U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

36–572 PDF 2007

POST KATRINA HEALTH CARE: CONTINUING CONCERNS AND IMMEDIATE

NEEDS IN THE NEW ORLEANS REGION

HEARING

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND

INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 13, 2007

Serial No. 110–17

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

BART STUPAK, Michigan, Chairman

DIANA DeGETTE, Colorado

CHARLIE MELANCON, Louisiana

Vice Chairman

HENRY A. WAXMAN, California

GENE GREEN, Texas

MIKE DOYLE, Pennsylvania

JAN SCHAKOWSKY, Illinois

JAY INSLEE, Washington

JOHN D. DINGELL, Michigan, (ex officio)

ED WHITFIELD, Kentucky

Ranking Member

GREG WALDEN, Oregon

MIKE FERGUSON, New Jersey

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOE BARTON, Texas, (ex officio)

(II)

(III)

C O N T E N T S

Page

Barton, Hon. Joe, a Representative in Congress from the State of Texas,

prepared statement .............................................................................................. 9

Burgess, Hon. Michael C., a Representative in Congress from the State of

Texas, opening statement .................................................................................... 16

DeGette, Hon. Diana, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 6

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 18

Green, Hon. Gene, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 16

Jefferson, Hon. William J., a Representative in Congress from the State

of Louisiana, prepared statement ....................................................................... 12

Melancon, Hon. Charlie, a Representative in Congress from the State of

Louisiana, opening statement ............................................................................. 15

Stupak, Hon. Bart, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 1

Whitfield, Hon. Ed, a Representative in Congress from the Commonwealth

of Kentucky, opening statement ......................................................................... 5

WITNESSES

Bertucci, Bryan, M.D., coroner/family physician, St. Bernard Health Center,

Chalmette, LA ...................................................................................................... 27

Prepared statement .......................................................................................... 129

Cerise, Fred, M.D., M.P.H., secretary, Louisiana Department of Health and

Hospitals, Baton Rouge, LA ................................................................................ 103

Prepared statement .......................................................................................... 148

DeSalvo, Karen, M.D., executive director, Tulane University Community

Health Center at Covenant House, New Orleans, LA ...................................... 29

Prepared statement .......................................................................................... 130

Answers to submitted questions ...................................................................... 136

Erwin, Donald T., M.D., president and chief executive officer, St. Thomas

Community Health Center, New Orleans, LA ................................................... 32

Prepared statement .......................................................................................... 138

Answers to submitted questions ...................................................................... 144

Fontenot, Cathi, M.D., medical director, Medical Center of Louisiana at New

Orleans, New Orleans, LA .................................................................................. 25

Prepared statement .......................................................................................... 154

Franklin, Evangeline R., M.D., director of Clinical Services and Employee

Health, City of New Orleans Health Department, New Orleans, LA ............. 3

Prepared statement .......................................................................................... 169

Hirsch, Leslie D., president and chief executive officer, Touro Infirmary, New

Orleans, LA ........................................................................................................... 74

Prepared statement .......................................................................................... 183

Koehl, Thomas, director, Operation Blessing Disaster Relief Medical Center,

New Orleans, LA .................................................................................................. 23

Prepared statement .......................................................................................... 156

Lynch, Robert, M.D., director, South Central Veterans Affairs Health Care,

Jackson, MS .......................................................................................................... 99

Prepared statement .......................................................................................... 157

Answers to submitted questions ...................................................................... 161

Miller, Alan, Ph.D., M.D., interim senior vice president for health sciences,

Tulane University Health Sciences Center, New Orleans, LA ........................ 66

Prepared statement .......................................................................................... 164

Page

IV

Muller, A. Gary, president and chief executive officer, West Jefferson Medical

Center Marrero, LA ............................................................................................. 67

Prepared statement .......................................................................................... 167

Norwalk, Leslie, acting administrator, Centers for Medicare and Medicaid

Services, Washington, DC ................................................................................... 97

Prepared statement .......................................................................................... 198

Quinlan, Patrick, M.D., chief executive officer, Ochsner Health System, New

Orleans, LA ........................................................................................................... 69

Prepared statement .......................................................................................... 171

Rowland, Diane, executive vice president, the Henry J. Kaiser Family Foundation, Washington, DC ...................................................................................... 21

Prepared statement .......................................................................................... 210

Answers to submitted questions ...................................................................... 231

Smithburg, Donald R., executive vice president, Louisiana State University,

chief executive officer, Health Care Services Division, Baton Rouge, LA ....... 72

Prepared statement .......................................................................................... 176

Answer to submitted question ......................................................................... 181

Stephens, Kevin U., Sr., M.D., J.D., director, city of New Orleans Health

Department, New Orleans, LA ........................................................................... 105

Prepared statement .......................................................................................... 173

Wiltz, Gary, M.D., chairperson, Region 3 Consortium Franklin, LA .................. 37

Prepared statement .......................................................................................... 233

Answers to submitted questions ...................................................................... 246

(1)

POST KATRINA HEALTH CARE: CONTINUING

CONCERNS AND IMMEDIATE NEEDS IN THE

NEW ORLEANS REGION

TUESDAY, MARCH 13, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC.

The subcommittee met, pursuant to call, at 9:30 a.m., in room

2123 of the Rayburn House Office Building, Hon. Bart Stupak

(chairman of the subcommittee) presiding.

Members present: Representatives Stupak, DeGette, Green, Inslee, Dingell [ex officio], Whitfield, Walden, Ferguson, Burgess, Barton [ex officio], and Blackburn.

Staff present: John F. Sopko, Christopher Knauer, Kristine

Blackwood, Scott P. Schloegel, Rachel Bleshman, Lauren

Bloomberg, Alan Slobodin, Peter Spencer, and Krista Carpenter.

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. STUPAK. I will call this hearing to order.

Today we have the hearing on Post Katrina Heath Care: Continuing Concerns and Immediate Needs in the New Orleans Area.

It has now been over a year-and-a-half since Hurricane Katrina

touched land on August 29, 2005. Nearly a year ago, this subcommittee held a hearing in New Orleans to examine public health

care conditions in the region. What we found then was a system

overwhelmed with far more patient demand than capacity. Since

that time this committee has continued to monitor and assess the

ongoing health care needs faced by those in the New Orleans region.

A few weeks ago, our majority and minority committee staff returned from the area to report on where health care stands today.

Unfortunately, what our staffs found is that much of the region’s

health care structure still remains crippled and major problems remain unresolved. In the four worst-hit parishes of Orleans,

Plaquemines, Jefferson, and St. Bernard, the loss of hundreds of

thousands of homes and the closure of many health care facilities

displaced thousands of physicians, mental health providers, nurses,

dentists, obstetricians, lab technicians, and other allied health professionals.

2

While estimates are that approximately half of the city’s former

residents have returned, it appears that many of those previously

employed in the health care sector have found work elsewhere and

may not return. Many specialists and support staff are in high demand in other parts of the country. This demand continues to place

significant pressure on New Orleans’ outpatient clinics and hospitals to attract needed medical personnel. At the same time, the

region has experienced an influx of construction workers and day

laborers who often lack insurance.

Key hospital facilities remain destroyed or closed. The flagship

hospital for the State-run public health system in downtown New

Orleans was known as Big Charity. Big Charity was the predominant source of healthcare for the large percentage of poor and uninsured. It will never reopen in the old building, and a path to building a new hospital is littered with controversy and obstacles. In addition, privately owned Methodist Hospital and Chalmette Medical

Center, which provided hospital services for residents east of the

city, are closed.

[Slide shown.]

This is what these two hospitals look like today. We have one

back here. Here we go. At Chalmette, we got what, about four of

them?

[Slide shown.]

That is the Wal-Mart parking lot. You can see the trailers that

are right there. We are providing some health care right now.

[Slide shown.]

And that is Methodist Hospital. There is a fence around it. It is

not open for business but there is a fence around. It is hard to see.

If that was a real hospital, you would see more than just two cars

around there. Next facility? That is it? OK.

Hospitals that were able to remain open during the storms or

have since reopened continue to struggle with critical staffing

shortages, rapidly spiraling costs, and inadequate or delayed reimbursement. These challenges are compounded as they treat New

Orleans’ poor and uninsured who were previously provided for by

Big Charity.

Many of today’s witnesses have made tremendous personal sacrifice to help their community and its medical infrastructure recover while they cope with the loss of their own homes and neighborhoods. Along the way they forged many new and innovative

partnerships. Their courage and heroism is an inspiration to us all.

It is clear, however, that there is so much more to be done and

soon.

Our hearing today will focus on what the health care providers

believe are the most urgent health care issues that need to be addressed in the short term. For example, as debate continues about

when, where, how big, or even whether to rebuild a charity hospital

in New Orleans, there is no consensus on how to cost-effectively

deal with the growing number of uninsured and underinsured patients now flowing into the region. Many who were once able to

rely on Charity Hospital must now turn to either University Hospital, which has only 100 beds, or travel to other parts of the State

for treatment at one of the State’s other public hospitals. Traveling

for health care is impractical for many residents, particularly given

3

the transportation problem still plaguing the State. Others are

seen by the region’s private hospitals. However, aside from loading

an uninsured with complications from diabetes into an ambulance

and delivering him or her to an emergency room, the most expensive avenue of treatment, there is no way to allow an uninsured patient to easily access private care.

Because Louisiana State law has directed that the bulk of the

Medicaid disproportionate share, DSH, dollars go to the State Public Health Care System, significant challenges remain about how to

allow the uninsured access to existing capacity while providing fair

compensation to the doctors and hospitals that provide the care.

Given that Big Charity is no longer viable and won’t be for at

least 5 to 7 years, access to health care for the uninsured and poor

must be resolved. And while we must find a way to compensate

those private hospitals that are currently providing care, we must

also ensure that private hospitals shoulder the full spectrum of the

uncompensated care patients, not just the healthiest. All this must

be done in a way that is reasonably fair to both the institution and

the taxpayers.

Another area that must be addressed immediately involves the

many outpatient clinics now providing critical safety-net care.

Many of these clinics, including those that make up the PATH network, are seeing patients that otherwise would have little or no access to healthcare services. These clinics are filling critical health

care needs where there was once a public hospital and clinic system. They also provide ambulatory and preventative care that

would otherwise require an expensive trip to the emergency room.

Nonetheless, more needs to be done to integrate these important

health care providers into the existing hospital structure and reimbursement structure. For example, if someone with complications

from diabetes shows up at a small primary care clinic, there is no

formal way to refer him or her to the surrounding hospitals, particularly a private hospital other than placing the patient in an

ambulance and sending him to the emergency room. If the patient

is under- or uninsured, this makes the effort even more daunting.

