governor Blanco and the Legislature, we are deploying
satellite medical clinics in New Orleans and the first stage of
what will be a comprehensive, statewide electronic medical
records system.
In addition, LSU's Health Care Service Division has been
working closely with representatives of the U.S. Department of
Veterans Affairs to plan construction of a joint academic
medical center in downtown New Orleans.
Collectively, we have much work left to do and our medical
training programs are still threatened, but the picture I will
paint today is significantly more optimistic than it was four
months ago.
I will also briefly address a number of continuing myths
about the joint hospital project, falsehoods that have caused a
great deal of concern among indigent patients and our veteran
population.
Overall, although wait times for uninsured and underinsured
patients at our hospitals and clinics are improved, they're
still too long.
We also need more bed space for mental health patients. In
a few weeks, LSU will open 33 mental health beds in leased
space at a former mental hospital in uptown New Orleans.
We are adding diagnostics beds for mental patients at the
Interim LSU Public Hospital, but there is an overwhelming need
to do more, and this need will not be met until a new, 68-bed
crisis intervention unit at the planned LSU hospital is opened.
LSU and the state are planning early next year to deploy a
``medical home'' demonstration project in the New Orleans area
funded by the State of Louisiana.
The project will provide coordinated, patient-centered care
that utilizes partnerships and health information technology to
improve health outcomes at reasonable costs while providing
increased training opportunities for our medical students.
Key to the effectiveness of this project will be new,
satellite health clinics operated by LSU doctors, nurses and
allied health personnel in areas where our patients live. Those
clinics will be operational by the end of October, and will be
in addition to the other community and faith-based clinics
currently in operation.
We believe this approach when eventually deployed statewide
will relieve overcrowding not only at the Interim LSU Public
Hospital in downtown New Orleans, but also at private hospitals
throughout the state that have seen their emergency rooms
overwhelmed by uncompensated care patients.
When the New Orleans demonstration project is fully online,
it will include an electronic health record, which our faculty
physicians have already begun implementing. It will provide
quality guidance and monitoring of the quality of care
delivered. It will also include an innovative software program
to enhance patient charting and prescription tracking, a
service not limited to LSU-run facilities.
We have already forged partnerships with faith-based
clinics and private hospitals to deliver care in the spirit of
health care redesign without depending on a massive infusion of
Federal taxpayer dollars.Our graduate medical education
programs, meanwhile, are another issue. Dr. Alan Miller from
Tulane Health Sciences Center is testifying regarding
suggestions of temporarily changing how GME is funded following
major disasters. LSU is strongly supportive of the suggestions
outlined in his testimony on GME and believe it would be very
helpful in stabilizing GME in the New Orleans area.
Prior to Hurricane Katrina, LSU annually trained
approximately 627 residents and fellows in 95 programs. Today
475 LSU residents are being taught in 76 programs, a 24 percent
decline.
Because nearly three out of four physicians, dentists,
nurses, and other allied health professionals are trained by
LSU and remain to practice in Louisiana, I believe we are
facing a long-term shortage of doctors and other medical
professionals that will be worse than forecast physician
shortages in other areas of the United States.
This view is based on the fact that LSU's GME slots are
increasingly going to international medical graduates,
especially in internal medicine and family practice. These
young doctors will likely return to their home countries once
they complete their training whereas in the past, the majority
of our graduates stayed to practice in our state.
Following Katrina, the New Orleans area lost an estimated
50 percent of its medical professionals. At LSU, we lost more
than 165 faculty. However, we have been aggressively recruiting
and our efforts have yielded almost 200 new faculty members
during the last fiscal year. We also expect to add more than
100 new residency slots by next summer.
We are encountering a pioneering spirit among new faculty
members who are committed to helping us revolutionize
Louisiana's health care delivery system.
The key to that revolution is the construction of the new
LSU/VA academic teaching hospitals.
Over the past four months, LSU and the State Office of
Facility Planning and Control have accelerated land acquisition
and design team selection, and are mobilizing teams that will
complete historical preservation and environmental evaluation
and construction of these facilities.
Of particular note in this effort is the governor and state
legislature's decision to substitute state funds for $300
million in Federal hurricane relief funds to eliminate any
possible delay in the state meeting the Department of Veteran's
Affairs timeline for beginning the joint project. Among those
state funds is $74.5 million for the purchase of 37 acres of
land along with design work for the project. Legal teams are
identifying and expediting property acquisition, environmental
assessments, and relocation matters. Architects for both
facilities have been selected.
The city of New Orleans and the State Division of
Administration, meanwhile, have executed a Cooperative Endeavor
Agreement to purchase an additional 29 acres of property
adjacent to the LSU site for the exclusive use of the VA.
The LSU/VA cooperative planning group, which includes the
VA, LSU and Tulane University, has identified dozens of
services that will be provided by each hospital. Many of those
services, such as lab work and radiology, will be shared.
Still other services will be purchased from each hospital.
For instance, LSU will purchase EEG, Pulmonary and Audiology
services from the VA, while the VA will buy Radiation Oncology,
Dental, and Dietary services from LSU.
LSU alone estimates it will realize more than $4.2 million
per year in operational savings. Our business consultants
estimate combined operational savings to LSU and the VA will
exceed $400 million over 25 years.
This facility makes economic sense. Cash flow will be
sufficient to operate the facility, service debt, and finance
the continued maintenance of the new facility thereby reducing
reliance on state funds.
Moreover, the joint hospitals project, which will create
20-thousand jobs, will spur growth in biomedical and research
sectors and serve as the single largest post-storm urban
renewal project in New Orleans history.
A recent letter from Governor Blanco to Secretary Nicholson
urging the VA's continued collaboration with LSU to rebuild the
VA facility in Downtown New Orleans was cosigned by Louisiana's
legislative leadership, the presidents of LSU and Tulane
Universities and the chancellors of their medical schools, the
mayor of New Orleans, the director of the downtown development
district, and a number of individuals representing veterans
organizations.
My testimony would not be complete without addressing to
those who contend such a project should not be built in a flood
zone. It is important that they keep in mind breaches of
Federal levees by Hurricane Katrina's monster surge inundated
80 percent of the city of New Orleans.
Flood maps indicate both proposed sites for the new VA
hospital were covered or threatened by up to two feet of water.
Plans for the new LSU/VA medical center, however, include
armoring both hospitals against hurricanes and terrorism. First
floors of both facilities will be built at least 25 feet above
ground and the two hospitals will be capable of sustaining
operations for 30 days following any potential disaster
Finally, let me direct your attention to opponents of the
joint LSU/VA project who contend that the population of the New
Orleans area will not be large enough to support the new
hospital.
Population estimates indicate people are slowly coming back
to New Orleans. Since Katrina, an estimated 90 percent of the
veteran's population in New Orleans has returned along with a
like percentage of residents in Jefferson Parish which is part
of the regional catchment area for the new academic medical
center. The average age of the population in the catchment
parishes for the new hospitals will be older than their pre-
Katrina population and will hence require more medical
services.
