One on One Interviews by Healthcare Journal of New Orleans

Roxane A. Townsend, MD

CEO LSU Health Care Services Division

PUBLISHED: January/February 2012

SMITH W. HARTLEY: First, can you clarify for us the status of this LSU facility?

Roxane Townsend: This is the Interim LSU Public Hospital. Statutorily we are still funded under the Medical Center of Louisiana-New Orleans. We are the interim LSU Public Hospital really as a FEMA designation. A lot of that is because the whole reimbursement issue from FEMA was that they brought back an interim facility to serve us until we actually replaced Charity Hospital that was destroyed. So the $474 million that we received as an award from FEMA is to replace Charity Hospital, but by now they have probably spent upwards of $100 million actually getting University Hospital campus up and ready for us to be able to run acute care services.

SWH: How have LSU’s services come back since Katrina?

Roxane Townsend: It’s been a journey. The sequence of events was we went from a ship, the USNS Comfort, to tents in the parking lot out here, to the Convention Center, to Lord & Taylor, actually running inpatient services with the trauma center at Elmwood. Finally in November, 2006, was when we were able to reopen this hospital. I think we started with about 60 beds. Today, between this hospital site and the DePaul campus where we run 38 acute psych adult beds, we have 255 staffed beds. So all of our services that were going on pre-storm are actually back in some capacity, though not necessarily full capacity. Before the storm we were running over 500 beds between the two campuses.

So services have come back, but we are not where we need to be. I’m running about 85 to 90% occupancy with a lot of overflow. Things that I am short of—my ICU beds are constantly short; we have 38 ICU beds. We have a beautiful trauma ICU that was replaced after the storm. FEMA helped us build that out. We have our medical ICU and we frequently have ICU patients holding either in the emergency room or in the recovery room. The other place I really don’t have enough beds is Psych. Adult psych beds stay full all the time.

The other thing I think is exciting is that since we’ve been back we have re-established our Joint Commission accreditation. There were no significant findings. We were last accredited in February, 2010. Our Level 1 Trauma Center has been verified by the American College of Surgeons Committee on Trauma. We actually just went through another reverification and we are just waiting on the letter for that. And we just went through a Joint Commission Stroke Certification and we are anticipating a positive outcome. So the services have come back and a lot of them have come back just as strong or even stronger. We are very proud of that. Essentially we put Humpty Dumpty back together again. That’s really what it felt like.

And it’s one of the things where we often got criticized because several years ago our costs were so high and we had so many employees, but we didn’t know what it was going to take to do this and it certainly took tons and tons of people; way more than you could justify for the number of patients. Finally in 2009 we started to reach some equilibrium. That’s when we brought Alvarez & Marsal in. We let them look at our operation, kind of to get a third party look from someone independent, and they really helped us say, “Yeah, this is how many people you probably need now to take care of these patients.”

It took a long time for people in New Orleans to be willing to get out of crisis mode. With this event I think it is really unfair for the national media to take potshots at New Orleans because unless you’ve been through it…the people down here lived through some amazing times and I think have shown tremendous resiliency. So the fact that we are back and strong and getting better than ever is a real testimony to the people down here.

SWH: What’s the status of the University Medical Center since its groundbreaking in April?

Roxane Townsend: The exciting part is we have broken ground and actually started construction. In September we went to the Joint Budget Committee and got the approval to actually begin. Up until now our site preparation had been going on, but we couldn’t get into any vertical construction. But they’ve driven test piles and if you look at the site today, it’s essentially cleared. In November we moved the school off of this site, because it was actually in the footprint of the diagnostic treatment building. That was a huge undertaking. They used the same kind of technology that they used to move the shuttle. It took them about three days to move it from the center of the site off to the corner of Galvez and Tulane.

If you look on the site you might see what looks like a thousand of these little orange flags and those are where the wicking is actually going to take place. They brought in about five feet of dirt to overlay the site and they are doing compression. That compression would normally take a couple of years, but they have this wicking process that they do where they literally stick wicks down and hundreds of gallons of water a day will be wicked off the site and go into the sewage system to actually compress the area. They are expecting about 30 inches of compression on the site. Then they will be ready to drive upwards of 6000 pilings to circle the structure. So the construction is moving and we anticipate they will be finished in late November of 2014. We will actually start operating the new facility in spring, 2015.

SWH: Can you clarify how the funding is going to work? Is there anything that is still in negotiation?

Roxane Townsend: Well, we have the $300 million commitment from the State. We have the $474 million that was awarded from FEMA for the replacement of Charity Hospital. Right now there are some negotiations that aren’t finalized yet for contents of some of the other buildings, because there were multiple buildings that were actually destroyed…not just Charity Hospital. And that could be upwards of another $150 million that we may receive from FEMA for the contents that would go towards the construction. The balance of the funds for the ambulatory care building and the parking garage—that commitment is being made by the LSU Foundation. They are going to do a third party financing to complete that piece of the project.

SWH: Could you characterize the joint venture with the VA and how the two entities are going to work in collaboration with each other?