As these clinics are often working on small budgets comprised of

donations and small grants, a formal mechanism to reimburse

them for the care they provide must be explored. These clinics will

play a significant role in providing care for the region’s poor for the

foreseeable future.

Another area that needs immediate attention is the State’s ability to train its own health care providers. The New Orleans region

was a significant training center for the State’s future doctors,

nurses, and other health care practitioners. Since both of the primary teaching facilities, the Veterans Hospital and Big Charity,

were destroyed, the region’s two medical schools, LSU and Tulane,

have struggled to keep their teaching programs together. And while

LSU and Tulane have managed to hold many of their programs together by placing their students around the region in other hospitals, this stop-gap measure will only last so long.

As reported to this committee by officials from both medical

schools, key programs have already lost accreditation and others

are now threatened. Shoring up the region’s medical schools and

teaching facilities is a significant urgency, and this alone will be

4

a daunting task. A solid plan must be developed for LSU and

Tulane so they can continue to train much-needed health care professionals.

I want to talk for a minute here about the model that has been

used so far to attempt to address some of the rather daunting

health care challenges that have faced the region post-Katrina.

Last year the Secretary of Health and Human Services asked the

State to come up with a plan to fix the region’s health care infrastructure including some of the issues I just raised. That process

became known what is generally referred to as the Collaborative,

and it is a very important chapter in the State and Federal Government’s response to the region’s post-Katrina health care needs.

The Collaborative plan brought together a vast array of stakeholders, public and private, State and local, to find ways to restructure health care delivery system for the area’s most affected by the

storm. This area referred to as region 1 encompass Orleans, Jefferson, St. Bernard, and Plaquemines Parish. While many of the participants in the Collaborative had significant differences of opinion,

they worked hard to achieve consensus on some major points.

Last October the Governor submitted the Collaborative plan to

the Department of Health and Human Services. What came back

from HHS just a few weeks ago appears to be a proposal that is

very different in both size and scope than what the State sent to

HHS. Instead of working on the various points of consensus and

rolling out a pilot plan for region 1, HHS answered with a plan to

replace Louisiana’s statewide public health hospital system with

what appears to be an insurance model. Putting aside the various

HHS plans or one view on the State’s public health care system,

HHS’s plan may simply be too ambitious at this point in the recovery process. Applying just some of the concepts of the Collaborative

merely to region 1 would be difficult enough, but having Louisiana

implement a sweeping, statewide redesign of its complex, publicly

funded hospital system, may simply be unworkable in the current

environment. While HHS may have good intentions in this effort,

much smaller bites of the apple must be taken if we are going to

provide access to health care in New Orleans.

Unfortunately, the State and Federal Government now appear to

be at an impasse. Instead of breaking off pieces of a complex health

care system and forging ahead with ways to solve each piece, I fear

that the State and Federal Government will become locked in a colossal fight of dooming spread sheets and armies of actuaries. Answering the question whether HHS proposal can work or would instead obliterate the safety net for hundreds and thousands of lowincome residents across the whole State as Louisiana’s Secretary of

Health and Hospitals now suggest seems less important in the

amount of time and energy that will be expended in this fight. Perhaps rather than one-size-fits-all plan, the Secretaries of Health for

both the State and Federal Government should attempt to address

smaller portions of this problem and provide health care of all the

citizens in region 1.

There is an old African proverb that goes something like this.

When elephants fight, it is the grass that suffers. I am afraid that

is where New Orleans region finds itself with health care today.

5

Tremendous energy is already gone into attempting to solve the

health care needs of the region.

My admiration goes out to all the witnesses that are in this room

today, those representing small clinics, those representing public

and private hospitals, and those representing both the State of

Louisiana and the Federal Government. Each of you has greatly

contributed to keeping the region alive through your creativity and

your countless hours of service. Nonetheless, I fear if you do not

find new ways to work together on these issues soon, the health

care situation in the region may grow worse.

Let me be clear as to why we are here today. The hearing is not

about pointing fingers, nor is it about attacking one another. I understand that many of you have very valid philosophical differences

about how to get the job done; but frankly, you all work too hard

to allow this ongoing effort to be balled into a bigger exercise of

blaming one another for poor choices. Instead, I challenge you to

use today’s hearing as the opportunity to seek common ground.

I am looking forward to hearing from each of you about what

problems you think need immediate focus and some proposals for

ways we might be able to work together, the Congress, the executive branch, State and local government, private and public providers, to address the health care needs of your region. Too many lives

are counting on your collective efforts, and I intend to do my best

to use this committee to play our small part.

Let me conclude by again thanking every witness that will be

testifying here today. Many of you have taken great expense to be

here and have left your practices of providing needed health care

to the region to be here. Your input and willingness to be here is

boldly commendable and appreciated by us and the people in the

New Orleans region.

Let me also thank my colleagues on the other side of the aisle.

Mr. Whitfield, you and many of the colleagues on both sides of the

dais have been particularly gracious with your time and attention

to this matter. Moreover, I want to thank our staffs for their excellent input they have provided into this inquiry. I look forward to

working with all of you as we continue to stay involved in this critical matter.

With that, I now yield to my good friend from Kentucky, Mr.

Whitfield; and I would just remind our witnesses, we have four

hearings this week in Energy and Commerce Committee. Mr. Dingell is overworking us and underpaying us, but Members will be

coming in and out. So you will be seeing people coming in and out

all day.

And with that, Mr. Whitfield, great to be with you for your opening statement, sir.

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

Mr. WHITFIELD. Chairman Stupak, thank you. And I also want

to thank those witnesses who have come from the New Orleans

area to testify today on this important topic. I would suspect that

if there is any group that has been overworked and underpaid over

the last few years it is this panel of witnesses, in fact, all three

6

panel of witnesses; and we genuinely appreciate the great effort

that you all continue to make in the New Orleans area.

I remember January 2006 this subcommittee came to New Orleans and held a hearing on the state of health care delivery postKatrina. And we know as I said earlier you have met many challenges that have been extremely difficult, and all of us have been

amazed at the progress that you have been able to make in the

New Orleans area, but we also understand that you have a long

way to go. And from the testimony that I have read that will be

given today, access to care continues to be limited with critical

shortages of mental health, long-term care, and certain surgical

services, private and community hospitals which stepped up to

cover the care gaps created after the various hospital closures have

been operating at a deficit under existing apparently inflexible

State and Federal financing system, physician and other staff

shortages, coupled with ongoing funding obstacle for these providers impede further expansion of health care options. A budding

community health center system which I believe has great promise

and maybe can even transform access to and the quality of health

care, not only in New Orleans but around the country is one of the

bright, shining spots I see.

Failure so far to shore up the system raises a risk of a disintegration of the graduate medical education system in New Orleans,

historically the source of most of the State’s nurses and physicians.

And meanwhile, hospitals and other health providers, local, State,

and Federal health officials appear to be at an impasse over both

short- and long-term plans for the region at this critical juncture.

Obviously those of us on this subcommittee do not have the answers. Hopefully listening to your testimony we can come up with

some short-term solutions to maximize the opportunity for a great

health care delivery system in the New Orleans area.

And as Chairman Stupak said, the only purpose of this hearing

is to try to come up with some short-term answers to get the train

back on the track for lack of a better term.

So I want to thank all of you for being here. We look forward to

your testimony, and we look forward to working with you to help

solve the significant obstacles that still stand in your path.

I yield back the balance of my time.

Mr. STUPAK. I thank the ranking member. Next, Ms. DeGette

from Colorado, 5 minutes for opening statement.

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO

Ms. DEGETTE. Thank you very much Mr. Chairman, and thank

you in the whole committee for the continuing efforts to keep this

issue of Hurricane Katrina on top of our agenda.

While the hurricane now was a year-and-a-half ago and while the

country poured out its heart to those affected by the storm right

after it was hit, attention has now been diverted to other issues.

But for this committee and for the sake of those committed to rebuilding New Orleans the way it was, we have a duty to continue

to engage on this issue.

7

I have been down to New Orleans twice looking at health care

issues. In January 2006, this subcommittee looked at the damage

put to the health care infrastructure of the city of New Orleans.

Put simply, and as we saw from some of the slides, the media did

not do it justice. The interior of Charity Hospital, which was once

the keystone of the city’s health care safety net, was completely destroyed. Medical records were rotting, mold was growing on the

wall, medical equipment was strewn everywhere, and I can honestly say I have never seen anything like it.

During our field hearing the next day, I was gratified to hear

about the efforts of some of the city’s private hospitals to provide

care to those who would otherwise seek aid at Charity. These hospitals, having suffered less damage and having insurance, were

able to return to service much more quickly, and they stepped up

to fill a need. The next time after that I was in New Orleans, I

found that these hospitals were still fulfilling the need; but as that

turned out, of course, the role these hospitals played was only temporary.

During the first hearing, I asked the panel of the private hospitals if their long-term business plans included providing care to

the population previously served by Charity; and everybody got a

look of shock on their face and said, no, that was not in their business plan for assuming the care of Charity’s patients in the long

term.

So Mr. Chairman, as we examine plans for the longer-term revitalization of the health care infrastructure of New Orleans, I look

forward to hearing from our witnesses about putting in place a

health care system that is permanently going to provide for health

care for indigent patients. And frankly, while we are looking at

long-term plans for New Orleans, we can’t overlook those who are

in need of health care services right now. Right now we have a

patchwork and we have in our notebooks—and I know there is a

map over there of the ad hoc system that has grown up in New Orleans. We need a thoughtful, long-term approach to deal with this.

Otherwise, there will be nobody in place in 10 years to serve once

the grand redesign has been put into place.

Now, frankly, the city faces the chicken and egg problem because

medical professionals are needed in the community to provide care

to those rebuilding the city while those medical professionals need

a place to live and get paid for the services they are providing.

I want to hear from our witnesses today about how we might encourage physicians and nurses to return to the city and provide

health services as they once did. Otherwise, the best reimbursement system will fail.

After Hurricane Katrina hit New Orleans, the response from the

Federal, State, and local governments was at best an uncoordinated mess. Public servants from all levels of government worked

courageously to meet health care needs of thousands throughout

the city. But policymakers failed to maximize resources to address

the immediate needs of patients and did not plan for how to bring

the health care system back on line quickly. Instead of fixing the

problem now, we more often see our elected officials and appointees

squabbling.

8

And so as the chairman said, the time has come for all of us to

put aside our differences, roll up our sleeves, and develop some

consensus solutions. The people of New Orleans have suffered

greatly, and it is our job to make their lives better.

