charity's blog

State Treasurer Kennedy tackling UMC financing in New Orleans

Unless $400 million materializes out of thin air in the next 10 days, the UMC is still, despite all sorts of rhetorical floundering, short on financing.  And even if money rained down like manna over the barren wastes of the UMC Footprint, there is still no business plan - and there won't be one until at least September.

That's why it's altogether timely and appropriate that Louisiana State Treasurer John Kennedy will be speaking in New Orleans on July 26, 2011, hosted by a diverse, growing coalition of over 26 community groups.  The Treasurer will speak on the fiscal realities of the UMC at 6:00 p.m. at Grace Episcopal Church at 3700 Canal Street in Mid-City.  After brief remarks, the public is encouraged to ask questions, provide suggestions, and share comments.  Given the stunning lack of public input on a monstrous and destructive plan, especially in the earliest stages, this event is a matter of justice.

The destruction of neighborhoods to make way for the LSU/VA hospital is the Claiborne elevated expressway of its day - a dagger through the heart of a community, a true travesty that the community will rue for decades because it is so unwise.  Show up on July 26 to make sure that your voice is heard.  Speak up to influence this ongoing process while you can.

We urge all citizens to support putting the UMC in the existing Charity Hospital building!   We should not allow the state and LSU to demolish their way to what they want.  Even though the UMC site grows more desolate with each passing day (the state continues to destroy mindlessly), there is still one key use that the site could be put to: an alternative site for the BioDistrict.  As heart-breaking as it may be, it would be one use that could help to "cage" the BioDistrict in a more dense, vertical, urban setting closer to downtown.  Rather than sprawling across hundreds and hundreds of acres in Mid-City and Gert Town, this redirection of the BioDistrict would take inappropriate development pressure off key residential areas.

Not that it's clear where the "biomedical corridor" will get its funding.  It looks like the Governor just made a veto that swatted down over $700k that would have gone to the BioDistrict.  And the Cancer Center on Tulane Avenue, noted as a BioDistrict facility, is $15 million short of financing necessary to complete due to a state failure to allocate funds.  The Pennington biomedical research facility in Baton Rouge is struggling along as well.  Overall, the "bio-" promise of jobs and economic development is looking rather bleak.  We're not against biosciences development - we simply note that most facilities and ventures in this field in Louisiana seem to be more dependant than robust these days.

Thanks to Treasurer Kennedy for agreeing to help provide citizens with a straightfoward and honest understanding of the financial situation facing the UMC.  That's far more than the fanciful mirage many officials have been foisting on citizens.  Come out on July 26 for a critical public discussion on this important community issue.

UMC Board meets tomorrow: Call for full consideration of the Charity Hospital option!

Tomorrow, Wednesday, July 13, the UMC Board will hold its monthly meeting at 1:00 p.m. in the basement of the LSU Interim Hospital.  [Agenda attached]

If you attend tomorrow - and sign in 1/2 hour before the meeting, as required - make a public comment demanding that the UMC Board consider a retrofit of Charity Hospital.  That option, explored and confirmed in the FHL/RMJM Hillier study, should most definitely be on the table as the board seeks to find a way out of the fiscal mess that it remains stuck in.  The governor, after his meeting with Vitter, Tucker, Kennedy, Mayor Landrieu, etc., called upon the UMC Board to study all options.  He should be true to his word and demand that the board take an independent look at just that - ALL OPTIONS.

Despite the rhetoric from so many officials that would have believing that the project is marching forward invincibly in Lower Mid-City, just remember the facts.  There is no business plan.  There is no plan for making up an over $400 million financing gap.  There are massive annual state subsidies, ramp up costs, a 100-day cash cushion fund, and legacy debts to be dealt with somehow.  

We'll say it again: if restoring healthcare is really the end goal that's driving everyone in this debate, we should be heading back into the existing Charity shell, building a brand new facility inside the limestone exterior.  We could start today.  The state has the necessary amount of funds in hand to undertake renovation and improvement of the facility.  And you'll also recall that building a 250-bed facility in Charity is part of the Kennedy/Tucker/Vitter plan.