This project will stop the so-called ``Brain Drain'' of
skilled, well-compensated medical workers while attracting a
new generation of health care professionals. It will also meet
the medical needs of veterans for generations to come.
After nearly two years, New Orleans remains a shattered
city on the mend, but the outlook for health care and medical
education is steadily improving.
Since the last time LSU representatives appeared before
this committee, our institutions have begun aggressively
working out and implementing solutions on their own, but we
still need Congressional help.
The message from New Orleans today is that we are making
major progress in building a ``medical home'' based health care
delivery model using an electronic medical records system that
we believe will serve as a model for the nation.
Mr. Chairman and members, thank you for this opportunity to
discuss these issues. I will be happy to answer any questions
you may have.
----------
Mr. Melancon. Thank you, Chancellor Hollier. I appreciate
those comments. Dr. Miller, if you would, with the Tulane
Health Sciences, 5 minutes, please.
TESTIMONY OF ALAN MILLER, PH.D., M.D., INTERIM SENIOR VICE
PRESIDENT, HEALTH SCIENCES, TULANE UNIVERSITY HEALTH SCIENCES
CENTER, NEW ORLEANS, LA
Dr. Miller. Thank you, Mr. Melancon, Mr. Whitfield, staff,
and members. Since the March hearing, and through your efforts
a number of actions have been taken that will have an immediate
impact on health care. We must turn our attention to long-term
stabilization, specifically the supply of future doctors and
graduate medical education or GME. Discussion must include
keeping our training programs vibrant. I will focus my comments
on the role of GME in providing the region's health care and
future workforce, the role of the VA in patient care and
physician training, and financial stability for the region's
providers. The tragedy of Katrina has energized our young
adults. Students flock to New Orleans to assist in rebuilding.
This fall, our medical school will admit its largest class
ever with no compromise in quality. As a result of damage to
the medical infrastructure, we have voluntarily downsized our
GME programs. Each year, the Tulane and LSU train fewer
residents, Louisiana faces long-term problems in physician
supply. Prior to Katrina, Louisiana ranked second in the
percentage of physicians practicing in the State in which they
trained, yet Louisiana was still well below the national
average for physicians per 100,000. Our experience revealed
flaws in the system for reimbursing GME that still impacts us
and will be repeated in other cities if a disaster results in
the total or partial closure of a major teaching hospital.
Pre-Katrina both schools had their largest concentration of
residents at the Medical Center of Louisiana at New Orleans,
MCLNO, which was closed for 15 months post-Katrina. Although
partially reopened, it can accommodate only a portion of the
previous total residents. The financing of GME is a complicated
maze. We have provided diagrams demonstrating the process
before and after Katrina. We train residents at several
hospitals and rotate those residents among them. The medical
schools act as pay masters so the residents have consistency in
salary and benefits. During the period of total and partial
closure the medical schools remain responsible for education of
the residents and pay their salaries despite being unable to
receive reimbursement from the closed hospital.
As a result, Tulane lost $6 million in fiscal year 2005-06
and anticipates $1.5 million this year. This process has been a
bureaucratic nightmare. This diagram that you see on the screen
shows you the situation before on top and since Katrina in how
the medical schools operated with hospitals and CMS to receive
reimbursement and train the residents. CMS provided initial
waivers that helped but fell far short of solving the problem.
Currently, we must find teaching environments that meet
accreditation standards but cannot get agency approval until
after the training is in progress. Closed or partially closed
hospitals must enter into affiliation agreements with host
hospitals which then enter into agreements with medical
schools.
Our proposed remedy is pictured in the third diagram in the
written testimony. When a teaching hospital that functions in
partnership with a medical school for GME will be totally or
partially closed the slots that cannot be supported should be
put in the stewardship of the medical school giving the school
greater flexibility in assuring training and continued
financial support. GME payments would go the host hospitals who
would reimburse the schools. This would continue as long as the
originating hospital could not support its total approved slots
and be adjusted annually. The process would be far simpler and
assure the stability of the GME programs.
Another challenge has been the 3-year rolling average by
which CMS funds GME slots based on the average number of
residents over the preceding 3 years rather than the actual
count. This was waived for affected hospitals through June
2006, despite the fact that the programs never totally closed
as was stated earlier. Hospitals accepting additional residents
report significant negative financial impact and have been
unable to fully reimburse the medical schools. The difficulty
in finding temporary hospital placements for residents was in
part a function of Medicare's cap on the number of reimbursable
training slots assigned to hospitals. Hospitals were reluctant
to accept residents because of the negative financial
implications of exceeding the cap.
The process of resident placement is dynamic in a recovery
period. Adjustments must be made as the original training
hospitals reopen beds and as feedback from accreditation
agencies mandate change. We request that Congress instruct CMS
or if necessary pass legislation to provide further exemption
from the 3-year rolling average for hospitals that take in
displaced residents until a replacement MCLNO is completed.
Prior to Katrina, Tulane provided approximately 70 percent of
the care at the VA medical center in New Orleans which also
provided training for 120 residents. The VA closed as a result
of Katrina and today provides outpatient services in VA clinics
and admits some patients to Tulane University Hospital.
The VA's integration with the Health Sciences Centers at
Tulane and LSU provided a critical synergy. The missions of
these 3 institutions in patient care, education, and research
are integrally intertwined. The quality of the health care
provided to our veterans is enhanced by the association with
the schools and the highly skilled clinical faculty. It is
critical that construction of a new VA hospital in downtown New
Orleans proximal to the two medical schools begin without
further delay. Finally, I ask you not to forget the doctors who
are providing uncompensated care. If hospitals are compensated
and doctors are not who will admit, diagnose and treat. Once
again, I thank you for your continued attention and support for
the challenges that we face.
[The prepared statement of Dr. Miller follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Melancon. Thank you, Dr. Miller. I appreciate your
comments. Dr. Peck, if you would, please, 5 minutes.
TESTIMONY OF GARY Q. PECK, M.D., AMERICAN ACADEMY OF PEDIATRICS
Dr. Peck. Good afternoon. I appreciate this opportunity to
testify today. My name is Gary Peck, and I am proud and pleased
to represent the American Academy of Pediatrics. I chair the
Academy's Disaster Preparedness Advisory Committee and I sit on
the Board of Directors. I also am a former medical director and
assistant State health officer for the Louisiana Office of
Public Health as well as a former pediatrician who practiced in
New Orleans.
An effective health care system has two primary components:
strong hospitals and related institutions, but an equally
robust cadre of private practitioners in the community. We have
heard a great deal about hospitals today and institutions. We
have heard virtually nothing about the vitally important
physicians in private practice, so allow me to share with you
this afternoon the litany of issues faced by my colleagues in
the New Orleans area.
Many physicians faced the total destruction of their homes
and office space, including medical records, equipment, and
supplies. Physicians lost revenue during the weeks or months
they were unable to practice. Many physicians who stayed in the
region are only now--2 years later--seeing an adequate volume
of patients to sustain their practice.
