Study Background

In November 2003, the Medical Center of Louisiana at New Orleans (MCLNO) commissioned ADAMS Management Services Corporation (ADAMS) to direct strategic and financial planning services and campus master planning services for new and consolidated inpatient and outpatient facilities. ADAMS orchestrated separate selection processes whereby a strategic/financial planning firm, Kaufman Hall, and a campus master planning firm, NBBJ, were incorporated into the Planning Team. The study was ordered in response to facility and accreditation threats due to dilapidated facilities.

The total MCLNO campus is composed of a variety of buildings, including two major inpatient facilities Ð University and Charity hospitals. Charity Hospital was constructed in 1938 and is comprised of approximately 1,000,000sf. In addition to the main building, there are numerous ancillary buildings on campus that total approximately 250,000sf of space. University Hospital was constructed in 1972 and consists of approximately 364,000sf.

Between the two facilities, MCLNO provides medical education for Louisiana State University (LSU) and Tulane University and normally staffs between 450 and 500 inpatient beds. MCLNO is a critical resource for the city of New Orleans and the state of Louisiana through both its role as a site for medical education and the delivery of clinical care. MCLNO patient volumes are one of the largest in the state of Louisiana, though the majority of MCLNOÕs current patient base is uninsured. Approximately 350,000 visits are made to MCLNO outpatient clinics each year. MCLNO emergency rooms experience over 160,000 patient visits annually.

A Comprehensive Healthcare Facilities Study (HFS) was undertaken in early 2003, at the request of LSU Health Care Services Division (HCSD), to examine each of the (then) ten hospitals in the Charity system. At MCLNO, the HFS team discovered poor privacy and infection control environments, particularly within the Charity facility. The study indicated that many of the buildings and their systems were in overall poor condition, with major repairs required. There was an apparent unsafe operational functionality of the existing facilities. The HFS team found that the Charity Hospital structure was no longer suited for healthcare services delivery. Preliminary analysis of University Hospital facilities suggest that its best long-term usage would be primarily for non-clinical activities.

MCLNO has been a repeated victim of historic budget cuts and deferred maintenance. Between calendar year (CY) 2003 and CY 2004, MCLNO inpatient discharges decreased by nearly 17 percent (4,600 cases), primarily due to a reduction in scale and scope of services. While MCLNO captured over 60 percent of the areaÕs estimated "self-pay/indigent"; cases in CY 2004, overall area cases in this category decreased by 12 percent (1,758 cases), indicating that many patients either sought care outside the service area or did not have access to care and their need went unmet. In that same time frame, MCLNO lost market share across all "paying patient"; categories (Medicare, Medicaid, BCBS, commercial/managed care and other government), further inhibiting its ability to maintain future financial stability.

The indigent population that MCLNO does serve constitutes a disproportionate share of its payor mix, financially hampering its ability to provide additional access to care. Despite the constraints and relative lack of resources, the MCLNO staff and physicians provide some of the highest and best outcomes in the region. Despite the best efforts of the staff, operating two campuses and outdated/threatened facilities is inherently inefficient. The consolidation of services at a single site would undoubtedly present substantial cost-saving opportunities.
External Threats to MCLNO

Even with excellent outcomes and exceptional patient care, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has threatened MCLNO with the possibility of revoking its accreditation. JCAHO last visited MCLNO in 2002, with a follow-up visit scheduled for December 2005. During the 2002 visit, JCAHO charged MCLNO with rectifying the lack of compliance with applicable laws and regulations, particularly with respect to privacy issues and patient rights. The 2002 JCAHO report specifically states: "(MCLNO) leadership needs to strongly consider seeking from the state a more modern facility to improve patient safety, environmental safety, patient privacy and infection control."; Without facility accreditation, MCLNO will not be able to draw Medicaid or Medicare funds, thereby severely impacting the access to care that it could provide.

Other than replacement, the only option would be to ultimately close MCLNO and redistribute medical education and patients throughout the private hospitals in the region. This would have a negative impact on the medical education component due to the absence of sufficient clinical mass at any one site, present access challenges for patients, and shift the uncompensated care burden to private hospitals and physicians.