On the other side of the scale, the Lower Mid-City site has not even been cleared yet.  The Blood Center is set to be forced out of its building, which makes no sense.  Buildings are being demolished in parts of the UMC Footprint that won't even be utilized for a structure for years to come - if ever.  Contractors have been caught failing to water down demolitions recently, as reported to the LA DEQ.  Over 100 lawsuits are grinding on.  It's not clear whether the UMC Board is really a public or a private entity - it's a private non-profit that a private entity for purposes of state expropriation law?

Why is it so important to take a stand against all this destructive insanity?  Because it's coming down the pike in so many other parts of town.  The 1,500-acre BioDistrict.  The Iberville expansion far beyond its current boundaries.  And whatever mega-project du jour that happens to arrive in your neighborhood in coming years.  New Orleans needs to be vigilant.

The bottom line for tomorrow's meeting: call on the UMC Board to give full consideration to the FHL plan for Charity Hospital.  Tell them to request a presentation on the plan by FHL and the architects involved.  The FHL proposal is the most realistic option for proceeding at this point given the fiscal realities in place.

UMC rocked by more uncertainty - Board pulls HUD application

Wow.  The UMC Board pulled its pre-application for HUD mortgage insurance - a federal government guarantee that would have helped to cover the $400 million gap that must be filled before there's enough money on hand to build the UMC hospital as proposed.  J.P. Morgan, serving as a financial consultant to the Board, sent a letter to HUD requesting withdrawal without prejudice.

We think that HUD should refuse to let the pre-app be withdrawn without prejudice.  In fact, we think HUD should call a spade a spade, reject the pre-application outright, and do so WITH prejudice.  Why?  Because the UMC, as we've said over and over and over again...still doesn't have the money, still has no business plan, does not appear to have any shared services/facilities with the VA despite all kinds of jabbering, and the State of Louisiana has continued its wanton destruction of Lower Mid-City.

Still, it looks like Governor Jindal and Mayor Landrieu are fused at the hip when it comes to their insistence that the withdrawal of the HUD app is somehow irrelevant or insignificant.  Are you serious?  All indicators show that HUD knows this entire project is rotten - unsustainable in terms of both financing for initial construction, the business model, and the long term operating costs.  Once again, from what we hear, the two public figures acted like nothing is new at a press conference this afternoon, despite the very real concern that now haunts the project, a concern pointed out in the Times-Picayune article today.  Namely, after today's development, will any private investors in their right minds touch this project with a ten foot pole?

Mayor Landrieu apparently trotted out his stock language this afternoon on Charity Hospital, saying in no uncertain terms that the hospital would not be going back into the existing building.  Again, there's no reasoning given when this rhetoric gets pulled out.  It's simply the fiat of the Mayor.  Charity is more on the table today than ever before.  If city officials were smart, they would recognize that at this point, the best approach would be for them to support the Charity alternative in order to prevent the hospital from leaving the city or not getting built at all.  The glowing rhetoric about jobs and the nsistence on pursuing the existing UMC plan - by the Mayor, the Governor, and others - will at some point have to intersect with reality.

Pulling the HUD application is a big deal.  It's a real problem for the viability of the UMC project.

The next UMC Board meeting is on Wednesday, July 13, 2011 beginning at approximately 1:00 p.m. at the lnterim LSU Public Hospital, 2021 Perdido Avenue, New Orleans, Louisiana in Room 101/102 Basement.  Get ready - we'll see what new chicanery is afoot.

Propaganda machines - running in high gear

Since the presentation of the Kaufman-Hall report, very little has changed regarding the proposed UMC hospital in Lower Mid-City.

But you wouldn't know that from all the official propaganda that's been spewing forth from City Hall, LSU, and the various state agencies working for Governor Jindal.  In the wake of the Kennedy/Tucker/Vitter alternative proposal, all those institutions have been working overtime to bamboozle the public into thinking that the possibility of rebuilding a new hospital inside the existing Charity shell is somehow "off the table" or that "the time for debate has passed."

