**GAO-08-681R**                      Published: Jul 17, 2008. Publicly Released: Jul 17, 2008.                  

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## Highlights

New Orleans faces many challenges in the aftermath of Hurricane Katrina including the challenge of reestablishing the health care system and hospitals within the system. Hurricane Katrina, which made landfall on August 29, 2005, and the subsequent flooding caused by the failure of the New Orleans levee systems, resulted in the sudden closure, damage, or disruption in services at many of the New Orleans hospitals. On August 1, 2007, officials representing five New Orleans hospitals that have been the main health care providers in the region since the hurricane, testified before the House Committee on Energy and Commerce's Subcommittee on Oversight and Investigations. The officials stated that since the hurricane they have experienced significant operating losses and that they expect the losses to continue. The official from one of the hospitals that was designated to present an overview of the specific problems facing the five hospitals stated in his testimony that the hospitals expected to experience a combined operating loss of $135 million in calendar year 2007. This operating loss estimate was calculated using operating revenue and expense amounts for all five hospitals for January through May 2007 and then annualized for the year. The official also testified that the combined operating loss for the five hospitals would equal $405 million by 2009. The hospital official cited several reasons for operating losses, including increased labor costs and Medicare reimbursements that do not take into account the increased labor costs since the hurricane. The hospital official appealed to Congress for additional federal financial assistance. The subcommittee asked us to review the extent to which Hurricane Katrina adversely affected the hospitals' operating results. To that end, Congress asked us to analyze 1) the operating results of the five hospitals before and after Hurricane Katrina and 2) the factors contributing to changes in hospital operating results and whether those factors would have a continuing impact.

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## Topics

Economic Development

Budget obligationsBudgetingCost analysisData collectionFinancial managementFinancial statement auditsFinancial statementsHealth care cost controlHealth care costsHealth care facilitiesHealth care personnelHealth care planningHealth care servicesHealth centersHealth resources utilizationHospital administrationHospital care servicesHospital planningHospitalsHurricane KatrinaHurricanesInfrastructure rebuilding (domestic)Labor costsLossesMedicarePaymentsCost estimates