Under the Stafford Act, physicians in private practice are
considered for-profit entities like dry cleaners or liquor
stores. As such, they are unable to access most forms of
Government aid like the programs that assist hospitals and
community health centers. The Louisiana Department of Hospitals
and Health Program retains and recruits new providers, but has
been the subject of a good deal of confusion, and its impact on
retention, especially in pediatrics, is very unclear. While the
greater New Orleans Health Service Corps will distribute $50
million, 70 percent of that is earmarked for recruitment of new
providers and only 30 percent for retention of existing health
care workers in the New Orleans area.
In the immediate wake of the storm, the entire Gulf Coast
region experienced an influx of volunteer organizations
providing free or low cost care to our residents. Local,
private practitioners found their patients going to temporary
facilities that were more visible, better advertised, and
easier to access than their own practices. While certainly well
meant, these efforts had the unintended consequences of
diverting patients to temporary providers that fail to provide
a medical home and deny needed revenue to local health care
providers.
With the loss of jobs after the hurricane, the number of
patients covered by Medicaid or having no coverage at all has
increased dramatically. Louisiana Medicaid now covers
approximately 20 percent of all people in the New Orleans area.
At the same time almost 65,000 fewer children are covered by
Medicaid in the SCHIP program. We are faced with a paradoxical
situation of having far fewer residents but a higher proportion
of uncompensated Medicaid care.
Physicians in private practice do not have the ability to
charge more for their services. Pediatricians are locked into
contracts with private insurances or Medicaid that prevent them
from altering their rates. In fact, one private insurer,
United, is currently decreasing reimbursement to New Orleans
primary care pediatricians.
The recruiting challenges faced by hospitals and health
systems are as bad if not worse in physician practices.
As caregivers for children, pediatricians do not treat
Medicare patients and were therefore unable to benefit from the
modest health provider shortage area increases disbursed
through Medicare to Gulf Coast providers. Medicaid rates, in
Louisiana average 60 to 70 percent of Medicare rates although
recently the legislature has passed a measure that will raise
our Medicaid payments to 90 percent of Medicare rates effective
October 1.
Pediatricians face very high overhead costs, particularly
in the forms of vaccines, which must be purchased and paid in
full up front with no guarantee that all of the doses will be
administered or reimbursed. Pediatricians struggle to provide
medical help, particularly for children with chronic or complex
health needs. Usually they find the extra time and work
involved does not get compensated. Children's mental health in
New Orleans are woefully unmet; a recent study estimated that
45 percent of children returning to New Orleans need mental
health services.
If we hope to rebuild a robust health care system in New
Orleans that can provide quality, high health care to all
patients. policymakers must recognize the crucial role that
private physicians in private medical practices play in that.
In pediatrics in particular, 85 percent of all patient
encounters occur in privately owned and operated practice
settings.
In conclusion, I have two recommendations for the State of
Louisiana. The American Academy of Pediatrics commends the
State of Louisiana for its recent decision to increase Medicaid
payments. Unfortunately, this increase is still insufficient to
assure access to care for all children. Policymakers should re-
examine the emphasis of the greater New Orleans Health Services
Corps on retention versus recruitment. The State's effort to
establish additional community health centers and federally
qualified health care centers should be reviewed to insure that
it represents a long-term strategy that will best serve the
needs of my area residents.
The Louisiana Department of Health and Hospitals should
affirm the vital role of private practitioners in the health
care system by exploring creative incentives for supporting
these practices and their efforts to serve their patients and
recruit staff in their practices.
The Federal Government must transform its goal in disaster
medical care from providing short-term, temporary care to
supporting the local health care system and its providers.
After the immediate recovery phase, Federal efforts should
focus on the reinstatement of local health care institutions
and providers, rather than the provision of care through
volunteers and short-term facilities. Health care providers,
including for-profit private practices must be provided with
aid to re-establish their operations. Patients must be
encouraged and be assisted in returning to their prior health
care providers to improve the continuity of care. The Stafford
Act should be examined to identify avenues for providing aid
for profit health care entities such as private practices,
recognizing the vital role they play in a health care system.
The American Academy of Pediatrics commends you, Mr.
Chairman, for holding this hearing today to examine the ongoing
challenges facing the health care system in my home, New
Orleans. I appreciate this opportunity to testify, and will be
pleased to answer any questions you may have. Thank you.
[The prepared statement of Dr. Peck follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stupak. Thank you, Dr. Peck, and thank you to the full
panel for being here today and your testimony and your help and
support in what we are trying to do in New Orleans. I apologize
for being in and out but we have been on the floor with SCHIP.
For questions, Mr. Melancon, please, do you want to start?
Mr. Melancon. Thank you, sir. First, and a positive
statement, Dr. Quinlan, don't feel bad for trying to take an
opportunity and make it work for your hospital. No one faults
you for that. The people that should be faulted for that
happening in the sense of where the VA didn't go yet, where
Charity didn't go yet or the people up here that have played
politics with it and left it out there. I truly understand. Now
our goal is, and I think what I heard from every one of you
gentlemen and Dr. Rowland, is that we have got a lot of
immediate problems that we need to address, and I think you
have delineated those very well today. And if I can, I would
like to rather than ask questions just kind of make sure I hit
them and then let us talk about what we do from this point
forward.
I have been in office with every one of you, I believe, at
some point in time in the last 2 years, and we have had these
discussions. As Dr. Hollier, I believe, expressed it never went
anywhere after you had the discussions with the bureaucracy.
They listened, and then as I heard today, and I said where is
the action switch, we haven't seen that. One is we have to
remedy the situation with the bleeding, with the red ink, and
address those issues in whatever way that we can try and get
those things, take a direct attack at them through the
legislation.
Now the second one is the GME, the third is the DSH dollars
to compensate physicians at the hospitals. I think I have got
them all. They are not all inclusive, but what I would like to
ask of the chairman and the ranking member is that at this
juncture, the end of this meeting, that the staff of this
committee become the mediator between the Louisiana medical
community or the New Orleans regional medical community and the
agencies we are dealing with and start trying to put something
down that they can do with either the rules and regulations or
that we can do through legislation here because it is entirely
too long the process that has been ongoing. But is there
anything that anybody other than your prepared statement, Mr.
Chairman, if I am allowed with my extra 2 minutes that if
anybody has any other comments or suggestions of things that we
need to make sure to include.
Dr. Hollier. I will just make one comment for emphasis. We
keep hearing multiple comments being made in Washington that
they would prefer that we not build a replacement University
Hospital in New Orleans in order to help drive health care
reform. We have been trying to change the system since before
Katrina, and we are still committed to doing that, but what is
often missed is that how one funds health care and how one
provides graduate education and care for patients are related
but different. It is important to recognize that the University
Hospital, Charity Hospital, that we had before the storm not
only trained residents but it had over 2,200 students that it
trained.
LSU and Tulane trained over 70 percent of the physicians in
the State of Louisiana. All the health care professionals are
dependent upon this training system. It has been very
destructive to have so much opposition to building a hospital.
I think all of my colleagues here that we worked with and the
hospital CEOs have had concerns on their own about not being
able to replace the workforce that they need, so this is an
important thing we recognize. We need a place not only for the
residents but to also train all these students that we have to
train.