Let's make one thing clear right now: the Charity option remains viable.  It should be considered in full by the UMC Board and it should ultimately be pursued for the benefit of taxpayers, New Orleans, and the health of regional healthcare.  The powers that be continue to make it seem like the UMC plan is just rolling right along.  It's not.  Nobody has proposed a real way to overcome the $400 million financing gap.  There is still no actual business plan in place.  The UMC site is not cleared - over two dozen historic buildings remain in the site, along with several other modern structures, like the Blood Center.  Over 100 lawsuits pertaining to expropriations have not just magically disappeared.  There are still no plans for the dozens of vacant buildings in the former Charity and VA complexes in the CBD.

Now, Charity Hospital appears on the grand design for the proposed redevelopment of the Iberville projects - in the midst of a gargantuan, delusionally ambitious plan that gives HANO - and really, Pres Kabacoff - control over vast swaths of the city.  It's really disconcerting.  And, of course, Mayor Landrieu is as gung ho as ever about the "return to splendor" that stands to make New Orleans lose its cultural soul.

Taken together with the DDD, the LSU/VA hospitals disaster, the continued pressure from BioDistrict New Orleans, and the Iberville Redevelopment trapezoid, one almost begins to see New Orleans after the storm as Africa in the 1880s - put on a platter and carved up by the various colonial powers at a conference in Berlin.  Each project/district fiefdom in New Orleans has its land-grabbing lord.  And each lord has in turn pledged fealty to the Mayor, who, in turn, permits them to operate with impunity.  It's a bad system, one that's called economic development, but which more often actually based on expropriation, displacement, destruction of perfectly useful buildings, homes, and businesses, and unsustainable reliance on federal funds.

Notice that at the Mayor's press conference two weeks ago in support of the UMC project...the Mayor did not have a sea of residents or neighborhood groups behind him.  It was instead a bunch of figures, many of whom are reliant upon the state, who are ultimately dependant upon mega-development to retain power and wealth.  That's telling.

The media myths that are taking hold through repetition are ripe for rebuttals from Charity supporters.  Remind media outlets and public officials that attracting top talent and forming a great healthcare facility is not about Houston envy and short-sighted buildngs that require excessive land development.  Its about what you put inside of a hospital - and how that hospital can be sustained.

Beyond HCR-59 - the Fight Continues

HCR-59 was defeated today in the House.  Strangely, it was defeated after several amendments to the resolution were passed - including one that would have required the state to return properties in the UMC footprint to former landowners if the project did not start construction by January 1, 2012.

Who led the charge to kill the bill?  None other than Representative Walt Leger, III.  He's shown a strange zeal in his vehement opposition to HCR-59, whether in committee or on the floor.  Why would he be so opposed to greater legislative oversight of the beleaguered UMC project?  Perhaps he wants a boondoggle to unfold and harm taxpayers, as well as the City of New Orleans - we're not sure.

We know one thing for sure, though: Rep. Leger is the chief figure who's been carrying water for Senator Karen Carter Peterson on the BioDistrict this session (Peterson was the author of the legislation that created GNOBEDD).  He introduced a bill that the BioDistrict sought to have passed - even though the BioDistrict is not in his district.  Essentially, he appears to have pushed the bill because Peterson's plate of bills was already full for the session.  Today, he referenced "opponents" of the UMC on the floor.  We don't know that anyone is an opponent of the UMC, but there are many opponents of the proposed UMC location and design.

Leger appears to be under the sway of the same spell as Peterson and Mayor Landrieu, the glowing, intoxicating lure of...BioDistrict New Orleans.  Like the Mayor, Leger seems to be blinded by the "jobs for everyone" panacea that the LSU/VA project has come to represent (I thought this was about healthcare?), as well as the even larger bottle of economic cure-all elixir, the BioDistrict.  The two projects really aren't connected, but the Mayor and the media continue to fuse the two together...even though BioDistrict New Orleans is even more fanciful at this point than even the troubled UMC project (ask BioDistrict staff who suddenly had to "volunteer" recently).  Jim McNamara of the BioDistrict even stated at a Mid-City Neighborhood Organization meeting that the BioDistrict is not dependent upon the currently proposed location of the UMC.  Whether the UMC flails along in the current footprint or goes into Charity, it shouldn't matter.