Roxane Townsend: Well, we are still working with the VA. Part of our issue with the VA has been the uncertainty of our timeline because the VA has had their money in place and had all their approvals really for several years. With us just getting our approval in September they have had to move along because of their need to get services back online for the veterans. So some of the things we thought perhaps at the beginning we would be able to do with the VA we realize now that it’s impossible for us to do.

The original thought was that we would actually build a joint facility. We would have a shared core and then perhaps have two patient towers—one for the VA and one for LSU. But what we have realized is that 9-11 really changed our world. So now it’s necessary for the federal government to build really to terrorist specifications. While we’re concerned about hurricane hardening and things like that they have to think about terrorist threats. So their cost of construction is astronomic. For us to build to that same level of threat we wouldn’t have been able to afford it. So that’s why we are on two separate sites, but we do plan to share a lot of activity. They can’t afford sometimes to do some things because of the cost of the specialists so they are going to be doing all their radiation oncology with us. Things like linear accelerators. We are working with them to try to jointly purchase them to put in our facility so that our specialists can take care of the veterans there. We will share women’s services. We will share a lot of medical staff because it makes sense since we are across the street from each other that if you’ve got a doctor on call for ICU there’s no reason they can’t cover the ICU for the VA as well as our hospital. So we’ll have a lot of physicians going back and forth—a lot of joint training going on with our Tulane and LSU residents being both at the UMC and at the VA.

SWH: So the timeline for UMC is still on track?

Roxane Townsend: In October they got the contract signed with Skanska/MAPP, the construction manager at risk. What they’ve done is come up with some pretty unique ways to try to keep things on track. If you are looking at the site on the corner of Canal and Galvez there is an old warehouse building and within that warehouse building they are going to build the mockups of the new ORs and all those things so we can use it for training and for physicians and staff to get in there and say, “Yeah this works, this doesn’t work.” And we will be using it for recruiting in the future. The other piece of that though is they are actually going to do some of the construction in sections because the place is massive. I think at the end of the day it’s about 2 million square feet. So they are breaking up the projects into much smaller contracts for multiple reasons: to allow more people locally to bid because it would be very hard to be bonded on some of these really big contracts that could have gone out; but they are also going to allow space so that things like the ductwork can be done in 20 foot sections. They’ll build it there and then bring it over to the facility and just set it in. They’ll do that with the bathrooms and things like that. It allows them to do things without the weather being a factor. So they are doing lots of things to make sure they stay on track. They are pushing.

SWH: LSU is going to be relying significantly on private pay patients, which you haven’t done in the past. Is this critical to LSU’s success and how do you think that’s going to impact some of the other local hospitals?

Roxane Townsend: We certainly are planning for that. Our business plan calls for additional private pay patients. It’s not a significant increase—perhaps about a 10% increase overall. As for the effect on other hospitals, we actually think because most of the programs we are talking about are destination programs, those patients don’t necessarily come out of the population here. And as New Orleans continues to come back and the population continues to grow, and looking forward to 2014 if we actually have an expansion of Medicaid, if all that happens, there’s going to be much more business in all of the hospitals. So there’s no anticipation that there’s going to be any sort of negative impact for the surrounding hospitals in this plan. It probably means that we would start to be looked at more like a Birmingham or a Houston and be a destination city for healthcare. So actually it’s likely that everyone will benefit as we get better known, as the biomedical corridor grows, and you have more innovation and things happening.

LSU right now is unable to house their specialty programs in our current facility. It’s simply too small…we can’t get other patients in here. We can’t get all of the population we are supposed to serve in. So when you expand beds and you allow the LSU physicians to actually practice in one area they are really excited about the opportunity. Because there are specialties, like our ENT program— they do skull-based surgery—they are world-renowned. They have patients from all over the country, all over the world, come in to have those special procedures done. They really like to be able to collaborate with the plastic surgeons, with the neurosurgeons, and it’s more difficult whenever your neurosurgery program is in one place and your ENT program is in another and ortho is spread out. So all of them get very excited when you talk about, “You can all be in one place at one time. You can schedule these complicated surgeries and take care of those patients that are more of a challenge to take care of today.” So it’s a huge opportunity for us.

SWH: One of the ongoing concerns is should the LSU system receive State funding for a hospital that’s going to compete for private pay patients? But you don’t anticipate an adverse effect on other facilities?

Roxane Townsend: No. I don’t think it’s going to adversely affect them at all. I will say people like to make something out of LSU being paid by the State, but we don’t get a subsidy from the State. There is not some pot of money that is sitting there supporting the hospitals. The State has chosen to pay LSU to take care of the uninsured citizens of Louisiana. So by statute, we have to provide free care to any Louisiana citizen who lives at less than 200% Federal poverty level. Well, as you know, free care is not free. Someone has to pay for the cost of that care because my employees at LSU hospitals, just like the employees at Ochsner and Tulane and everyplace else, expect to be paid every two weeks or every month.