Mr. Melancon. Let me ask one. When you have had the
conversations after either our meetings or the last hearing and
we thought maybe things would move, what kind of response did
you get from CMS or VA or any of the agencies? Was it just they
read to you what the programs provided and then left it or did
they try and give you any suggestions?
Dr. Miller. Particularly on the GME issues, I think what we
have tried to do is educate on what the problems were and how
we saw that they might be ameliorated, and what we got in
return was education on what their regulations were and how
they wouldn't allow what we wanted.
Mr. Melancon. And when you presented to them the problems,
what was their response? What did they do?
Dr. Miller. It was similar to what you had this morning in
the earlier panel.
Mr. Melancon. A renumeration of the program.
Dr. Miller. Yes.
Mr. Melancon. Mr. Chairman, thank you.
Mr. Stupak. Mr. Whitfield for questions, please.
Mr. Whitfield. Thank you, Chairman Stupak, and I would
thank you all once again. I know how frustrating it is to be
sitting here so many hours when you have so many issues facing
you. Chairman Stupak, I would follow up on the suggestion made
by Mr. Melancon that it maybe would be helpful to have our
committee staff be intermediaries to deal with this because
every time we have a hearing and the people from the Federal
Government, CMS, and other agencies may have the very best
intentions but it appears that there is always an explanation
of a regulation or a rule or a law or why you can't do
something, why you can't address the issue, why it is an
obstacle. And so all of us seem to be tied up in knots and not
getting anywhere. And when Dr. Peters presents the combined
financial statements of the five hospitals that he talked about
for the first 5 or 6 months of this year and the combined
losses in excess of $53 million, it makes you wonder--and, by
the way, in March when you all were here we were talking about
those losses as well.
And so we have discussed the depleting of these cash
reserves and the deficits and how long can you all really
continue to operate? Where does this money come from? If you
all would address that, you executives of those five, how long
can you operate?
Mr. Muller. Maybe I should start because I think I am a
little different at West Jefferson because of the bond
insurance requirements. We have to have an operating income
quick. They are talking about September, another review by
December, so if we don't have operating income, which would
include grants and things that are immediate then we become in
default. They take the mortgage. They can come in and operate
West Jefferson. That would not serve the community.
Mr. Whitfield. And what about you, Dr. Quinlan? What about
Ochsner?
Dr. Quinlan. Well, we made a commitment from the beginning
that we are not going to put patients in the middle, and to
date we have been reasonably successful at preserving services
and we have committed the company to risk its existence to
promote economic growth in addition to care. We keep scrambling
to find new ways to stretch dollars and make them work but the
losses make that progressively more difficult.
Mr. Whitfield. Mr. Hirsch.
Mr. Hirsch. We are in a similar position. I brought a
deficit budget to our board in the beginning of this year. I
have never in my career--I can't say that I have never operated
at a loss before but I have never planned on doing it before
the year started. And that budget called for going through
about two-thirds of a board designated fund of cash to support
our operations to the tune of about $20 million. And so we
can't do that for another year or two. It is a spiral. To Mr.
Muller's point, we had the same kind of issues. We are not in a
technical default right now but I don't know how far away we
might be from that. We had that last year as well so it is--the
question gets asked what do you cut and when. I am not certain
about that, but I know that it looms as a possibility. I am not
prepared today to say exactly what but again in almost 30
years, I have never seen a picture like this.
Mr. Whitfield. Dr. Peck.
Dr. Peck. This is a great question. I can comment on a
couple of pediatricians. I know of two practices in New Orleans
who are just getting ready to go under. They can't practice for
much longer. And it wasn't just New Orleans. It is the Gulf
Coast. There was a pediatrician who practiced in Bay St. Louis.
He was very young. He went back to Bay St. Louis after Katrina
and tried for 2 years to get things going and just ran out of
money. I have two practices in New Orleans I know of that if it
doesn't turn around they are having to leave the city just
because of reimbursement costs. It is incredible.
Mr. Whitfield. Well, thank you very much for that, and I
know this next question is not related to the physician which
is an important component of this obviously, but after our last
hearing Dr. Quinlan and Dr. Miller and Dr. Hirsch signed a
letter which they outlined certain solutions to this problem or
at least helpful steps that could be taken. And one was
relating to critical access designation so the reimbursed costs
plus, and I remember at that hearing there was a lot of
discussion about that but whatever happened to that suggestion
and is that not possible or what is the deal?
Dr. Quinlan. Actually we have looked into that further and
we have different effects with the different hospitals based on
the size of their graduate medical education program. Because
of our size we have 350 residents and fellows that would
actually lose revenue by that mechanism. Don't ask me how but
we would. It is kind of an archaic accounting system. Others I
think would benefit so the effects would not be the same.
Mr. Whitfield. So some would benefit and some would not?
Dr. Quinlan. That is correct.
Dr. Peters. I would make the comment probably very general
in nature. I think what it really takes at this point is to try
to come up with some creative solutions. I think first
acceptance of the data and maybe making sure that it is
accurate, which we are convinced that it is, I think that that
has always been a question mark with some of the agencies, is
it really as bad as what maybe individuals anecdotally portray.
So and not to be repetitive, but I think there have been a lot
of dead ends with regulatory roadblocks, and I think I will
speak for East Jefferson, we would welcome staffers being
helpful to be intermediaries to whether it is thinking out of
the box or really determine a type of cost-based reimbursement
that would address this unique issue that exists.
Mr. Whitfield. Thank you very much. Do you want to say
something, Mr. Hirsch?
Mr. Hirsch. I was just going to say that we would be
supportive of cost-based reimbursement. It would help us. We
have hit these same kinds of dead ends that we heard earlier
with some of the questions that the Chair was asking, and we
just hit dead ends on these kinds of solutions.
Mr. Lagarde. For Tulane we would--critical access
designation would negatively impact us with the same reason it
would negatively impact Ochsner. The hospitals with the large
teaching programs, I agree with Dr. Quinlan on this, it is
impossible to understand but it would not benefit. It would
have millions of dollars worth of impact to us to move to a
critical access designation at this point in time.
Mr. Stupak. But if the purpose is to give you critical
access designation so you can be paid a premium for your
services, not asking you to move or do other things, just that
the reimbursement rate was at a critical access hospital rate
wouldn't that be beneficial?
Mr. Lagarde. In theory it would but the way the critical--
if critical access designation is amended from the way it is
currently paid it potentially could be beneficial for all five
hospitals represented here but the way it currently reimburses
hospitals it would have an impact upon----
Mr. Stupak. Because of your GME?
Mr. Lagarde. Because of not only GME but also our indirect
medical education costs as well.
Mr. Stupak. We sort of see that from this side of dais, and
we see it in sort of a separate situation like you would think
you would be reimbursed your critical access for services
provided, the emergency room, your GME, but one offsets the
other, right?
Mr. Lagarde. That is correct. Dr. Hollier was reminding me,
it is a formulation, it is a formula driven reimbursement that
doesn't fully account for the cost associated with large
graduate medical education or direct or indirect medical
education.