The Mayor and representatives of the state continue to try to dispel the notion that the Charity option remains viable.  Boy, do they try hard to "put it to rest."  But it just keeps rearing its head.  Why?  Because it makes sense on so many levels - urban planning (less vacant urban core, less destructive to neighborhoods), economic development (same economic development engine even if more concentrated), healthcare (it would come back faster than building new), creating a destination hospital (a revitalized Big Charity would be far more iconic and notable than another generic, suburban-style no-place in the UMC Footprint), and fiscal responsibility (the UMC programmatic requirements could be reconstituted for almost $400 million less).  And, there's a $600,000 study that supports these claims.

We're also really interested in how the UMC push will affect other regional and local healthcare issues.  How about the Methodist Hospital in New Orleans East, for example?  Will the single-minded push for the UMC as currently proposed...ultimately require the state to make massive expenditures to save the UMC, but also derail or seriously delay other critical healthcare facilities?  We've already seen the state cut $800 million in funding for healthcare facilities statewide in the face of budget realities.  The Mayor's staff keep talking about how a hospital in the East is the chief priority.  But is it?  Follow the actions, not the rhetoric.  And follow the finances necessary for the project too.  To quote the Mayor, "So, you got the money?"

At any rate, HCR-59 may have been defeated by those who continue to put on the blinders and bull forward.  That doesn't mean that the many uncertainties and hurdles that stand in the UMC's way have been cleared.  It's still facing a long and treacherous path.

Press Release: Advocates Request that Kaufman Hall Associates review the FHL/RMJM Hillier Report


June 16, 2011
For further information contact:
Sandra Stokes, (225) 445-3800
Bill Borah (504) 432-8413

Re:  Request that Kaufman Hall Associates review the
FHL/RMJM Hillier Report

With all the financial uncertainties that have been exposed by the recent independent studies
on the economic viability of the proposed new University Medical Center in New Orleans, it is
the responsible course of action for Governor Jindal to finally allow exploration and analysis
of all options. We hope to take the governor at his word that “the (UMC) board shouldn't be
limited by anything LSU has done. Their job is not just to kick the tires, but to be an
independent body” – and that they will fairly examine all fiscally responsible alternatives.

This includes having the nationally respected consulting firm of Kaufman Hall and Associates
examine and analyze the $600,000 legislatively-charged feasibility study by the Foundation
for Historical Louisiana and RMJM Hillier architects – a study that found that a new state-ofthe-
art 21st century medical center could be placed inside the shell of Charity hospital and
that it could be done faster and cheaper than building the new facility LSU has proposed.

“In the post-Katrina era,” says FHL spokesperson Sandra Stokes, “it is time to move from
politics to planning as the basis for shaping the future. By reviewing the findings of the RMJM
Hillier report, Kaufman Hall will be able to determine whether the landmark hospital can be
reused to best serve the health care, medical education and economic development needs of
the city as a transformative, 21st century, state-of-the-art academic medical center.”

The following organizations want the best academic medical center that the state can afford
to build, operate, and sustain. An objective analysis of the RMJM Hillier report, we suggest, is
the responsible way to achieve this worthy goal.

Foundation for Historical Louisiana

Smart Growth for Louisiana

Louisiana Landmarks Society

Mid-City Neighborhood Association

Lafayette Square Association

No, Charity is Not Off the Table

Why are several key figures saying that rebuilding a healthcare facility inside the existing Charity Hospital is "off the table"?

It's bunk. Charity is definitely not off the table. If anything, going back into Charity is now more likely than it has been for several years.  Why?  Because state and federal officials - though clearly not Mayor Landrieu - finally see that Fred Cerise's"self-supporting" UMC as proposed is entirely unsustainable and will saddle taxpayers with debt and subsidy costs for decades.  The mirage of inevitable "progress" in the Lower Mid-City site is fading.  And the Mayor knows it.  That's why he's holding a press conference on the UMC AND in support of the biomedical district - code for BioDistrict New Orleans/GNOBEDD - at 3 p.m. today at City Hall.  