One thing I just want to mention, I am deeply concerned and

have been all along about what we do about establishing a longterm level one trauma center in New Orleans because the last few

times I was down there they didn’t have one. Now we have one operating, but as I understand it has only 100 beds. This will not suffice for the long-term future, and we are going to need to grapple

with how we come up with a cohesive health care system in New

Orleans that serves all the patients that need to be served in a

rapid and technologically advanced way.

So I hope our witnesses have some ideas on this. I want to thank

you again, Mr. Chairman, for holding this next in a continuing series of hearings, and I yield back.

Mr. STUPAK. I thank the gentlewoman. Next turn to Mr. Barton,

ranking member of the committee. Mr. Barton, I appreciate your

continued interest in oversight investigations. I know you were a

chair a one time, and I certainly appreciate your continued interest.

Mr. BARTON. Thank you. Thank you, Mr. Chairman. I will submit a written statement. For the record, we support this hearing.

We had a field hearing on this issue in New Orleans in the last

Congress. We plan to continue to work on a bipartisan basis.

I will say I think you have set a record for most witnesses at one

oversight hearing. We have 17 and I believe that beats the record

of the last Congress, but we will get to the bottom of it.

I yield back.

[The prepared statement of Mr. Barton follows:]

9

10

11

Mr. STUPAK. It was not the number of witnesses, it is the number of problems we are facing.

Next we will go to Mr. Melancon from Louisiana.

Mr. MELANCON. Thank you, Mr. Chairman. If I could, I would

like to request by unanimous consent a statement from Congressman Jefferson and one from Louisiana Recovery Authority be

added into the record?

Mr. STUPAK. Without objection it will be added.

Mr. MELANCON. Thank you, sir.

[The prepared statement of Mr. Jefferson follows:]

12

13

14

15

OPENING STATEMENT OF HON. CHARLIE MELANCON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. MELANCON. First, I would like to welcome all witnesses

today and thank them for the time they have taken to come to testify. I would also like to thank you, Mr. Chairman, for dedicating

the committee’s time and the resources to the Gulf Coast health

care crisis.

I am glad to see Congress take another step towards living up

to its commitments that we have made in August 2006 on the

Katrina-Rita Task Force Trip to the Gulf Coast.

A year-and-a-half has passed since Hurricane Katrina made

landfall, and south Louisiana’s health care system remains in crisis. There is no doubt that our health care system faces serious

long-term challenges, but today we are here to focus our attention

on the immediate needs. Our objectives are simple. We want to

help enhance the region’s capacity to take care of the patients’ immediate needs and want to help the region demonstrate a level of

care and quality that will bring our people back.

Achieving these objectives requires us to understand what resources are needed. Today’s testimony will help the committee to

grasp and meet those needs. To explain the situation in detail is

outside the scope of this opening statement, but just to give you

some examples, our primary caregivers are few and far between,

hospitals are filled to capacity with many who have not received

basic primary care in over a year, the number of uninsured has hit

an all-time high. In a recent Times-Picayune article, the average

wait time in the emergency room at Touro Infirmary was 6 to 8

hours. That is about the same time it takes to drive from New Orleans to Houston or Atlanta. In Chalmette, Louisiana, there isn’t

even a hospital to wait in; rather people line up outside tents in

front of the Wal-Mart or what used to be the Wal-Mart to receive

health care services that are still being provided.

I hope that today’s hearings help us identify our short-term challenges. I also want to use this opportunity for all stakeholders in

the region to sit down together and talk with each other, rather

than at each other. I want to remain focused on finding common

ground. Everyone in this room has been called to serve the people,

either through medicine or public service. We should remain focused on the common ground of serving the people as we continue

our conversations over the next several months.

I want to again thank the witnesses who have come here today,

and thank you for your continued and dedicated service in providing good health care to the people of the disaster-ridden area. And

again, I would like to thank Chairman Stupak for his persistence

and his tenacity. He has given me assurance that this subcommittee will revisit the Gulf Coast health care crisis as many times as

it may be needed until we find solutions.

I look forward to working with you to resolve the important

issues and get our health care system back running in a way that

it should be.

Thank you, Mr. Chairman. I yield back for time.

Mr. STUPAK. I thank the gentleman. Up next, Mr. Walden.

16

Mr. WALDEN. Thank you, Mr. Chairman. I just wanted to welcome our witnesses. I don’t have an opening statement this morning. I look forward to hearing from them, and I yield back.

Mr. STUPAK. Mr. Green from Texas, opening statement?

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman. I would like to have my

full statement placed into the record and just briefly say that it

continues to shock us. I have a district in Houston, and knowing

what our neighbors in Louisiana and New Orleans have gone

through and to see that the status of the health care where there

are no public hospitals and the number of people who have a disproportionate share of the private, for-profit hospitals weren’t picking it up, obviously there has to be a lot of changes in it. And Mr.

Chairman, I am glad we are having this hearing, and hopefully we

will follow up with legislation. I serve on the Health Subcommittee,

so I would like to see how we could deal with it. On a personal

note, in Houston after Katrina or during Katrina, we received over

100,000 Katrina evacuees, in fact, estimates up to 250,000; and I

was so proud of what our community did on very short notice, the

for-profit hospitals, non-profit, plus our public hospitals coming together and working side by side when the rest of the year they

compete every day but it worked.

I have to admit, Mr. Chairman, we got some commitments from

the Federal Government because Texas is not known as a high expense Medicaid State. In fact, our match is much more than what

Louisiana was. We did get Federalized the State/local match. The

problem is there were lots of commitments made on that Labor Day

of 2005 but it didn’t work out. It is frustrating.

And so I hope our Oversight Committee can bring to life what

we need to do, plus look at legislative solutions so when this happens again, because this year it could be Houston where we may

be going to New Orleans, in all honesty. I hope that is not the case,

but looking at your infrastructure, we still have to build a lot there.

But there but for the grace of God goes any of us who live along

the Gulf Coast or the east coast of the United States, so I am glad

you are having this oversight. Thank you.

Mr. STUPAK. Thank you, Mr. Green.

Next I go to Mr. Burgess from Texas. Mr. Burgess, opening statement?

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BURGESS. Thank you, Mr. Chairman. Again, I thank you for

calling this hearing today.

We have all read a lot about what happened down in the Gulf

Coast. We all have questions about preparedness, we all have questions about the adequacy of the response. Most explosive have been

the issues surrounding the three catastrophic events that occurred

the day that Katrina hit the Gulf Coast. We had the wind damage,

you had damage from the surge down in Plaquemines and Port

Chalmette, and then the levee breach that affected both West Jefferson and the city of New Orleans itself.

17

Responsibility rests at every level of government. The time has

certainly passed for fixing blame; but today in this room, in this

committee we must focus on not only what destroyed the health

care community, the extent to which it has recovered and can recover in the future, and how to prevent this from ever happening

again.

In October 2005 I visited both Orleans and Jefferson Parishes.

The people there were very kind to me and welcome me into their

community. It wasn’t really an official visit, but I wanted to see for

myself the physical damage to the buildings and the property; and

most important to me is what was happening in the level of the

local practitioner in the health care community.

Let me put my opening statement into three principles, the most

important is having a plan in place in case a disaster threatens.

The case in point, I think the gentle lady from Colorado already addressed, the difference between HCA’s hospital implementation of

an emergency plan and essentially the lack of a plan across the

street at Charity Hospital. Across the street from each other the

differences and outcome were astronomical. One stands today, and

today as we sit here in this committee we wonder if one of the venerable old institutions in medicine will ever be what it once was

again, Charity Hospital.

[Slide shown.]

There is a slide up there. Actually, this is the correct slide. The

obvious need for electronic medical records. It is amazing how a

small electronic device can keep health records of thousands of individuals safe from destruction.

[Slide shown.]

This is a photograph from our visit, our field hearing last January to Charity Hospital. This is the records room; and as you can

see because of the extent of the mold damage and water damage

to those records, very little useful data will be able to be gleaned

about anyone’s ongoing medical care.

This committee has the oversight capabilities to encourage and

set regulations to move the use of medical records along, and I believe we should.

And just parenthetically, Mr. Chairman, I will add that yesterday I was at Walter Reed Hospital here in Washington and the

same issue came up. We all heard the great things the Veterans

Administration is doing with their electronic medical records, but

apparently the DOD medical records don’t communicate with the

VA medical records and that remains a problem for our soldiers

who are on medical hold or are looking to get out of the military

for medical reasons.

Just after Katrina passed, many displaced individuals, thousands

with severe medical illnesses were uprooted and moved to various

places, some to my district in Texas. The Tarrant County Resource

Connection in Ft. Worth where one of my district offices is located

was a recipient for some people who had to leave New Orleans. We

worked with the local American Red Cross to prepare for the busloads of citizens to arrive. When they did arrive, many were in

quite fragile medical condition. You can imagine my concern when

I got a call from a staff member who asked me if a lady had a Csection, how soon could she sleep on the floor. Why do we need to

18

know this? Well, we have a lady here who had a C-section yesterday, and we don’t have enough cots for her. The really bad part of

that story was at the time, no one had any idea to the hospital to

which her baby was evacuated. It took us several days to ascertain

that.

The medical community in north Texas did rise to the occasion

both in Tarrant, Denton, and Dallas Counties and did a wonderful

job with helping people; but the fact is, it should never have been

necessary for them to respond in such an emergent fashion.

The final principle is that I want to discuss in this hearing is actually set out a plan of action. We are focusing on the achievable

and the desirable. We have a tendency in Congress to simply debate problems forever, but this hearing needs to be about solutions

and the follow-through. Specifically it was well-documented that

after Katrina the medical community in New Orleans was not recovering, the medical professionals were unable to care for individuals, they lacked funding and resources to actually assist those in

need. The disaster medical assistance teams flown in from around

the country did a great job. The reality was if they hadn’t been

there to set up on the grounds of some of the hospitals, the waits

for emergency treatment were in excess of 24 hours, sometimes for

something as minor as an ankle sprain or as major as a heart attack. Any major disaster, a bus crash or fire that might affect five

or more people, would greatly benefit from a level one trauma center; and New Orleans lost their trauma center. Now that means if

a bus crash occurs, the lives of many more could be jeopardized

where they would have to go over 2 hours to the nearest trauma

center.

The effects are ongoing, Mr. Chairman. We cannot continue to

just debate and point fingers. This committee must make specific

goals to instigate change. We must also accept responsibility to

continue our oversight. I would recommend quarterly hearings on

this subject and at least once a year in the city of New Orleans

itself.

As we begin today’s hearing, I am hopeful that we will all keep

in mind that this is about helping to mitigate future disasters and

ensuring that the best health care is available to those in the

greatest need, even in the gravest of times.

Thank you, Mr. Chairman. I will yield back.