Mr. Stupak. You want to waive those requirements so you can
get reimbursed for services.
Mr. Lagarde. I think as Mark Peters has mentioned this is
something that we would probably like to have a good
conversation about.
Mr. Stupak. Dr. Peters, on the financial statements that
you provided us, do you have any objection if this committee
bipartisanly asks GAO to go through those numbers so we can get
some quick verification? We will ask them to do it
expeditiously because we need some verification and get back to
HHS and others to move this process along.
Dr. Peters. No, absolutely. We all welcome that and we
welcome the rapid approach to that.
Mr. Stupak. We talked today, and there has been discussion
about like $195 million coming in to the area and another $100
million is supposed to be available around September 1, and $26
million for GME. You hear these numbers, and my folks back home
are saying, man, you are pouring a lot of money in there, but
then I look at your financials and it is not there, the money
is not there, so how did we get to this point? Can you give us
a little bit more? Has Secretary Leavitt or representatives
from HHS engaged you in a dialog about these issues, the
financial parts? Mr. Peters, do you want to start? How did we
get here?
Dr. Peters. I think it is probably a multi-factorial
reason. One is I think the efforts have been diluted as we have
talked about. I think that Medicare wage index money is a good
example that went to 31 parishes, 60 some hospitals. That
diluted its impact on the hospitals in our area. I think that--
--
Mr. Stupak. The wage index--let me stop you there. So
because people were not in your hospitals, what happened to the
wage index? Did they take it down on you? Did you get less
money?
Dr. Peters. Well, first off the dollars came as a grant. It
was not stepping----
Mr. Stupak. I see what you are saying. It was spread out
too.
Dr. Peters. Change in the dial, the new setting that would
pay us at a different level for every Medicare patient that is
admitted to the hospital which is again one thing that is an
immediate partial solution to the problem because there is a
process already in place. There is a way to audit it. We do
Medicare cost report, et cetera. So I think that that is a huge
area of opportunity. I think second maybe stepping aside from
dollars, I think that there has been maybe too much emphasis
looking at long-term reform and not the immediate needs. And I
think what the testimony of my colleagues has expressed today
health care providers continue to want to do the right thing
and keep taking care of patients in spite of all this bad
stuff. None of us are businessmen at heart and if we were we
probably would have about half the beds in place. So I think
not enough attention to address the short-term needs which
honestly would help us have more ability to look at reform as
we move forward.
Mr. Stupak. Define your short-term needs. From listening to
the last panel with HHS it seemed like the short-term needs
was, OK, the hurricane was over, things calmed down, we are out
of here. But I see your short-term is a little bit longer than
what----
Dr. Peters. To fill a gap that exists to get us back to
break even because the other thing we have not talked about----
Mr. Stupak. Was that short-term going to be 2 years, 3
years?
Dr. Peters. I think we would say 3 years, 3 years to fill
that hole because the other thing that has happened is that we
have all cut back on expenditures. We have all not bought some
of the things we would have normally and there is going to be a
huge price to pay at a later date. The other thing that I
wanted to mention to Congressman Whitfield's question is how
long can we all go. The other thing that has happened that we
all appreciate now is how intertwined our fates are and whether
it is East Jefferson, West Jefferson, Ochsner, Touro or Tulane
if somebody cuts services tomorrow it is going to make my
situation worse because this is all that is there. And with all
due respect to the new facility, the VA, where it should be
located, this is that immediate issue that if as Gary talked
about he is forced out of his own control to do something we
are all going to pay the price and it starts back that downward
spiral. And that is not even talking about how much that impact
will be on whether somebody is going to come back to New
Orleans.
Mr. Stupak. Well, you must have had these conversations
with HHS. What is their response? We certainly understand it up
here but what is their response? What are they doing to help?
Dr. Peters. They listen. They will say we will try to
evaluate and look at some of these solutions, and again there
have been partial solutions. East Jefferson got $5 million for
the Medicare wage index. That is a lot of money but relative to
where it should be if current data was being used it to a
degree it is like me saying here is a quarter, go have a great
lunch. It is nice you got a quarter but I don't think it is
going to buy you much of a lunch. We appreciate that effort but
it just hasn't taken care of it, and we are frustrated too. We
are very frustrated. But also why we are here is we are still
trying to come up with solutions.
Mr. Stupak. Dr. Miller and Dr. Hollier, I mentioned earlier
to HHS that the Utah demonstration project for reimbursement of
your GMEs, could that work in your situations or am I just off
base?
Dr. Miller. After that, I talked a little bit with
Secretary Cerise and with Dr. Hollier regarding that. Something
of the modification of that plan could possibly work for us. I
think the plan itself is too broad to apply because you don't
really need to apply it to the hospitals that are open and
taking care of their own GME slots. It really only needs to be
applied or something like it applied to the handling of GME
slots from a closed or partially closed facility. So if there
were 600 some odd slots at MCLNO prior to the storm, if you
could put those 600 slots into some type of stewardship,
whether the stewardship was administered by the medical schools
in proportion to what proportion of those slots they handled
before or by some type of oversight, that would go a long way
to solving the problems. We would be able to place those
residents in hospitals that could handle them with the proper
teaching environment.
The funds would flow so that the medical schools and the
hospital supporting the GME were reimbursed, and it should take
away any of the 3-year rolling average problems.
Mr. Stupak. I don't mean to interrupt you, but could the
two of you put together a proposal of the modified Utah, get it
to us, and we will try to coordinate that with Secretary
Cerise, and maybe we can start pushing HHS. So what I have been
hearing again today is DSH payments, we have to get that fixed.
We could do a waiver there. The GME, we need to fix this one.
The wage index, we have to get back and take a look at it now.
Any other areas I am missing? I know we still got the BA issue.
Dr. Quinlan. I think the other issues would be don't forget
immigration to increase the labor pool. Those are caught up in
the visa problem bottleneck. And remember the wage index refers
just to that. It is a workforce issue but there are other
expenses around insurance and utilities that are significant
contributors, and there are other smaller ones but this problem
is not one thing. It is hard for people to understand. It is a
lot of things that go against us and a little bit that doesn't
go for us. In aggregate, that is how small companies develop
large deficits.
Mr. Stupak. I am looking at this financial and I see
utilities are up 32 percent, your employee contract labor is
162 percent increase. This is pre and post-Katrina. Then I am
looking at insurance, business interruption, that is up 35
percent. Bad debts up over 30 percent, so I can certainly
understand how these numbers multiply and if there are five
hospitals it multiplies in a hurry. Dr. Rowland, if I can ask
you just a couple quick questions on some financial things. You
have heard the hospitals stating their financial situation and
it sounds pretty stark. What would you recommend to the
committee and some of the HHS areas they could address?
Ms. Rowland. Well, I think that one of the issues that has
clearly come out today is that our health policies and health
reimbursement policies are based on a health system that is
continuing and continuous and so you can go back to 3-year old
data and move forward. I think there clearly needs to be for
future disasters like this and to even help here to have some
mechanism by which these rules can be flexible and suspended.