The Mayor is also probably getting really nervous because the continued push for the New Orleans East hospital means that the bed count in the metro region will only increase, further reducing the overall need for hospital beds.  Listen to this excellent interview with State Treasurer John Kennedy on WWL with Garland Robinette.

He makes the Mayor's prouncement yesterday that any talk of going back into Charity is "bad"...look rather ridiculous and out of touch.  There's no reason it's off the table other than the Mayor's declaration that it is so.  Governor Jindal and other attendees at the Monday meeting in the state capitol indicated that all options need to be reviewed, that Kaufman-Hall should study all possible options.

But then you have the head of the UMC Board, Bobby Yarborough, saying Tuesday that going back into Charity is off the table.

Treasurer Kennedy has it right: all options MUST be on the table right now if we're going to avoid a boondoggle. That means the Kennedy/Vitter/Tucker plan and the FHL Charity plan, along with any other plans.

Here are the details on the press conference at City Hall today - go and tell the Mayor that Charity Hospital is not off the table.

UMC a "Done Deal"? Not After Today

Today, a resolution that requires the full Lousiana legislature to approve the business and plan and financing for the proposed UMC passed the House Appropriations Committee on a 12-11 vote.

Whew.  Score one for public oversight and accountability.  Given the lack of a business plan, the lack of over $400 million in financing, and the lack of a clear site, the UMC project is definitely in need of additional oversight.  And the legislature needs to exercise a higher degree of control over this project right now as laid out in House Concurrent Resolution 59 because better alternatives exist and they need to be fully explored.  Taxpayers shouldn't simply be stuck with a boondoggle because inertia demands it.

The measure now heads to the full House itself, as far as we can tell.  Tell your State Representatives to support this resolution!  It's crucial to ensuring that the UMC project is done right.


Here's another interesting development from today: the trio of Senator David Vitter, Treasurer John Kennedy, and House Speaker Jim Tucker met with Governor Bobby Jindal, Secretary Greenstein, UMC Chair Bobby Yarborough, UMC board members, and Mayor Landrieu to discuss the UMC alternative proposed by the trio last week.

According to the Vitter press release that went out this afternoon, "“The discussion today in the governor’s office and the concrete outcome it led to were extremely productive. The governor is writing the full University Medical Center board and asking them to look at all options and possibilities – including other existing assets, partners and potential partners, ways to independently and efficiently manage the new facility, etc. – with the help of appropriate experts like Kaufman Hall. This is meant to empower the board to do its job independently and not rubber-stamp any LSU plan."

Interesting.  Take a look at that language: "look at all options and possibilities - including other existing assets", reading the tea leaves, does that mean that the powers that be are considering the existing Charity Hospital building, which the state owns, and the multiple attendant buildings in its complex?  And the former VA Hospital building and its complex?  If not, it should.

Contact any person listed above and tell them: "REBUILD INSIDE CHARITY HOSPITAL!"

Here's why:

- It's less expensive than building new in the UMC Footprint; a retrofit for a modern facility in the existing limestone shell could be accomplished with the money the state already has onhand.

- It would take less time than continuing the death march through lawsuits, expropriations, and demolitions in the UMC Footprint.  If this was really about getting healthcare back online in New Orleans, we would have retrofitted Charity starting several years ago...and the full new hospital would have been back online for several years by now.

- The Kennedy-Tucker-Vitter alternate UMC proposal incorporates a 250-bed rebuild of a health facility inside of the existing Charity building as a priority.

The situation surrounding the UMC is as fluid as ever.  Help influence the outcome in a positive manner.  Start contacting state, city, and federal officials today to keep them on the right track.

BREAKING NEWS---- UMC Plans Face Serious Opposition as Vitter, Kennedy, and Tucker Pitch Alternative

Senator David Vitter, House Speaker Jim Tucker, Treasurer John Kennedy and state leaders sent a letter today - Thursday - June 9, 2011 -  to Governor Bobby Jindal envisioning an $800 million alternative for the new UMC Academic Medical Center that includes the potential of reconstituting a healthcare facility in the existing Charity Hospital shell.  [Read attached letter for details]

The much more fiscally responsible plan could entail using Charity Hospital as one of the entities that would make up the new University Medical Center.  Senator Vitter has been very vocal as of late in regards to his concerns that the 424 bed hospital proposed by LSU and the State is unsustainable over the long term.  Treasurer Kennedy, too, has long been a critic of the project, especially it's lack of a business plan.