Mr. STUPAK. I said earlier we have about three or four hearings

this week in committee, that you are overworking us and underpaying us. But I see you are here with us today. Thanks for coming.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

The CHAIRMAN. Mr. Chairman, you are most gracious. I want to

commend you for the outstanding job you are doing and also to

thank you for holding a very important hearing here today. I want

to acknowledge also the contributions and hard work on this hearing made by the distinguished ranking member of this subcommittee, Mr. Whitfield, as well as that of our friend and colleague, the

ranking member of the full committee, Mr. Barton.

19

Nearly 18 months after Hurricane Katrina, major problems remain on how to care for the region’s many residents who are trying

to rebuild their lives or return to their homes. I fear we are now

on the verge of turning the Nation’s largest natural disaster into

the Nation’s largest man-made disaster. Private hospitals are

bleeding red ink. There is still no agreement on how to or even if

to rebuild Big Charity, the Nation’s primary public hospital.

The Department of Veterans Affairs has proposed to collaborate

with that effort, but now there is disagreement as to what role they

should play and where the new VA hospital should be located or

even if they should remain a partner in the deal with Charity.

If no one draws a line through the center of the city, it reveals

that there is no functioning hospital which exists east of that line.

Chalmette, east New Orleans, St. Bernard Parish, all remain without a medical facility. Residents there rely on a few small overworked and overwhelmed clinics where there are health care needs.

Many nursing homes remain closed. There is acute shortage of

nurses for the entire area. There are virtually no beds in the region

for those needing detox treatment. Caring for the mentally ill remains exceptionally challenging as many psychiatrists and other

mental health specialists have left the region. And at best, there

are few beds to house such patients.

Those doctors who are trying to remain in the region often encounter difficulty in obtaining reimbursements for services to either

patients or hospitals. Many have already left but others may be

soon forced to do likewise because they cannot afford to remain

there because of financial problems.

The situation here then is bleak. It is therefore to the third

panel, the government panel, that I will direct the rest of my statement.

Without a doubt you have all put significant energy into trying

to solve these problems. Your efforts are appreciated, especially for

the untold hours that you have dedicated to this cause. Nevertheless, it is clear that things are not working. Let me provide an example.

Secretary Leavitt asked the State of Louisiana to provide a plan

on how to rebuild the Nation’s health care infrastructure. Though

much of the disagreement was encountered, the difficult decisions

were presented and made. The State and its various stakeholders,

public and private, held up their side of the bargain and they produced a plan.

That plan, known as the Collaborative, was transmitted by the

Governor of Louisiana to Secretary Leavitt on October 20, 2006,

about 6 months ago. The State’s plan called for a series of pilot

projects in region 1 where the devastated parishes are located in

and around New Orleans. What Secretary Leavitt sent back is not

even a formal plan. It is a loose confederation of spreadsheets and

bullet points. It asks the State to disassemble its statewide public

hospital system and replace it with some form of insurance program, a most curious consequence.

There are almost no specifics in the plan, and at least none are

available to the public. There is not even a formal publication from

the Secretary to the Louisiana Governor that this committee could

review, despite the requests of this committee to obtain such a docVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
20

ument; and we will again, at the appropriate time, ask the Secretary to make such document available to the committee. The

State of Louisiana now counters that the HHS proposal will not

work.

Now, I do not bring these points up to point fingers but to suggest that we are now facing a deadlock between two very important

players who are needed to solve these problems. If not fixed quickly, the next 6 months will be spent on dueling spreadsheets. Simply

put, the plan proposed by Secretary Leavitt, regardless of your

opinion of the State’s system, is simply too large of a task to undertake at this time. Even if adopted, it will not address the immediate problems faced by patients and the practitioners in this region.

I therefore call on the Secretary of Health and Human Services

and the Louisiana Secretary of Health and Hospitals to immediately convene a series of meetings to re-energize the next steps

on how to move forward. Both are at an impasse and a serious one

at that. If not corrected, this situation will jeopardize not only

progress that has been made on the ground but also the future of

the region, and I would note that this committee will be having further hearings to bring the Secretary and others before us to explain

what they are doing and whether progress has been made as a result of these hearings today.

Mr. Chairman, I want to congratulate you and commend you for

what you have done today. I suggest that you consider holding the

additional hearings that are needed on this matter. I believe the

committee can and should work with and hold accountable if necessary the public entities that are responsible for providing leadership in this important area.

Thank you, Mr. Chairman, I appreciate your courtesy.

Mr. STUPAK. I thank the gentleman.

Mr. WHITFIELD. Mr. Chairman?

Mr. STUPAK. Mr. Whitfield.

Mr. WHITFIELD. Mr. Chairman, Congresswoman Blackburn officially became a member of the Energy and Commerce Committee

last night, and she will be a member of the Oversight and Investigation Subcommittee but will not be a member until Thursday.

And she is very much interested in the topic of this hearing today,

so I ask your unanimous consent that she be allowed to participate

in this hearing today.

Mr. STUPAK. Hearing no objections, that will be granted. Mrs.

Blackburn will be allowed to participate in this hearing. She was

actually with us in New Orleans a year ago when we had the hearing, so it is good to have her back.

Earlier today Mr. Melancon asked me to put two statements in

the record. Congressman William J. Jefferson, he is a Member from

the New Orleans area. We will accept that statement. The other

statement, though, on behalf of Louisiana Recovery Authority we

cannot accept. This is oversight investigations. It would not be subject to any kind of cross-examination or any type of questioning

from this panel, and each group that wants to put in a statement

we cannot accept. It would just clutter the record. We want to keep

ours clear.

21

If the gentleman wishes to refer to it throughout or if any Member wishes to see it to refer to it throughout this hearing today to

ask a question to a witness, to pose a question from it, we will accept it for that purpose only.

With that, we have our first panel up. I ask the panel—this is

an Oversight Investigation Committee as I indicated. It is tradition

here that we swear the witnesses.

[Witnesses sworn.]

The record should reflect all witnesses indicated positive that

they understand they are under oath. They are now under oath.

We will begin with our first opening statement by Ms. Rowland,

recognized for 5 minutes for your opening statement.

STATEMENT OF DIANE ROWLAND, EXECUTIVE VICE PRESIDENT, THE HENRY J. KAISER FAMILY FOUNDATION, EXECUTIVE DIRECTOR, KAISER COMMISSION ON MEDICAID AND

THE UNINSURED, WASHINGTON, DC

Ms. ROWLAND. Mr. Chairman, members of the subcommittee, I

am honored to participate today in this important hearing to assess

the state of health care services in New Orleans 18 months after

Katrina and hope to help frame some of the issues before you

today.

Louisiana, we need to recall, before Katrina was one of the poorest States in the Nation with over a quarter of its residents living

in poverty. It ranked at the bottom of most health statistics in

terms of the States of the Union with higher rates of diabetes,

heart disease, AIDS, infant mortality. It had limited public and private coverage, leaving one in five of its residents uninsured. But

clearly, this was a State with severe health care needs. It provided

for those needs through a two-tier system, private doctors and hospitals for the insured and a State-run charity hospital system for

the poor and uninsured, financed largely through Medicaid disproportionate share hospital payments.

That made care in New Orleans for the poor and the uninsured

hospital-centered and based and Charity the source of most of the

inpatient services, psychiatric services, specialty care for the lowincome population. Katrina and the flooding that subsequently

happened destroyed the infrastructure as well as the structure for

care of the uninsured in New Orleans. You have all gone through

the very many hospitals that had to close, the loss of the workforce.

We have been doing survey work in New Orleans trying to understand what the needs of the health care population there are,

and in October 2006 our household interview survey in the New

Orleans area revealed continued high rates of uninsurance, problems with access to care, and the fact that 90 percent of our respondents did not feel there were enough services, hospitals, clinics, medical facilities in the New Orleans area to meet their needs

and that it was one of the most troubling factors in their decision

of whether to return to New Orleans or to stay in New Orleans.

There are severe challenges to the workforce shortages and the

limited hospital and clinic financing, critical shortages of mental

health services, and psychiatric beds with the closure of Charity.

There is a growing uninsured population, both as people have lost

their job base coverage but also with the new labor force coming

22

into the city. And there has been delayed assistance from the Federal Government to support community-based care and troubling

negotiations that continue over how to rebuild the system.

There are steps, however, that could be taken now to help restore

some of the services to the Louisiana area and to improve access

to care and give residents the confidence they need to have their

health services available.

First and foremost is to maintain the Medicaid and LaSCHIP

coverage, the SCHIP program for children in Louisiana, and hopefully in your reauthorization of SCHIP, to continue to provide the

funds there so that the children of Louisiana can get their care.

But more importantly, immediately you can raise the eligibility levels or the State can move to do that, to provide Medicaid assistance

to more of the low-income adults who currently don’t qualify for

Medicaid because the income eligibility level remains set at 20 percent of the Federal poverty level, or $3,000 a year.

Second, you need to rebuild the capacity in the city. Health care

coverage can help that by putting the dollars into the providers

from the patients as they seek care, but additional incentive payments are needed to recruit back a workforce; and you can also

look at provisions in the Medicare statute that would extend the

reimbursement for extraordinary labor costs that can come through

the Medicare program to help improve the financing for the hospital system.

But most importantly as I am sure this panel will tell you, you

need to develop secure financing for the emerging development of

community-based care that can help move the care out to where

the patients are and can help to provide early access to primary

and preventative services that can deal with the chronic illnesses

that face so many of the individuals in New Orleans.

So in sum, I think you need to really look at how to put services

in place, and financing is a very important piece of that. There

needs to be greater flexibility over the use of the already-allocated

DSH funds, more direct Federal assistance through the use of the

discretionary fund that remain uncommitted from the Deficit Reduction Act, help build access to care and to support some of the

community development. The Social Services Block Grant that has

been so critical to extending psychiatric services is about to run

out. It could be extended to provide additional resources there to

help rebuild the capacity to deliver mental health services, and you

may well need to look at supplemental appropriations to provide

more of the on-the-ground services that are required.

As your panelists will tell you today, the needs are real, the commitment to provide services is extraordinary among those who have

been working in the trenches for so many months to help restore

coverage, but the resources are not there on the ground to let them

do the job they need to do.

I hope that this hearing will help move us forward to address

those deficits and to give the people of New Orleans the health care

services they need and deserve.

Thank you very much, and I will welcome your questions.

[The prepared statement of Ms. Rowland appears at the conclusion of the hearing.]

23

Mr. STUPAK. Thank you, Ms. Rowland. Mr. Thomas Koehl, director, Operation Blessing Disaster Relief Medical Center. Sir, for 5

minutes you are recognized.

Mr. KOEHL. Thank you. I would like to show a video first.

Mr. STUPAK. Sure.

[Video shown.]

