Independent report takes issue with projected costs and size of facilities

Last week, Sen. David Vitter questioned the financial scope and size of the projected teaching hospital in mid-city New Orleans which will replace the now-shuttered Charity Hospital. An Illinois-based health care consulting firm, Kaufman, Hall, and Associates, has likewise released an extensive report questioning the wisdom of the state’s proposal for this new medical complex.

Currently estimated at $1.2 billion and accommodating 424 beds, the state has allocated around $800 million so far toward the construction. It is requesting that HUD fund the remainder through the sale of municipal bonds. Like Vitter, the Kaufman Hall report openly raises doubts about beginning preliminary construction on the complex despite still not having the additional $400 million in place.

In contrast to the state’s vision for the UMC, Kaufman Ellis determines that “UMC, as currently envisioned, is materially larger than is supportable.” The report projects a 332-bed facility as the most financially viable option. Calculating annual state subsidies for the UMC, Kaufman Ellis finds that funding could range from $72.5 million in 2015 (the UMC’s slated opening year) to $108.4 million in 2019.

Other elements taken into account by the report include a slower-than-projected regional population growth, and lower estimates of patient streams from an expanded Medicaid program.

State officials, such as state Health and Hospitals Secretary Bruce Greenstein, remain adamant that the complex’s size and price tag are necessary. Proponents argue that the UMC is designed to be an elite teaching hospital and research center for the region, and extensive funding is necessary to ensure its competitiveness.

Despite disagreement over the cost and size, the major players agree that a state-of-the-art facility is necessary to provide quality care for residents, as well as to attract revenue and health care professionals to the area. In fact, UMC board chairman Bobby Yarborough has indicated that he will consult with the Kaufman Ellis team on their suggestions.

Jamison Beuerman is a contributing writer and policy analyst at the Pelican Institute for Public Policy. He can be contacted at or followed on twitter @jbeuerman.