Then if a crisis occurs you can have a demonstration program or
an initiative that lets you weave together all these pieces
that everyone has talked about today whether it is for special
incentives for workforce or other componets.
And I recall many years ago, when I worked at the
Department of Health and Human Services, we had an initiative
we called financially troubled hospitals. And it happened in
New York, it wasn't Louisiana at the time, but we were looking
at ways to use grant funds combined with waivers of Medicare
and waivers of Medicaid and put together a demonstration
project that could really move in and provide the funding. And
the other piece that I have heard today is that it not 1 year
or 2 months. It is over a long period of time and that instead
of focusing on what the health system will look like in 2020,
we need to focus on how to get enough of the resources there to
get them over the hump, and the hump I think is a lot higher
than what we had said before. But clearly looking at one of the
lessons out of this I think is to really put together some kind
of a disaster-related assistance so when a health system is
disrupted as that in Louisiana you have some ability to go in
whether it is an earthquake in San Francisco or whatever.
And we clearly just see a patchwork approach, and I think
that is why there are so many stumbling blocks about trying to
put one piece together and another piece doesn't work.
Mr. Stupak. I am sorry. I am way over my time. Mr. Burgess,
do you have questions? I am sorry. I didn't see you down there.
Mr. Burgess. That is all right, Mr. Chairman. Cheerful
persistence is my motto today. Let me just ask a question I
had. I probably ought to ask this of Mr. Miller because I
remember we talked about this in October 2005 when I was there.
Community development loans were monies that you all needed to
keep your operations going. Actually I think you wanted those
to come in the form of Federal grants and they actually came in
the form of loans. But my understanding from information I
received is there was $100 million left on the table at the end
of September 2006 that was not subscribed. What was the reason
that you couldn't utilize that money, that the hospitals
couldn't utilize the money? Was it because they had to be paid
back? Was that a problem with your bond holders from East
Jefferson and West Jefferson's perspective?
Mr. Muller. Actually a couple things. The formula again for
receiving any amount of money comes from your revenues lost and
the CDL. We had actually applied for almost $50 million and
ended up getting $30 million, so that $20 million was left on
the table East Jefferson, Jefferson Parish, Orleans Parish,
whoever got the CDLs. The formula drove a lower number. The
second thing----
Mr. Burgess. So then let me just interrupt you for a
second, then that money left on the table could not be
accessed? You didn't get another bite at it?
Mr. Muller. No.
Mr. Burgess. Does anyone know what has happened with those
dollars since then? When the time limit expired did those
dollars come back to the Federal Treasury or maybe that is
something we need to find out, Mr. Chairman. I don't know what
happened to those dollars.
Mr. Stupak. That is a good point. That is a good point.
What happened to them? If it was designated for you and you
couldn't use it because of the formula based upon past old
information if that money has been designated why can't we get
it back?
Mr. Burgess. And let me just, reclaiming my time, let me
just ask have we done anything legislatively to alleviate some
of the burden as far as the repayment of this? Has anything
happened to your understanding in either the House or Senate
where they made a legislative fix that these loans would
convert to perhaps grants where repayment would not be
requested?
Mr. Muller. Well, it was approved in the Iraq war bill,
part of the Iraq war bill, to have them forgiven. Again, we
said that is wonderful. What we have found is that the process
of forgiveness is going to take several years, and that is the
problem.
Mr. Burgess. Again, reclaiming my time, this was in the
supplemental that we just passed in June, is that correct?
Mr. Muller. In June, that is correct. It was in the bill.
It was forgiven. We said wonderful. I believe the rules came
out like end of July or something and we found that it would
take several years to do it. I am not going to get into how
they decided this but it is a legislative way of doing it.
Mr. Burgess. Mr. Chairman, I know we are not a legislative
committee but maybe we could put our staff to work on this if
there is language that we can write that would make this money
available and make those loan forgivenesses accelerated so that
you guys aren't in hot water with the New York bond holders and
can continue----
Mr. Stupak. That was not the intent of Congress, that is
for sure. Maybe HHS wrote the rules that way but that is not--
--
Mr. Burgess. We actually wrote part of the rules that way.
Dr. Quinlan. Can I make a point?
Mr. Burgess. Please. I wish you would.
Dr. Quinlan. Not all institutions are eligible because we
are not governmental agencies.
Mr. Burgess. And that is a very good point. Had these been
handled as grants rather than loans perhaps Ochsner would have
had the availability of some of those funds. And again, Mr.
Chairman, I would just suggest that if we are looking for
legislative fixes that may be something that we ought to
investigate.
Dr. Peters, I do need to ask you, and I thank you for
outlining the five issues, the target issues, that you brought
to our attention. And based on your understanding of what is
available, what do you see--I know my time is brief. Maybe the
chairman will indulge me a similar amount of time that he had.
What do you see as the fixes that are amenable that could be
done from the Federal agency, from HHS, from the standpoint of
State government, and the standpoint of congressional activity?
Are there things that come to mind that leap off the page
looking at those five targeted areas where if HHS would do
this, if the State would do that, and if Congress would do the
other things that your lives would be improved.
Dr. Peters. At the State level, I think that what we would
really like to see is a consistent, more than a 1-year response
of how we could plan from compensated care dollars. Our State
goes through a legislative process every year. It is always
unclear how that will settle out so we are really interested in
consistency, again, over the next 2 to 3 years to let us
effectively plan.
Mr. Burgess. Let me just interrupt you for a second. Have
you found a sympathetic ear at your State legislature for that
concept?
Dr. Peters. I think that the State legislature has been
very engaged in this process. I think they have wanted to come
up with some solutions.
Mr. Burgess. I hope they have.
Dr. Peters. I think one of the challenges that remains is,
how much should be directed to New Orleans as it relates to the
other part of the State, so that is a recurrent issue both at a
State and Federal level of everyone has problems these days and
health care is not wonderful anywhere, so we face that
challenge. At the Federal level----
Mr. Burgess. Let me just interrupt you there for a second.
I just have to ask this, and it may be inappropriate and I
apologize in advance if it is, but other States were affected
by this disaster. Are they having the same types of
difficulties vis-a-vis their State legislatures with the
distributional issues that have been brought to our attention
this morning? Is it unique to where you are living or is it in
fact all of the States that have been so affected have found
the same problems?
Mr. Melancon. If I could, if you would yield for a second,
I think I can explain something. What happened in Orleans
Parish is that the entire----
Mr. Burgess. We have experts that we asked--you and I can
talk any time.
Mr. Melancon. The difference of what happened is on the
budgetary problems the State constitutional amendment says they
have to balance the budget every year, and they don't do 2
years of projections. That is----
Mr. Burgess. You and I can have that discussion.
Mr. Melancon. I yield back. Thank you.
Mr. Burgess. Is there anyone on the panel who has a feeling
about that? Is there something that is unique to Louisiana or
is in fact Alabama and Mississippi having similar sort of
difficulties?