STATEMENT OF THOMAS KOEHL, DIRECTOR, OPERATION

BLESSING DISASTER

Mr. KOEHL. My name is Thomas Koehl. I work for Operation

Blessing, a humanitarian relief organization that responds to both

domestic and international disasters.

Among other activities, as you have seen, we provide a free medical/dental clinic in New Orleans. We presently see 75 to 100 patients a day with a staff of volunteer doctors, nurses, nurse practitioners, and physicians assistants.

In the past 11 months we have provided health care for 15,000

patients and provided over 25,000 free prescriptions to these residents of the stricken city.

These residents were pulled from the rooftops, they waded in

water, they spent days sweltering in the heat on highway overpasses and in the Superdome. They are a never-before-seen American. Over 100,000 newly made poor, helpless, homeless, and

marginalized. Our task, should we not forget it, yours and mine,

is to relieve their suffering.

When Katrina struck, it washed away their homes, their jobs,

and their health care but did not wash away their high blood pressure, their diabetes, or their other chronic illnesses.

The need for health care is so great that at our clinic every weekday morning at 3:00 to 4:00 in the morning the line begins. Grandmothers, single mothers with sick children, entire families waiting

in the cold and waiting in the dark for a health care provider.

The need was so great that as you saw on our video, Operation

Blessing recently partnered with Remote Area Medical, International Medical Alliance, the New Orleans Health Department,

and the Louisiana Department of Health and Hospitals to host this

medical recovery week.

On the very first morning of this event, I met a man named Mike

in our triage area. He had made his way through the maze of tents

concentrating on staying warm and keeping his place in line. He

was one of hundreds who had arrived in the pre-dawn hours. I

asked Mike when he had arrived. He had gotten in line at 10 p.m.

the night before. I asked him why he was there, and he said, I am

a diabetic and I am out of insulin. I have been out for months, and

I can’t find anyone who can help me.

Like thousands of others returning as evacuees from the hurricane, Mike had returned to a city where health care was limited

and the majority of residents are now uninsured. On this day, he

along with 600 other patients received free medical care.

We brought in more than 400 doctors, dentists, and nurses from

across the country with a total of 891 volunteers to provide 9,000

medical services to more than 3,000 patients by week end. These

services included dental work, eye exams, free glasses, primary

24

health care, OB/GYN services, diabetic care, pediatric, and cardiology care.

To accommodate the influx of patients, we set up 20,000 square

feet of tent space to serve as additional exam rooms.

This is simply a larger version of what we do every day in New

Orleans. For Mike, help was as simple as giving him one blood glucose meter to test his blood sugar and a vial of insulin. This is

what he needed to survive, was a little bottle of insulin and he

couldn’t get anyone to help him.

Our patients still, 18 months after Katrina, get in line before

daylight every day. Over 50 percent have high blood pressure. 30

percent of those with high blood pressure come to our door in crisis

with blood pressure so high they cannot be managed. 26 percent of

our patients are diabetic. Many walk through the door daily with

blood sugar so high they cannot be measured by the instruments

that we have. Two to three patients per week come through the

door and have not had their insulin since Katrina. They just heard

about us and just showed up at our door because no one would help

them. Patients are turned away from the free clinics and turned

away from the hospitals because they are at capacity every day.

These citizens are not what you classically think of when you

think of indigent patients. These citizens, just 18 months ago,

owned their own homes, worked full time, went to their children’s

band performances and volunteered in their community. They were

just like you and your neighbors, people you would invite over to

your home for dinner.

Would you feel comfortable if your neighbors had to stand in line

all night in the cold to see a doctor? Or would you feel comfortable

if they had to be sent to a hospital in an ambulance where they

were told they had to wait in the ambulance 4 to 5 hours before

being admitted into the emergency room because the emergency

room was so overcrowded? The question then is who is your neighbor? Who is my neighbor? Is it just the family whose grass meets

ours or should we be concerned about those Americans we have not

yet met?

This population is our modern-day Job. They have lost their

loved ones, their homes, their cars, their jobs, and their insurance.

According to the local newspaper, we now have 127,000 uninsured

residents in greater New Orleans. They see others profiting from

a disaster in which they lost everything, including their faith in a

system which had promised them health care, insurance, pensions,

and most importantly, protection.

The video said that Dr. Steven’s office in New Orleans has stated

that the death rate is 48 percent higher per capita now than it was

before Katrina. The infant mortality rate is five times higher now

than before Katrina. And the level of depression is present now in

rates never before seen in the United States. This depression and

stress act to worsen and exacerbate the individual health care

issues and disease process.

We are here to discuss what needs to be done going forward. I

would ask you to build a system where it is easier for non-profit

agencies to operate in the disaster-stricken area. Operation Blessing can provide its own infrastructure but many non-profits cannot.

Please build a system where they can operate.

25

Create a system where doctors and nurses that pass national

boards and exams are allowed to come and practice in a State that

is under a disaster notice. Last week, the State of Louisiana Board

of Nursing declared they would no longer allow volunteer nurses

from other States to come in and work. They said they did not need

them.

Again, our patients get in line at 3:00 and 4:00 in the morning.

We turn away 75 patients a day when we see 100 patients a day,

and the State of Louisiana Board of Nursing says we are not going

to let any more volunteer nurses come in. They need your oversight.

Build a system that encourages for-profit providers to return to

a region where the dollars follow the patient, where the uninsured

have choices and can seek care and private health care facilities

and those doctors and offices and hospitals are reimbursed for that

care.

Among the recommendations being considered to improve primary and preventative care are technology initiatives to track the

person’s medical history and to create community health care clinics. These community clinics would refer patients to specialists,

manage disease care, and provide a consistent system for tracking

care.

And please remember that everything that was needed by the

New Orleans is also needed by the health care system you seek to

rebuild. Infrastructure such as housing, schools for doctors’ and

nurses’ children, utilities, and people with the economic ability to

pay for these services that are being offered. All of these are necessary for a sustainable health care system.

To close, I would like to state that Operation Blessing has provided free medical and dental services to more than 15,000 patients. We have spent $1.5 million. But because we are able to

work with volunteers, we have delivered $11 to $12 million worth

of medical services to these patients. We could only do this by

partnering with other agencies and collaborative efforts with our

volunteers and donors.

We would like to thank all those who have made this possible.

We are grateful for the opportunity to serve the residents of New

Orleans and to serve the United States of America. Thank you.

[The prepared statement of Dr. Koehl appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you, Mr. Koehl.

Dr. Cathi Fontenot, medical director, Medical Center of Louisiana, New Orleans. Cathi, 5 minutes, please, if you would?

STATEMENT OF CATHI FONTENOT, M.D., MEDICAL DIRECTOR,

MEDICAL CENTER OF LOUISIANA AT NEW ORLEANS

Dr. FONTENOT. Good morning. I would first like to thank members of the subcommittee including Chairman Stupak and Ranking

Member Whitfield and others on this committee who came down to

visit with us and go through Charity Hospital a little over a year

ago and actually since that time as well.

My name is Cathi Fontenot. I am the medical director of the

Medical Center of Louisiana at New Orleans comprised of both

Charity and University Hospitals. I would like to take this opporVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
26

tunity for a brief visit back to New Orleans during that week in

August 2005. We have got a 2-minute video, and I promise I will

keep to my 5 minutes.

[Video shown.]

The storm effectively destroyed both facilities, University at

Charity Hospital. That loss has been devastating to the community.

The current status of health care infrastructure in New Orleans is

tenuous and critically ill. We have been able to temporarily reopen

portions of University Hospital, restoring approximately 140 inpatient beds including the trauma center I might add; but sicker patients who in many cases have lost their health care providers

present to our emergency rooms with uncontrolled disease processes due to lack of primary care and access to medications as you

have already heard.

Cancer patients who present to our hospital with no health insurance have no choice but to travel 60 miles to a rural LSU Hospital for their chemo or radiation and back home while weak and

miserable, and that is assuming they have transportation.

The status of behavioral health is even more dismal with limited

outpatient and inpatient services in the greater New Orleans area.

In our emergency room alone there are days when half of our emergency department beds are occupied by psychiatric patients because there are no inpatient beds available for them.

Solutions to the health care crisis in New Orleans are being developed with partners that you see here at this table but are constrained by availability of space and health care providers, both

primary care and specialists. A critical component of the effort to

restore health care services involves establishing and strengthening the network of neighborhood clinics that we refer to as PATH,

the Partners to Access for Heath Care for the Uninsured where we

serve as the major hospital partner and provide hospital services

as well as specialty access. It is only this sort of collaborative effort

that can be a real opportunity to accomplish health care reform as

we go forward in the New Orleans area.

The plan for the Medical Center includes the establishment of

the community primary care clinics of our own also in temporary

facilities so that primary care can be delivered in communities

where the basic principles of prevention and disease management

are best delivered. One of the major challenges for health care providers in the New Orleans region is the lack of access to specialty

care, and we anticipate that at least to some degree we can maximize the use of the limited specialty care available by using telemedicine technology, becoming more efficient at directing patients

to the right place for the right reason at the right time.

A shared electronic record is critical to such a network of providers, in order to share information, eliminate costly duplication of

effort. We look forward to continuing our work with other safety

net providers because such a coalition is crucial to real health care

reform and necessary for institution of a new model of health care

in the region, and we are proud to serve as a partner in that endeavor.

Thank you, Mr. Chairman.

[The prepared statement of Dr. Fontenot appears at the conclusion of the hearing.]

27

Mr. STUPAK. Thank you. Next we have Dr. Bryan Bertucci, coroner/family physician, St. Bernard Health Center, Chalmette, Louisiana. Doctor?

STATEMENT OF BRYAN BERTUCCI, M.D., CORONER/FAMILY

PHYSICIAN, ST. BERNARD HEALTH CENTER

Dr. BERTUCCI. Good morning. God bless you and God bless America.

Disease and death know no party, and I am happy to say we are

here for the patients’ interests today; and I appreciate the opportunity to speak.

My name is Dr. Bryan Bertucci. I am a family practice physician

and the coroner of St. Bernard Parish.

Medicine is not well in St. Bernard. One hundred percent of our

homes, offices, and buildings were destroyed, and for the first time

in history, FEMA declared a parish or country 100 percent destroyed. One hundred fifty-four St. Bernard residents died.

St. Bernard was flooded twice by Hurricanes Rita and Katrina,

experienced an oil spill, liquid mud, mold, snakes, flies, mosquitoes,

piles of trash, mice and rats. St. Bernard is a very difficult place

to live, and despite that, our residents returned. You have to be

tough to live in St. Bernard Parish.

Our biggest hindrance is the overwhelming lack of medical facilities. Our 194-bed hospital was destroyed. One hundred fifty physicians left, and now we only have six. We have 10 registered nurses.

