A private health care consultant has recommended that the academic medical complex in New Orleans be a $1.09 billion project built without any new borrowing either by the University Medical Center hospital corporation or the state, reducing the previously forecast price tag by almost $200 million.
The University Medical Center site, with Claiborne Avenue at the lower right, and Tulane Avenue cutting across the bottom left corner. Canal and Galvez streets also bound the site.
The plan, authored by Verite Healthcare Consulting and outlined by Gov. Bobby Jindal?s office in a written statement, does not reduce the size or scope of the previously forecast $1.2 billion design pushed by Louisiana State University System officials. But it does project a lower annual state appropriation of $52 million at the outset, compared with as much as $100 million projected previously.
The full plan is scheduled to be presented to UMC board members Thursday. The panel is set to vote on a final construction and financing scheme, though it could still be subject to wrangling by state lawmakers in Baton Rouge.
Verite calls for the UMC to use cash-on-hand to build 424-bed patient towers, a trauma center and a diagnostics and treatment facility. The LSU Physicians Foundation would finance a physicians? tower and parking deck. The administration?s outline did not specify what entity would build the central energy plant.
The outline also does not specify how much the LSU Physicians Foundation would spend. It does state that the lower bottom line would come from savings on construction costs. The state facilities office, which is managing construction, has said previously that construction labor and steel prices are lower than when construction estimators devised the initial $1.2 billion budget.??
Financing for the facility has been an open question for several years. The state has dedicated $300 million in state taxpayer support to the project, along with about $430 million from the federal settlement for Hurricane Katrina damage to Charity Hospital. The state also expects to get more than $100 million for lost Charity contents, which would bring the equity to at least $830 million.
The UMC board, acting on previous plans, had discussed borrowing as much as $400 million by issuing revenue bonds. But the project has been unable to win federal mortgage insurance that would have allowed for the lowest annual debt service. Abandoning that option also raised questions about whether the project could attract investors on the open bond market. At the very least, investors would have commanded significantly higher interest rates.
Annual debt service had been projected to be at least $35 million annually, a figure that could explain part of the difference in projected state appropriations. But previous analyses have also noted that annual rent payments to third-party builders like the LSU Physicians Foundation could be in the same range as debt service. The Jindal administration?s written statement did not detail how the Verite plan explains the lower projection for state appropriations.
Some state lawmakers have protested the projections for state taxpayer support, though the state has long contracted with LSU?s Charity Hospital system to care for the uninsured. Jindal, LSU administrators and others also have defended the need for a research and medical education facility.
Bill Barrow can be reached at bbarrow@timespicayune.com
Article source: http://www.nola.com/health/index.ssf/2011/09/university_medical_center_shou.html
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