Mr. Lagarde. Wearing my HCA hat, we operate hospitals in
Lafayette, Louisiana and also Gulfport, Mississippi. Neither of
their total of four hospitals that we operate in these other
communities, as well as we operate a hospital on the north
shore of--none of our hospitals anywhere else other than in
Orleans and Jefferson Parish do we have this fact pattern. As
far as the metrics, the normal operating metrics of hospitals
and hospital expense management issues, revenue issues, totally
out of whack, and Orleans and Jefferson Parish in relation to
anywhere else that we do business.
Mr. Burgess. OK. I think, Mr. Chairman, that is something
at some point this committee does need to follow up on. Let me
go back to Mr. Peters, and then again from the standpoint of
the Federal agency and from legislative action, are there fixes
you see that aren't over the horizon that are within your grasp
or within the capabilities of the Federal agency or this
committee?
Dr. Peters. I think a very rapid meeting of the minds that
says, OK, we have this gap, how can we best accomplish fixing
that, or something that comes close to that that is acceptable.
We in this conversation talked about cost-based reimbursement,
critical access designation, adjustment of the Medicare wage
index. I think the numbers need to be plugged in and think
about how can we come up with the solution and then create
whether it is waivers or legislative changes to make that be
accomplished and not have the perspective of we can't do this
because of this rule or that rule.
As you have heard, we all have some different structures
and different needs, and so I think thoughtful analysis of all
of those potential solutions so that we don't create a solution
that partially solves the problem or helps two out of the five
of us which then doesn't really solve the New Orleans
situation.
Mr. Burgess. Very good. And, Mr. Chairman, again, I would
ask that perhaps that is something we can task our committee
with trying to draft whatever language would be necessary. And
then finally, Dr. Peck, in the time I don't have remaining, let
me just ask you because it did come up earlier about
preparedness for the current hurricane season that is ahead of
us, how do you feel--obviously a hurricane planted square at
New Orleans again would be--strike the community with an
additional disaster do you have a feeling as to the level of
preparedness?
Dr. Peck. I certainly have concern. Something you could do
is certainly look at the Stafford Act again. I think the
Stafford Act needs to be reexamined at and potentially have
some rewriting of the Stafford Act so it can help for-profit
health care providers for the immediate recovery of a
situation. Should it happen next weekend, private practitioners
could be of benefit from that, and I think you would go a long
way to help that region and that part of America.
Mr. Burgess. Very good. I just want to thank everyone for
being here and for your indulgence today. We have had things
happen on and off the floor that have kept us away, and I
apologize for the time I wasn't here. It wasn't because your
issue is not important to us, and some of the most venerable
names in American medicine, Charity Hospital, Ochsner Clinic,
these are words I heard all my life growing up because my dad
was a physician too. These are cherished medical institutions
in our country and we are really privileged on this committee,
Mr. Chairman, to be able to be participating in saving these
institutions. With that, I will yield back.
Mr. Stupak. I thank the gentleman.
Mr. Melancon. If I may, Dr. Peck, in your testimony you
mentioned the monies from the DRA are going to bolster the
greater New Orleans Health Service Corps in the fact that the
bulk of the money will be going to attract or recruit new
providers.
Dr. Peck. Yes, sir. Of the $50 million that is going
through, 70 percent of that is going to be for the recruitment
of physicians to the area versus 30 percent that is going to be
for retaining of physicians.
Mr. Melancon. So very little that is going to help you or
other physicians like yourself?
Dr. Peck. That is correct.
Mr. Melancon. Another question, the monies that they are
talking about to attract physicians back in, will that also be
available to the physicians that have hung in there if they are
not back up to that level of income?
Dr. Peck. Talking to the pediatrician in the city of New
Orleans it is available but the restrictions and the confusion
about the applications and all the restrictions within--three
big practices that I know in pediatrics, and one of those had
about a 99 percent Medicaid practice. The other one had a dual
practice in Metairie and in New Orleans. It was not worth the
effort, the issue or the detail, so of all the private
practitioners that I know of in my region 1 of them ended up
applying for it and receiving that care. It is certainly
available for those that come out and if you did receive it you
were pretty much insured--unless you really had a substantial
practice--of insuring yourself at $33,000 annual salary.
Dr. Miller. I do want to say that it is a good thing. I
think it can be simplified and it can be made better but
certainly this $50 million that is available, and it came in
one pot of $15 million that was very heavily for primary care
and recruitment, and then the second pot which more recently
came to the State of $35 million, which does have more for
retention and also more for specialties and allows more use by
the teaching institutions is a good thing. It can be improved
in the way that physicians who are currently in practice and
have needs can access it, but I think it is a positive that
came out of previous hearings.
Ms. Rowland. Mr. Chairman, if I could interject. I think
one of the ways to really help the existing physicians who are
there is through some of these changes like we talked about
with the DSH allocation to allow that to go to non-
institutional providers and to help physicians because
currently there is no way to really provide for the
uncompensated care cost that they may be incurring. I think you
need a dual strategy, one that helps recruit people back but
also helps to provide a reasonable income to those who are
there practicing and seeking to re-establish----
Mr. Stupak. Well, Dr. Peck or Dr. Miller, have you talked
about the DSH payment concept to help you out? Have you looked
at that if all if we can get a waiver here?
Ms. Rowland. I think the State has already asked for such a
waiver but it hasn't been granted.
Mr. Stupak. Was it turned down or granted? The State asked
for it, did they not?
Ms. Rowland. They just asked for it but----
Mr. Stupak. Or HHS.
Ms. Rowland. But it has not been granted.
Dr. Peck. I certainly don't know the immediate answer but I
certainly can get that for you from one of the----
Mr. Stupak. OK. I think it was turned down anyway or not
ruled upon. That is one I think we should take a look at for
those providers who tried to hang in there. Anyone else? Mr.
Burgess.
Mr. Burgess. To clarify, are you talking about the
disproportionate share funds that were allocated for the fall
of the last quarter of 2005 or have there been ongoing
allocations for DSH funds for hospitals that are no longer in
existence?
Mr. Stupak. I am talking about 2005.
Mr. Burgess. Then going forward, and I don't know if anyone
can answer this, what has happened to that stream of
disproportionate share funds for say all of the quarters of
2006? If Charity was not able to see patients then what has
happened to those funds?
Dr. Hollier. Dr. Cerise could probably answer that but I
believe that some of those funds were moved to where the
patients were now being cared for in the other Hospitals.
Lafayette got a large influx of patients. Baton Rouge got
another large number of patients; so some of those budgetary
funds were moved there where the patients were cared for.
Mr. Burgess. Were any of those funds moved to East
Jefferson, West Jefferson, Touro, Ochsner?
Dr. Hollier. I think that is the problem we are talking
about. They haven't been able to have that.
Mr. Melancon. Mr. Chairman.
Mr. Stupak. Mr. Melancon.