I have some slides.

[Slide shown.]

This is of the office building where I practiced that housed 20

primary care doctors. We lost all those doctors. That had 13 feet

of water. You can just go through the slides until we get to the clinic.

You are asking, what can we do? Well, first, you have already

started by giving student loan deferments for the people coming

out of medical school to help pay off their loans. That is No. 1. The

biggest loss was young primary care doctors. That was our largest

loss. We need to get those people back. Without the primary care,

you are not going to get the specialist. Without the specialist, the

hospitals can’t support themselves.

Second, SBA loans. I still cannot get an SBA loan to rebuild my

office, so I can’t imagine what the other doctors are trying to do.

We also need loans for people who weren’t there before, low-interest loans to help them build their offices. You need to have increased recompensation for those doctors, and you need housing.

The three doctors that are working in my office all live in trailers.

We all lost our homes. We have no office space available for these

people to come back.

The buildings that we lost, and I am sorry because we went

through so fast, but all of those buildings are totally destroyed. We

have no housing for our specialists.

Mr. STUPAK. We can go through them quick one more time if you

would like?

Dr. BERTUCCI. Yes, if you would.

Mr. STUPAK. Go through the slides again, please.

Dr. BERTUCCI. Next?

28

[Slide shown.]

Yes, this is our neurologist’s office.

Mr. STUPAK. Is that open now?

Dr. BERTUCCI. No. All of these were just taken 3 days ago.

Mr. STUPAK. OK.

[Slide shown.]

Dr. BERTUCCI. This is a pediatrics office.

[Slide shown.]

This is an ear, nose, and throat office.

[Slide shown.]

That is another ear, nose, and throat office. And this is actually

rebuilt.

[Slide shown.]

This is one of our two clinics at work. This is a dialysis unit, and

obviously you see the condition of the ground surrounding it; but

we are rebuilding ourselves. We have an eye doctor, too.

[Slide shown.]

This is our pharmacy. We actually have six pharmacies back.

[Slides shown.]

And the next picture, this is our mental health trailer and this

is the trailers that we work in.

Perhaps I think our biggest encounter and problem was getting

funding back to rebuild our facilities. Chalmette Medical Center

was a fee-for-service medical hospital; and as such, we were penalized for being privatized. We were told that we couldn’t have any

money from FEMA because we were a fee-for-service. The Community Disaster Loan didn’t qualify because we weren’t on the parish

budget, so we were penalized for being independent. The Stafford

Act obviously didn’t allow doctors and nurses to get paid, and the

Community Block Grant money, $621 million went to the parish,

medicine got none because we were fee-for-service.

Perhaps our biggest problem is that Federal and State officials

do not realize that St. Bernard is not part of New Orleans Parish.

Funds that go to Orleans Parish stay in Orleans Parish.

Medicine has metamorphosized itself from the DMAT teams

which you saw pictures of, public health, to a 22,000 square foot

trailer. We see 100 to 120 patients a day. The severity of the illnesses that we see are equivalent to a small emergency room or an

urgent care center. We I&D abscesses, suture lacerations, stabilize

MIs and congestive heart failure, and give IV fluids and IV antibiotics. Almost a quarter of these patients have no insurance and

are no-pay or self-pay.

A foundation is willing to give us 30 acres of land to build a new

hospital that is 8 feet higher than where Chalmette Medical Center

was located. The Franciscans has offered us financial and professional help to try and make these dreams become a reality.

Mental health is in crisis. Fifty to 60 percent of the patients I

see and 20 to 30 percent of the children I see are depressed. Drug

overdose is a problem in our parish, and we have no substance

abuse clinics or beds to put these people in; and the schizophrenics

or psychotics due to lack of access to outpatient care have become

a problem for our emergency rooms.

St. Bernard is lacking significant emergency room services and

has to ship patients 18 to 35 miles to an emergency room. Our parVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
29

ish is surrounded by water and our limited ambulances have to

cross bridges, railroad tracks, and circumvent traffic jams. A routine emergency room visit takes 4 to 8 hours.

The logical solution for St. Bernard is a permanent physician office building, outpatient surgery center, outpatient diagnostic center, and eventually a hospital.

The medical village will assure primary care and specialty return. It will decrease the number of our residents who have to go

out to emergency rooms and free up our ambulances and free up

Orleans’ emergency room beds. It will allow our elderly to return

so that we can have nursing homes and we can have homes for assisted living. It will provide jobs as the hospital was one of the

largest employers in our parish. It also had 24 psych beds so psych

beds are a possibility. If you want electronic medical records and

a medical home, we need primary care doctors, we need specialists

who will support that concept, and we need a hospital as a safety

net for the patients who can’t be controlled as an outpatient.

We need three big things. We need the bridge money, Social

Service Block Grant Money with an extension of the funds that are

due to expire on July 31. We do have some allocated to us. We need

that expanded.

We need to make more SSBG funds available to medicine for permanent structures or infrastructure. We need Community Block

Grant Funds available to us now that we have a non-profit institution. We are not fee for services. We are a non-profit so that we

can have permanent building structures. And we need most importantly a rural designation for our Medicaid and Medicaid patients

to help offset the cost of treating indigent patients for hospitals and

physicians. We need some help with the rural reimbursement.

What if your child had a problem and you knew what they needed? As a parent, what would you do? St. Bernard, America is your

child. We need your help. We need brick and we need mortar. We

need permanent physician office buildings and we need a hospital.

As the hospitals meet later today——

Mr. STUPAK. Doctor, please summarize.

Dr. BERTUCCI. I am going to finish. As the hospitals meet later

today, leave an empty chair for St. Bernard. We had 240 hospital

beds. Imagine the pain of our residents as they hear the justifiable

cries for help from the other hospitals and while you call the name

for St. Bernard, you hear just silence. We need a hospital. We need

your help. Thank you for listening.

[The prepared statement of Dr. Bertucci appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you. Dr. Karen DeSalvo is executive director

of Tulane University Community Health Center at Covenant

House.

STATEMENT OF KAREN DESALVO, M.D. EXECUTIVE DIRECTOR,

TULANE UNIVERSITY COMMUNITY HEALTH CENTER AT COVENANT HOUSE

Dr. DESALVO. Good morning, Mr. Chairman and members of the

subcommittee. Thank you all for having us here today. I just want

to say it is really an honor to be on this panel with a lot of folks

30

that I have rolled up my sleeves and been working with in the past

18 months now, some of whom I didn’t even know before the storm.

As you said, I am Karen DeSalvo. I am the executive director of

the Tulane University Community Health Center at Covenant

House which is a clinic formed in the aftermath of the storm to

meet the urgent needs of our city’s population.

Today I am going to share with you my perspective as a primary

care physician caring for the uninsured patients in our city, and I

want to give you a snapshot of what it is like to practice medicine

in New Orleans including describing our successes and challenges

and suggest what would help improve access to care immediately

while we debate the larger policy issues.

We have come a long way in restoring care in our city despite

the many struggles that we still have, and while much has been

made of the divisions, an often overlooked bright spot has been the

progress we have made in building a primary care network for our

most vulnerable citizens.

The Tulane Community Health Center at Covenant House is an

example of such a success. We started as a makeshift clinic. We

were just a post-Katrina first aid station. It was only a card table

and basic supplies. This was in early September 2005.

We have evolved into a prototype medical home and become a

source of care for hundreds of patients and have seen over 12,000

of them since opening our doors. Our medical home is able to provide free care. It is basic primary care for adults. We are a multidisciplinary team. The typical patient that we see is middle-aged,

they are uninsured, and they have multiple chronic diseases.

To serve them we have begged, bartered, negotiated, access to

basic laboratory and diagnostic studies. We are able to use a sophisticated electronic medical record to help us manage our populations and be as cost effective as possible. We are also filling a

training void for health professionals with the added benefit of exposing the next generation of clinicians to a patient-centered model

of primary care.

We are determined to keep our doors open to provide these critical services to those that otherwise have no alternatives, and we

have received some Government support from SSBG but have been

forced to string together other funding from a wide array of entities

ranging from individual donors to corporations to the people of Cutter.

If you could show the map, I would appreciate it.

[Slide shown.]

You have heard a lot today about something called the PATH

network and while we are proud of what we are able to do for patients at our own medical home at Covenant House, we really could

not do this without our community partners. We are part of a larger system of care that has emerged since the storm to fill the void

left when our traditional safety net was essentially washed away.

The projected map shows the clinical providers in this group, many

of whom are sitting here at this table today. We call this the Partnership for Access to Health Care Path. This pre-storm entity has

actually gone from being a simple way to connect health information to actually being a loose network that includes government,

faith-based, not-for-profit clinical entities.

31

Every dot on the map represents a clinic of some sort. Some are

small, school based, some are mobile units, some are still tents, but

really many are becoming more permanent sites in these neighborhoods.

Inclusion in the group by the way is open to any one who is willing to share in our core values of quality and cost effectiveness and

the mission of serving the underserved.

They worked together to fill gaps in services and develop models

in the medical home, and altogether we are able to take care of

about 900 patients a day, most all of whom are uninsured and representative of the rich diversity that is our new New Orleans.

With continued support and additional resources, I believe that

PATH could serve as the core of a future medical home system of

care that really could transform health care in Louisiana.

Despite our rosy progress, we do face many critical challenges

that have been described already today but I will highlight a few.

Our major limitations involve poor access to specialty care and diagnostic services. For example, our patients don’t have access to

colon cancer screening or diabetic eye care. We don’t have access

to urgent diagnostic studies for like brain imaging for example, and

so we sometimes need to rely on sending patients to the emergency

room for such tests which is a highly expensive alternative, or patients often go without, arriving eventually at the hospital with significant or long-term health consequences that is a much more expensive alternative and makes them non-productive members of

our community.

As you might imagine finding clinical personnel willing to either

stay in or move to New Orleans is quite the challenge. They have

rational concerns about long-term job security and find it difficult

to maintain a high standard of practice in a broken environment.

This shortage of clinicians mean that we are turning patients away

every day.

So what can you do? The most cost-effective means to rebuilding

our health system I believe is to build a robust primary health care

system. This will unclog the overwhelmed hospital system because

it will prevent hospital admissions and help save money through

slowing the progression of chronic disease.

The three ways that I think you can help are extend the SSBG

deadline to provide further resources for funding through that revenue stream as well as provide further resources through the deficit

reduction act funding. As was mentioned, at the end of July, our

Federal funding from SSBG will end and would like to request at

least a 1-year extension on that deadline.

I also believe that perhaps using the discretionary DRA funds

could be a way to support and grow more primary care infrastructure to provide a bridge to our future health care system.

