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Witness Testimony of Michael Kaiser, M.D., Louisiana State University Health Care Services Division, Acting Chief Medical Officer, New Orleans, LA

Mr. Chairman and members of the committee, my name is Michael Kaiser, I am a pediatrician and Acting Chief Medical Officer of the LSU Health Care Services Division, which consists of seven acute care hospitals and extensive outpatient clinics operated by the State of Louisiana.  These include our rebuilt LSU Interim Hospital campus in New Orleans, which prior to Hurricane Katrina was a component hospital of what was legally known as the Medical Center of Louisiana-New Orleans and which was effectively destroyed by Hurricane Katrina.  Similar to other local public hospitals across the country, this facility functioned as the core of the safety net for the uninsured and was the predominant site for the clinical training of physicians and other health care professionals. 

The now closed Charity Hospital (the other component facility of what was the Medical Center of Louisiana at New Orleans) sits across the street from the VA Hospital, which also suffered catastrophic damage in the storm.  Following Katrina, nothing has occupied our time and attention more fully than the restoration of our public hospital and its clinics to serve the people of this region and the future health care professionals who train there.  

Of necessity, LSU has focused on both the present and the future.   In the nearly two years since Katrina, we have moved from emergency facilities in tents to the opening of a small, interim hospital and a growing number of primary and specialty care clinics at several locations.  Our capacity is not yet up to the level of need in the region, particularly in the availability of psychiatric services, some medical specialties and dispersed primary care clinics, but we have made significant progress.  Other major additional steps will be taken in the months ahead. 

As we continue work to address immediate and critical needs in the community, LSU has kept a steady focus on the longer term.  The region desperately needs not only additional health care resources, but also a way to develop and deploy those assets through a better, more efficient system than was possible before the storm.  LSU has long worked toward fundamental improvements in its delivery system, such as through its award-winning disease management program, but the convergence of the need to rebuild and the heightened support today for both a reformed delivery model for care to the uninsured and for the financial and reimbursement reform necessary to make that new model possible, present realistic opportunities for our long-term agenda for change.

The VA Collaboration

The potential collaboration between the Department of Veterans Affairs (hereafter VA)  and Louisiana’s state public hospital system is one propelled by unintended opportunity, but it is a core part of our strategic vision.  We have a chance to jointly design and cooperatively operate a new facility that meets the needs of both institutions, and the patients they serve, while at the same time achieving significantly enhanced efficiency, cost savings and quality health care.  

The proposed collaboration is a logical step for reasons that extend beyond the destruction of Katrina.  The adjacent VA and Louisiana-operated public hospitals have a long history of working together.  Prior to the storm, the New Orleans VA purchased over $3 million a year in clinical and other services from LSU, including Cardiothoracic Surgery, Radiation Therapy, and Dermatology services.   Many physicians worked at both the VA and the Medical Center of Louisiana at New Orleans facilities and many medical residents, from both LSU and Tulane Schools of Medicine, rotated to both hospitals.

For the past 18 months, I have chaired the planning efforts with the VA.  First, the Collaborative Opportunities Study Group, co-chaired with Mr. Michael Moreland, Director of the VA Hospital in Pittsburgh, looked at the possibility and feasibility of building together and sharing services.  Once proved feasible, the Collaborative Opportunities Planning Group, co-chaired with Mr. Ed Tucker, Director of the DeBakey VA Hospital in Houston, has been studying what services should be shared and the details of building together.  The COPG continues to meet weekly in order to present a final report to the Secretary by the end of September, 2007.

The creation of a VA-LSU campus in downtown New Orleans will create benefits for both partners that exceed what either can accomplish separately in different locations.  We have a rare opportunity to develop a whole that is greater than the sum of its parts.  There are enormous benefits to the community of a downtown medical complex anchored by the VA-LSU collaboration, bolstered by the Tulane and LSU health science centers, and building on a Level I Trauma program and centers of excellence in orthopedics, neurosciences and other specialties.  These benefits will redound specifically to the patients of the VA and LSU systems, as well as to a larger population.   It is the synergy created by working together that will enhance the services available to all our patients.

Where The Project Stands

The Louisiana Legislature in its just completed 2007 Regular Session, approved capital outlay appropriations totaling $1,500,000,000 for the project ($74,500,000 in HB 765 of the 2007 Regular Session and $1,425,500,000 in HB 2 of the 2007 Regular Session). These appropriations overstated the financial requirements for the facility by $300,000,000 because the legislature failed to make an adjustment for $300,000,000 previously allocated for this project, but moved in the waning days of the legislative session to the Road Home Program.   Adjusting for this error leaves $1,200,000,000 for the new academic medical center which matches the cost estimate for the facility contained in the business plan completed by the Adams Group, a national hospital consulting firm, and overwhelming approved by both houses of the Louisiana Legislature.  This funding comes from multiple sources as follows:  $74,500,000 is from the State General Fund that is available immediately for land acquisition, planning, and construction; $225,500,000 will come from the sale of general obligation bonds that will be issued by the state as the need for additional cash becomes available; and, the final tranche, $900,000,000 will come from the sale of revenue bonds that will be issued after the general fund and general obligation bond monies have been expended.

The construction of the new academic medical center is being managed by the Office of Facilities Planning and Control which is an agency within the executive branch of Louisiana government.  Acquisition of land identified for the new academic medical center and the VA facility is already underway with contracts having been issued to complete title and appraisal work.  Once the VA firmly commits to building at the downtown site, the City of New Orleans and the State of Louisiana are prepared to immediately proceed with land acquisition for the VA.

Both LSU and the VA have conducted independent architect selection processes and are ready to announce the winning firms.  If the same firm is not selected by each partner, a previously developed plan to work together with separate architects will be implemented.

From this point forward and given the preparation of both partners, the process of building a new hospital complex together can proceed as quickly as choosing to build separately.  Significant groundwork has been laid for a long term, mutually beneficial collaboration, and we are poised to see it to completion.

Thank you again for your interest and for this opportunity to share LSU’s perspective on these critical matters.  Far from being an obstacle to health care reform as some have feared, the creation of a revitalized academic medical center complex in the city will be a catalyst for that reform.   Particularly if LSU and the VA work together, it also will sustain a reformed system in the long run by supporting a viable, mission-driven system dedicated to improved access, the highest quality medical care and innovative health care education in a rebuilding community.

Thank you.