Vitter's and Kennedy's concerns are supported by a report that was presented to the UMC Board at their last meting that was written by Kaufman-Hall - an independent and well-respected financial consulting firm out of Illinois who specialize in health care and who were hired by the UMC board to do the number crunching for the UMC's long awaited - and much needed - business plan. 

Kaufman-Hall - taking into consideration new factors and variables presented by LSU when they asked Kaufman-Hall to revise their report after they found the first draft that was leaked back in April - (not to their taste) -  estimated that the new Academic Medical Center, at best, could only support between 330-403 beds. reported on that presentation on June 4, 2011.

 In the new proposal presented today by Senator Vitter and other Republican lawmakers, in addition to the possibility of reusing the existing Charity Hospital building for a smaller hospital, is to make use of a Jefferson Parish hospital as well as buying a share of Tulane University's New Orleans Hospital.  The three combined would comprise the University Medical Center.

At a price of only $800 million dollars, the University Medical Center Management Corporation [UMCMC] would not only be able to afford the new hospital with the funds in hand, but it would also be able to employ the best construction materials, equipment, contractors and marketing firms that are necessary to attract the best doctors and medical staff in the world.

UMC - City Council Caves, Financial Uncertainty Rages On

Two big things happened in the past week.

First, the City Council voted to revoke the public rights of way in the UMC Footprint.

Second, as if that move in and of itself wasn't reckless enough at this point, the Kaufman-Hall report on the feasibilty of the UMC was presented to the UMC Board.  AFTER the City Council voted to revoke.

Credit must be given to Kaufman-Hall for its presentation.  We did not see the "doctored" (pun intended) version of the financial feasibility report that we anticipated.  Instead, the numbers appeared to be rather independent and objective.

Why?  The report revealed what has been said for some time now: the 424-bed design is excessive when looking at patient projections for the coming years.  The UMC Hospital should be smaller - needing somewhere between 330-403 beds.  Gee, isn't it great that we've arrived at that revelation now that the 37-acre site, which was excessive for even the terrible 424-bed suburban design, has been largely destroyed through expropriation and demolition?  Isn't it great that we now see that there's additional uncertainty about what will actually be built (if anything) AFTER the city council has already cowed itself before the juvenile rage of an angry, red-faced, table-pounding Jerry Jones...and whimpered in submission as it gave up its last bit of leverage over this project.  They aided and abetted the fait accompli - so did the Mayor's office, which was pushing very hard to make this happen.

Several other interesting things emerged.  The Kaufman-Hall presentation revealed that the annual state subsidy for the UMC will likely be around $100 million - up from a present figure at about $20 million.  That shouldn't be a problem at all.  You know, the State of Louisiana is just flush with cash right now.  It certainly wouldn't contemplate cutting $800 million in healthcare spending around the state at other facilities.  I'm sure Representative Fannin will just waltz along with this and pony up the dough, a smile on his face.  Importantly, policy changes could skew the estimate.  Under one scenario presented by Kaufman-Hall, if certain reimbursement policies change in a certain way, the annual required state subsidy for operations could be as much as - gasp - $147 million (see page 42).  There's also the $300 million ramp up funding that the state needs to find somewhere in its gold-plated pockets.  And the prospect of legacy debts...something not accounted for in the Kaufman-Hall report.

Several boosters of the UMC spoke before the UMC Board meeting, prior to the Kaufman-Hall presentation, exclaiming "This is our Super Dome moment!"  Wow.  They better have some crow on hand in upcoming months because this thing ain't over, the uncertainty keeps rising...and they might need to eat it.

Oh yeah - there's also this.  The state and UMC are now saying that they will look at financing the $400 million + gap in funding for the complex on the private market...despite all sorts of smokescreen assertions otherwise along the way.

Senator David Vitter, when are we going to see a press release?

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