Number 2, we need more financial support for clinicians to help

with retention and recruitment in the form of loan repayment, malpractice support, SBA loans, as well as uncompensated care payments directed at physicians, and finally, through the expansion of

coverage such as programs in Medicaid.

And the third thing is I would like to ask you to assist us as we

progress, and please hold us accountable for what we are doing.

This hearing has been a catalyst for us locally. We have had better

32

communication and coordination than we have had in months. It

has made us all stop and clearly articulate what we think we need

to provide the immediate care for our population.

So we look forward to continuing to work with you. And I certainly want to invite you to come visit our clinics in the city of New

Orleans.

Thank you very much.

[The prepared statement of Dr. DeSalvo appears at the conclusion of the hearing.]

Mr. STUPAK. Next we will hear from Donald Erwin, president/

CEO, St. Thomas Community Health Center. Dr. Erwin?

STATEMENT OF DONALD T. ERWIN, M.D., PRESIDENT/CEO, ST.

THOMAS COMMUNITY HEALTH CENTER

Dr. ERWIN. Good morning, Mr. Chairman. I am Dr. Donald

Erwin, representing the St. Thomas Community Health Center in

New Orleans.

I would like to thank you for holding these hearings and for the

continued interest you have shown in our community. I am pleased

to be here to add to the discussion.

St. Thomas Clinic is one of the PATH clinics which was established in 1987 by a partnership with the residents of the country’s

oldest public housing development and leaders in the medical and

faith-based communities. These citizens simply wanted accessible

primary care in their community.

For 20 years, St. Thomas provided care to all patients regardless

of ability to pay. Pre-Katrina, St. Thomas primarily served the immediate community. We learned at that time that public/private relationships such as the ones St. Thomas Clinic had had for years

with the Ochsner Clinic Foundation are very valuable.

Six weeks after Katrina, St. Thomas reopened and we immediately realized we had a different population of patients. For years

the clinic had cared for patients in the nearby community. Post

Katrina, we now saw patients from all over the city, many of whom

had previously had health insurance through their work. They had

been insured all their lives but were now uninsured because their

jobs were gone. 7,000 school teachers alone were suddenly without

insurance when the school system closed since 50 percent of the

physicians who were practicing in New Orleans before Katrina

have not returned. St. Thomas also had a substantial number of

patients who had insurance but no physician and thus turned to

us.

This is worth emphasizing. Even patients with insurance had no

place to go for health care because the health care system was and

remains overwhelmed.

As we cared for an entirely different patient population without

funding to support this new demand, St. Thomas sought partners.

The clinic developed partnerships with supporters who worked

with us and with each other to maximize their support to our clinic.

I am not sure of the patient numbers in the first chaotic months,

but over the last 15 months, over 23,000 patient visits have occurred on our clinic’s 5,200 square feet of space. Through one partnership, St. Thomas is now the only site in the city where uninVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
33

sured women can receive mammography with appropriate follow-up

care as necessary.

As another example, a group of eight different organizations

joined together to provide our patients care for cardiac disease at

St. Thomas. Since Katrina, St. Thomas has received support from

over 30 sources. The clinic now offers primary and preventative

care as well as specialty consultations and six different medical

and surgical specialties.

Last month we leased a building to provide mental health care

to the community. We need funds to support this development. As

one physician mentioned, we are not seeing post-traumatic stress

syndrome yet because the trauma is not yet over. We find that the

relationships we have with the other PATH clinics benefit both of

us equally. St. Thomas raised $1.4 million in the last 18 months. We had no

choice but to try to do so since the needs of our patients were great

and they had no place else to go for care. The country has been

generous to St. Thomas. In turn, we are good stewards and amplify

the gifts we receive.

But St. Thomas cannot live on philanthropy. We cannot survive

that way. The St. Thomas Clinic has no guaranteed or predictable

funding. As the chairman mentioned, there are broad policy discussions going on now about the future of health care in Louisiana.

But whatever model is ultimately accepted is years away from implementation.

In the meantime, St. Thomas and PATH clinics like it will continue to provide major care for the uninsured. We predicted a financial deficit of $800,000 this year. We were relieved to be eligible

for $755,000 from a Social Service Block Grant. This as a critical

source but it was for only 1 year. We estimate another $800,000

deficit for the coming year, again to be covered with patchwork financing.

St. Thomas is emblematic of several small clinics that have become the type of efficient and effective providers needed to care for

large numbers of uninsured patients. But these clinics need help.

If we would not be there, there would be long lines at other clinics,

more overcrowded emergency room visits, and more expensive hospitalizations. High quality primary care is the least expensive way

to provide the best medical care in the community.

I urge Congress to develop a process to provide gap funding for

primary care clinics like St. Thomas that have no guaranteed recurrent funding. Whether it is through SSBG or some other mechanism is not for me to postulate, but I do hope that you agree that

St. Thomas and other clinics like it are essential to providing care

for the uninsured; and I hope you will continue to support our efforts to provide care for the citizens of our community.

I ask that you find a way to provide St. Thomas and other safetynet clinics with predictable, sustainable funding. I appreciate the

opportunity to speak to you and thank you again, Mr. Chairman.

[The prepared statement of Dr. Erwin appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you, Dr. Erwin. Next we will hear from Dr.

Evangeline Franklin, director of Clinical Services and Employee

Health, City of New Orleans Health Department. Dr. Franklin?

34

STATEMENT OF EVANGELINE R. FRANKLIN, M.D., DIRECTOR

OF CLINICAL SERVICES AND EMPLOYEE HEALTH, CITY OF

NEW ORLEANS HEALTH DEPARTMENT

Dr. FRANKLIN. My name is Dr. Evangeline Franklin. I am director of Clinical Services and Employee Health for the New Orleans

Health Department, also a member of the Partners for Access to

Healthcare.

To you, Mr. Chairman, and to Ranking Member Whitfield and

distinguished members and guests of the subcommittee, I would

like to thank you for the opportunity to speak to you today about

the two outdoor health clinics in New Orleans the Health Department recently held in the city of New Orleans.

Mayor C. Ray Nagin and members of his administration have

sought creative means of addressing our citizens’ critical health

needs as we work to recover from the tragedy of Hurricane Katrina

and the subsequent flooding.

Today I would like to describe to you a city, indeed a region,

which continues in health crisis despite the efforts of all of our organizations. This crisis results from a combination of factors. The

people of New Orleans face many challenges such as the difficulty

of returning to rebuild homes and businesses, the tendency to ignore their chronic illnesses that these stressful distractions have

caused or exacerbated, and the complexity of the processes to claim

insurance proceeds or funds from the Louisiana Road Home Program, the State initiative to compensate homeowners for their

losses in Hurricanes Katrina and Rita.

All of these factors are complicated by a health care system that

is itself damaged and under stress, further limiting the access to

health care that even before Katrina was not ideal.

In the aftermath of the hurricane, the population of the uninsured in New Orleans has expanded from traditionally uninsured

groups to include many who have experienced sudden loss of benefits, including individuals who were laid off from jobs because of

the destruction of their place of employment or due to loss of market or tax base. Many of these people returned to New Orleans following the floods because of personal or business financial commitments or because they simply just wanted to come home.

The composition of our uninsured also includes persons who cannot speak English and those who cannot secure health insurance

because of their migrant worker status or because they lack the

proper immigration documentation. Many of our uninsured are

part of the working poor who toil daily in their jobs but who are

not offered or who cannot afford insurance.

Hurricane Katrina and the subsequent flooding were responsible

for the loss of many aspects of health care including hospitals, doctors, medical records, and pharmacies. It has also meant that many

people lost their medications and let us not forget their dentures

and their eyeglasses.

This when coupled with the physical and psychological hazards

of devastation have put patients previously stabilized at risk. Imagine trying to fix your house when you cannot see.

I was assigned to coordinate two large-scale health care events

designed to provide medical, dental, and optical services and to assist in organizing follow-up. Helping patients regain some control

35

of health problems would enable our community to better manage

health resources such as emergency room use and admission to

hospitals.

Both of these 7-day events were highly successful. Thousands of

patients were able to proceed from each outdoor event with a 30-

day supply of needed prescriptions as well as eyeglasses, dentures,

immunizations, pap tests, and information about where to obtain

follow-up medical care at many of our participating clinics. But this

occurred only after they endured long lines, sometimes waiting all

night in cold and rainy weather to be treated on a first-come, firstserved basis by volunteers throughout the country as well as local

professionals. Typically capacity for each day was reached within

an hour of opening the registration. As a result, many of those who

needed care were unable to receive it and had to be turned away

to be seen on another day or at other locations.

The first of these events was held in February 2006 at the Audubon Zoo, a location considered to be an oasis in the middle of destruction. Audubon Zoo made a significant contribution by allowing

us access to their grounds to set up the clinic locations, by housing

the volunteers who came from all over the United States, and by

having their employees contribute their time for this seven-day

event.

The event was an immediate success in large part because of its

location and accessibility by car and by bus, but many people also

walked to the event. The zoo is located in an area of the city which

was among the first to repopulate because of the lower level of

damage that it sustained from flooding. FEMA trailers were still

being installed across the city.

Because of the magnitude of the catastrophe, very few safety-net

clinics and pharmacies were open at the time soon after the flooding. Many weary patients reported that they were unable to locate

their doctors, did not know where to go to have their prescriptions

filled or refilled. Others offered poignant stories about their inability to obtain needed care, medications, and immunizations.

Of the 5,212 patients who received care at the Audubon event,

27 were transferred to local hospitals for emergency care. One of

those was a revived cardiac arrest. This woman was having her

cholesterol tested, unable to get it tested at any other local institution; and during her visit at the Reach 2010 at the Heart of New

Orleans facility of the health fair, she had a heart attack. She was

unable to obtain primary care but could be cared for after having

a life-threatening emergency. Fortunately, she is currently doing

well.

Others were not so fortunate. One gentleman was given the diagnosis of metastatic cancer. He had been told at one of the local private hospitals that he had to pay for his diagnostic tests before he

could receive treatment. He did not have the required money and

was refused that treatment. Because Charity Hospital had not yet

reopened, there is no public facility in the city that could provide

the cancer care. Further complicating his situation, this man could

not speak English and had no transportation. Despite these difficulties, we arranged for this gentleman to receive care at another

facility out of town.

36

Many of the volunteers during the week remarked that they had

never seen so many people who were so very sick. All in all, there

were 1,300 volunteers who treated the 5,200 patients during this

event. Prescriptions were filled at no charge and social services, including mental health, were made available for interested patients.

Volunteers traveled at their own expense. The value of the services

provided was $1.9 million.