Mr. Melancon. If I could, and I think we have a good pretty
good handle on the issues that are here in front of us, and I
would like to request, if I could, when you think about it we
got what, a five-person staff for this subcommittee, the
Department has about 5,000 people, and they can't seem to solve
the problems, if we could ask for a meeting with the Secretary
and Mr. Madison and sit down and go through the list and find
out what their intentions are. We have talked about just trying
to move this forward. We have tried to do it nicely. I had the
same problems with FEMA. You bring it to public attention. They
get a little bit of responsiveness and then all of a sudden
they go back to wherever they came from and disappear, so, Mr.
Chairman, I would make that request if I could.
Mr. Stupak. We tried that a few times, but we will
continue. Any other questions?
Mr. Burgess. I will just say obviously the flooding we have
had in Texas this spring nowhere near on the order of magnitude
of what you have endured but I will just have to say the
Federal agencies I have found were responsive when those
requests were made, and I am still having a hard time
understanding what is going on that makes this so difficult to
solve. I know it was a big storm. I know it is going to be
difficult to recover from it, but it just seems like we have
more than our share of difficulty dealing with this. And,
again, I just frankly don't understand what the problem is.
Dr. Quinlan. It is a simple issue of scale. This scale is
of such magnitude it simply cannot be dealt with by
conventional means. It is that simple. The tools that are
designed to address these kind of problems were designed to
address exactly what you experienced in Texas and absolutely
has nothing to do with what we have experienced in New Orleans.
Mr. Burgess. But still after 2 years time and $100 billion
from the Federal Government, it seems like we should be doing a
better job. They had the same--and again I don't know really--I
haven't traveled to Mississippi. I don't know the difficulties
that they have encountered or where they are in their recovery
but we don't have Mississippi at the table and they had the
same storm. And I realize that New Orleans had three crises
happen one right on top of the other with the wind, the water,
and then the levees breaking. But still it seems like we should
be in a better place now with all of the effort that has been
extended. And I don't understand why it is so difficult to
overcome that inertia and make some things happen.
Mr. Melancon. If I could----
Mr. Burgess. And again we have plenty of time to talk----
Mr. Melancon. And I would like to but I wanted to invite
you to come on a CODEL on the 12th through the 14th to New
Orleans where we will sit down with all of the aspects of the
community including health care, and you will get an
opportunity to go to Gulfport and Biloxi and get a first-hand
view and an opportunity to visit with those folks.
Mr. Burgess. And I will tell the gentleman I wish he had
disclosed that to me earlier. Obviously, my August schedule is
pretty much set as is yours. It would be very difficult for me
to get out of obligations, but I do think this committee ought
to have a follow-up hearing on site, a field hearing like we
did in January 2006. It is high time we did that, and maybe we
can include some of the other sites as well.
Mr. Melancon. If the gentleman would yield back, I agree,
and of course getting a CODEL authorized when it happens, it
happens, and then you move as quickly as you can and it
happened at the end of last week so now we are trying to get
people to go. And we understand that, and I understand your
schedule and everyone else's, but it is difficult to explain
without actually--and you can see it on TV, you can hear about
it when people talk about it including you and I having
conversations about it, but until you physically ride the mile
after mile after mile after mile of devastation and vacancy,
and it is----
Mr. Burgess. Well, if the gentleman will yield, I have--I
haven't spent a lot of time but I have made two trips to New
Orleans, one with this committee and one as a guest to the
private hospitals who invited me down there in October, and
very kind to fly me in a helicopter around the Plaquemines
Parish and saw the mile after mile after mile and saw the car
dealerships that were inundated. And, yes, it is devastation on
a scale that I have never seen before. But, again, I don't
understand why we can't move this process forward. If it is
inertia at the Federal level, let us get past it. If it is
inertia at the State level, let us get past it. Again, I get
criticized at home for the amount of money that the Congress
has spent and yet it doesn't feel like we have done a darn
thing. That leads to an internal conflict that I find very,
very difficult to reconcile. We kept these gentlemen long
enough, and I am going to yield back.
Mr. Stupak. I think today and especially this last panel
has pointed out a number of areas we can work on, and I think
it is the Federal rules, regulations, and laws that are passed
are not designed for a hurricane or disaster like this, and we
have to find a way to get waivers and other creative ways to
help these folks out in a bipartisan manner. We have asked for
the Secretary to come. We have asked for Ms. Madison to come
who seems to be holding the keys to many of these programs.
They have refused us. So maybe we have one last weapon in our
arsenal here we can use and maybe we ought to ask the Secretary
once more to come and set a time and date at his convenience,
and if he can't then we subpoena him or something. We have to
get this thing rolling. I think we are all frustrated. Their
financial ruin is sitting right there, and we have to move this
thing along. If you have some good suggestions, we will work on
it. Stay in touch. Chris Knauer and his staff will be working
on this for the Energy and Commerce Committee, and both sides
of the aisle have been great and they have been down there a
couple of times and spoke with most of you. We will continue to
work this. This is our third hearing. I am looking forward to a
fourth hearing in New Orleans. I hope we have good news. It
seems like we get a little impetus every time we have one of
these hearing. Things start moving and then after about a month
or two it falls apart again.
And I am not casting any shadows at anyone at this table.
We are here in Washington. I find it ironic that we have this
hearing today. We asked the Secretary to be here. He couldn't
be here, 600 feet away, but yet he is down in New Orleans. It
sounds like the Federal Government just can't get coordinated,
can we? But I will dismiss this panel, and thank you again for
all that you do, and thanks for services you do for the people
in New Orleans and this country. That concludes our
questioning. I want to thank all of the witnesses for coming
today and for their testimony. I ask unanimous consent that the
hearing record will remain open for 30 days for additional
questions for the record. Without objection, the record will
remain open. I ask unanimous consent that the contents of our
document binder be entered into the record. Without objection,
the documents will be entered in the record. This concludes our
hearing. Without objection this meeting of the subcommittee is
adjourned.
[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Exhibit Binder
Exhibit No. 5: Department of Veterans Affairs report,
``Report to Congress on Plans for Re-establishing a VA Medical
Center in New Orleans''
Exhibit No. 6: Memorandum of understanding between U.S.
Department of Veterans Affairs and Louisiana State University
Health Care Services Division
Exhibit No. 8: Letter from Dr. Alan Miller, Tulane
University to Mr. Barton
Exhibit No. 9: Letter from Karen DeSalvo, Tulane
University, to Mr. Barton
Exhibit No. 10: Letter from Frederick Cerise to Secretary
Leavitt regarding immediate health care needs in the New
Orleans region
Exhibit No. 11: Letter from Thomas Koehl, et al., to
Secretary Leavitt
Exhibit No. 12: Letter of Thomas Koehl, et a., to Messrs.
Dingell, Barton, Stupak, and Whitfield
Exhibit No. 13: Letter from Norman Francis, et al., to
Secretary Jackson and Secretary Nicholson
Exhibit No. 14: Letter from President Cowen and Senior Vice
President Miller, Tulane University, to Secretary Nicholson
Exhibit No. 15: Letter from Greater New Orleans Healthcare
Community Stakeholders to Mr. Stupak
Exhibit No. 16: Letter from Greater New Orleans Healthcare
Community Stakeholders to Secretary Leavitt
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]