So at the end of the day what the State has decided to do is pay for those services in the LSU hospitals and we are required to not bill patients who live at that level. The truth is, as you know, everyone receives state funding and federal funding, every healthcare institution. About 70% of healthcare in the country is actually paid for with taxpayer dollars. So as a state agency it is necessary for the State to cover the cost within the state agency. So we don’t have the huge commercial population that is getting paid reserves. We don’t hold reserves. We don’t have the same situation; we are different. And as much as people would like to treat the LSU hospitals as though they are exactly the same as the rest of the healthcare institutions, the truth is we are different and it’s very difficult. None of the other hospitals in the state could survive if they had the same payer mix as we have. Fifty percent of the patients we take care of have no insurance. Thirty percent of them are Medicaid patients that are cost-based.

SWH: Does the model change at all with reform if everybody’s mandated to have insurance?

Roxane Townsend: I think what’s going to happen if everyone is mandated to have insurance is we may have some more patients that have Blue Cross or other third party payers, but I think the bulk of that expansion is going to be in the Medicaid world. And Medicaid basically for us covers the cost. If you are only covering the cost of that percent of the population even if that 50% that is currently uninsured gets Medicaid, for us it’s still cost-based. Because with the 50% uninsured if you get paid with DSH (Disproportionate Share Hospital program funds) it only covers the cost. So there is not a profit to be made there. So if 80% of your business is cost-based today and 80% in the future is cost-based, the only difference and the advantage for us would be that the Disproportionate Share Hospital Program, which covers the uninsured today, doesn’t cover physician costs, which is interesting. You don’t get paid for physicians who are actually taking care of those patients, but the hospital costs get covered. But in Medicaid there is actually a physician portion that can be paid. So for us that will change the model a little bit.

SWH: LSU-New Orleans doesn’t do maternity services right now. Will you resume when the UMC opens?

Roxane Townsend: No. We stopped doing obstetrics and nursery in August, 2010. It was for several reasons, but mainly that our volume was not high enough so that it really supported the residency training programs. So LSU moved their deliveries to Touro and Tulane already had Tulane Lakeside where they were doing maternal child health and so they were able to move their program over there. The current plans for the University Medical Center are not to do obstetric services in that hospital. It’s consistent with a model many university medical centers are using these days because often they will affiliate with a woman’s hospital or do their maternal services someplace else. We will still do gynecological services, GYN oncology, and things like that.

SWH: What’s going to happen to the old Charity facility?

Roxane Townsend: Well, we don’t know. There is planning being done. Part of the programmatic agreement that we have identifies funding to help repurpose that facility. I understand that Facility Planning has had some meetings with developers so there will be a reuse for that facility, but it just won’t be used as an acute health care hospital.

SWH: Tell us about the New Orleans Biomedical District being created here. Can you characterize what that will look like?

Roxane Townsend: I recently had a chance to tour the BioInnovation Center and it is a fantastic building. The Louisiana Economic Development group helped get it started. Apparently there was legislation passed in 2002 that actually enabled this. They had been open for about four months and they were about 40 percent occupied already. It’s an incubator for bio innovation. That’s located on Canal on the other side of the interstate down toward the river.

But the concept is that this entire corridor will provide healthcare, but not just healthcare, but also be an area where research is encouraged, where folks that are selling medical equipment and things like that will have a place to be centered. Part of it is the new cancer research building that is very close to being occupied right down here on the corner of Tulane and close to South Roman. So this entire corridor right now is really looking great for kind of the broader scope of the healthcare industry from bench research the whole way to taking medical devices to market, to being able to actually use those things and take care of patients.

SWH: What is the UMC project going to mean economically to this area?

Roxane Townsend: Well even right now, I think Skanska is going to have at least 100 people in the project management office who are essentially going to be down here for the next several years so they are occupying apartments, they are living in this city. Then you have all the construction jobs that are going on and one of the things I’ve seen is there are condos that have just gone up about a block away on Claiborne in the old Falstaff brewery in anticipation of the project. I think what you are going to see is now that we’ve gotten our go ahead from the State, I think there were a lot of people kind of sitting on property waiting to see if this was really going to happen. You know that there are going to be staff members, physicians, there are going to be all sorts of people that are going to need housing, that are going to be using restaurants, that are going to be buying goods. There actually has been an anticipated economic impact created. It’s a tremendous impact to the city. It’s about $2 billion in construction between LSU and the VA.

It’s huge for this city and it’s big for the state. This is a big deal for Louisiana and I think that’s one of the things people sometimes forget is that when you have a medical school that’s training the physicians that work in your state and they stay close to home and you have access to that caliber of care, that’s really important for our state. Then we provide a lot of the specialty services. We have ten LSU hospitals, but you can’t have ten topnotch neurosurgery programs and you can’t have ten topnotch ortho programs, but we are fortunate because we have Shreveport and New Orleans and so we can refer people to those specialists so they don’t have to go out of state. They do right now, but they don’t have to.

SWH: What about you personally? Are you going to be here overseeing this through the end?

Roxane Townsend: I’m here as long as they need me.