The second event was held a year later in conjunction with Operation Blessing who is represented here today. This organization

represents a clinic with medical, dental, and pharmaceutical services in eastern New Orleans. The week-long Health Recovery II

was an outdoor clinic as well. The New Orleans East location of

Operation Blessing was accessible by car and bus and had become

an anchor by providing free care before Health Recovery Week II.

This again was an idea location for the second event but this

time because neighboring communities have shown signs of return

and rebuilding. FEMA trailers placed in front of houses in New Orleans East and the sale and purchase of property for renovation

herald the return of significant resources in terms of professional

and business community members. In addition, citizens from eastern New Orleans were part of the regular patient population of Operation Blessing. Because the medical director is fluent in Spanish

and Vietnamese, non-English speaking residents are drawn to this

facility. In addition, this location does not interfere with the function of clinics and services in other parts of the city where population has stabilized.

For this event, Operation Blessing invested over $500,000 in the

project for the cost of supplies, lab work, pharmacy services, infrastructure improvement, marketing, and food and lodging for the

volunteers at their Slidell, Louisiana, command center.

Even though more medical facilities and safety-net clinics had

been opened in the intervening year, the story was exactly the

same as before. Fewer patients were treated but only because there

were fewer volunteers who could see them. Again, patients waited

in the cold and the rain and were willing to be seen in tents for

their medical, dental, and optical care. And again, citizens frequently stated that they could not find their doctors and did not

know where to get their medications.

The vast majority of patients seen during this health intervention week had never been seen at Operation Blessing, and many

had been referred by other clinics to receive services that were not

available there, in particular for their denture care and for their

eye care. Of the over 3,800 patients who were seen in the sevenday event, 21 were transferred to local hospitals. As in the first

Health Recovery Week, hundreds were turned away after the capacity of the event filled within the hour of its opening.

Mr. STUPAK. Doctor, can you sum up, please?

Dr. FRANKLIN. Yes, I would like to say that given the contribution of volunteer care in the city of New Orleans, I think attention

should be made for that to continue as a stabilizing proposition

until we can recover the system. Further recommendations will be

provided by Dr. Kevin Stephens in his testimony.

Thank you

37

[The prepared statement of Dr. Franklin appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you. Dr. Gary Wiltz is chairman, region 3.

Explain where region 3 is to us first.

Dr. WILTZ. I will do it as I give my testimony.

Mr. STUPAK. Thank you. You may start.

STATEMENT OF GARY WILTZ, M.D., CHAIRMAN, REGION 3

CONSORTIUM

Dr. WILTZ. Well, good morning, Mr. Chairman, and the members

of the committee and it is a special honor to appear before my Congressman, Mr. Melancon.

Thank you for the opportunity to speak with you today about the

very serious and continuing health consequences of Hurricane

Katrina’s aftermath. But I come before you today wearing many

hats. First and foremost I am a practicing, board-certified internist

and the CEO and medical director of the Teche Action Clinic, a federally qualified community health center established in 1974 located at Franklin which is a small, rural community 100 miles

southwest of New Orleans. I am also chairman of the Governor’s

appointed Region 3 Health Care Consortium which includes seven

rural parishes located immediately outside the New Orleans area.

I also serve on the Board of Directors of Louisiana Primary Care

Association or the LPC which represents State’s 21 FQHC’s. And

finally, I am the Board Secretary of the National Association of

Community Health Centers.

I would like to begin by telling you a little bit about my personal

history. I was born at Charity Hospital in 1953 on the colored ward

section of the then-segregated hospital. I earned a scholarship to

Tulane University and later attended Tulane Medical School where

I was fortunate enough to receive a National Health Service Corps

Scholarship. Ironically, I did most of my residency training at the

same institution where I born, Big Charity, in New Orleans. Upon

completion of my residency, I was assigned to Teche Action Clinic

in Franklin to serve my 3-year obligation service pay-back. Twentyfive years later, I am still practicing medicine at that same site.

In speaking of the health care realities in my home State today,

I must begin by noting the sad reality that Louisiana’s health care

system was broken pre-Katrina. Louisiana had the dubious distinction of having consistently ranked 49th or 50th among the States

in the United Health Care Foundation’s annual health status report over the past 10 years. Our health care system has been characterized as fragmented, expensive, and ineffective, producing far

too many health outcomes.

The original concept of the Charity Hospital was to demonstrate

the compassion of the people of our State. It was perfectly named

to fulfill its founding purpose, to provide charity. The flagship of

this system located in New Orleans fast became known affectionately by the locals as The Big Free. Unfortunately as we all know,

nothing in life is truly free. Pre-Katrina, the residents of the seven

rural parishes that represent the Consortium depended on Charity

Hospital. Katrina essentially destroyed the health infrastructure of

the entire southeastern port of Louisiana. It also decimated the

38

health care workforce by displacing more than 6,000 health care

professionals, most of whom have not returned.

In the immediate aftermath of Katrina, our surrounding parishes

saw evacuees overflowing into our communities. My family personally housed 19 family members for many months after the disaster

hit, and I am proud to say that Louisiana’s health centers responded to this tragedy as best we could but there is still much

more to be done.

Now fast forward 18 months, and where are we today? To borrow

a line from the play, The Music Man, ‘‘Oh, we have got troubles

right here in River City’’. To underscore how serious our problems

are, I give you several true-case studies. Number 1, a 38-year-old

uninsured male with a diagnosis of bipolar disorder is brought to

the hospital emergency room by a Sheriff’s Deputy. Family members say that he has not seen a psychiatrist in 18 months because

of Katrina. He remains in the hospital emergency room for 72

hours being sedated for his own and everyone else’s protection, only

to be finally released to his family when no other recourse could

be found.

Second, our region’s only pediatric psychiatrist has left the area

leaving hundreds of children who were under his care in the hands

of their primary care pediatrician. Our psychiatric nurse practitioner in our system alone has a 2-month waiting list and is seeing

children now, because of the delays are now unmedicated and have

decompensated.

Finally, a 57-year-old female with chronic neck pain that has

caused numbness in both her arms and hands and decreased motor

strength has Medicaid so we were able to get an MRI and discovered she needs a neurosurgeon. But there are no private neurosurgeons who accept Medicaid. With Charity now closed, the only

neurosurgeons accepting Medicaid are located at the LSU charity

hospital in Shreveport, a 6-hour drive from her home, but if only

she had transportation to get there.

So now that we see what the current landscape looks like, might

I suggest some solutions? Let me so that while the scope of the

problems we face in our communities are so great that they will require the kind of money that only the Federal or State government

can provide. The best solutions, however, are not likely to be crafted out of Washington or Baton Route. Let me add one more important point, that simply providing health care insurance to the

many uninsured, while that is a crucial step to make health care

affordable, would do little or nothing to make health care available

or accessible. We need a model that works, that is proven, that is

cost effective, culturally competent, and that can serve as a medical

home, a health care home in fact. And the beauty of it is such a

model already exists in our Nation’s community health centers.

Expansion of health centers would quickly address both the

needs of the underserved across our Nation and be a critical step

in transforming our health care system. The Federal Government

could immediately fund all the applications from Louisiana that

are already sitting at HRSA and greatly expand access to care immediately. Coupled with an expansion of the health center’s program is the need to expand the National Health Service Corps, the

very program that brought me to the community in need a quarterVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
39

century ago. We need a statewide expansion of the Nation Health

Service Corps that recognizes the needs of rural Louisiana.

In closing, I leave you with the immortal words from Dr. Martin

Luther King., Jr., that are as true today as they were 40 years ago

when he uttered them, ‘‘Of all the forms of inequality, injustice in

health care is the most shocking and inhumane.’’

Thank you once again for this opportunity, and I will be happy

to answer any questions you might have.

[The prepared statement of Dr. Wiltz appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you and thank you to all of our witnesses.

As I said earlier in my opening, your courage and heroism is an

inspiration to all of us, but that is not going to solve the health

care problems in New Orleans and that is why we are here and we

are going to stay with you and we are going to get this thing

moved, prodded, whatever we have to do to move this thing along.

I said in my opening that our hearing will focus on what health

care providers believe is the most urgent health care issues that

need to be addressed in the short term, and I certainly get the impression from this panel that the dollars have to follow the patient.

Some of you said that directly in your testimony, others have alluded to it. We certainly understand the Social Service Block Grant

money, the CDBG money, and other issues we must come to cope

with.

If we take the money out of it for a moment, just for a moment,

what else do we need in your opinion? Give me one thing you think

we should do, that Congress can push to do, that should be done

to help you out? Ms. Rowland, we will start with you and then proceed right down the line.

Ms. ROWLAND. I certainly think acting on some of the recommendations that have already been put forth to the Department

such as expanding availability of community health centers so that

the funds can be released for that, extending the Block Grant was

one issue, but I think really putting the resources of the Public

Health Service together with needs on the ground to use every

available resource that the Federal Government has to help build

community health centers, to help build more mental health capacity, and as the last speaker just mentioned, to bring the National

Health Service Corps in to help to establish some of the doctor

needs during the time when you are recruiting back positions.

Mr. STUPAK. Mr. Koehl?

Mr. KOEHL. The only thing that we would ask would be this

group push to allow our volunteer nurses to come and work. Without them we will only see 25, 30 patients a day. These nurses

triage, they take vitals, they dress wounds, they assist the physicians in every way possible.

Mr. STUPAK. Is that more than just nurses?

Mr. KOEHL. Nurses and nurse practitioners will no longer be allowed to volunteer in the State of Louisiana by the end of this

month without the Louisiana State Board of——

Mr. STUPAK. By the end of March?

Mr. KOEHL. Yes, if they will not allow them to come volunteer.

And our nurse practitioners are providers just like doctors, so that

will limit the number of patients that are being seen.

40

Mr. STUPAK. Any other medical profession run into the same

thing, where they cannot volunteer?

Mr. KOEHL. No.

Mr. STUPAK. It is just the nurse?

Mr. KOEHL. Different board, different group of people making the

decision.

Mr. STUPAK. OK. Dr. Fontenot?

Dr. FONTENOT. Unfortunately I think it ultimately comes down

to money, but certainly helping in the recruitment efforts by using

U.S. Public Health Service Corps. The regional designation for underserved community probably applies to more than the four-parish

area that is currently designated as I understand it and redeveloping infrastructure, namely electronic means of sharing data among

the partners who are now responsible for providing care.

Mr. STUPAK. OK. Dr. Bertucci?

Dr. BERTUCCI. Well, and again, it does come to money. It does

come to money. We need to get our primary care physicians back

and our specialists back so that we can do medical homes. Without

those particular individuals, it is impossible. It does come down to

the fact that we do need dollars. In order to have a medical home,

you have to have primary care physicians, you have to have specialists, and you have to have some buildings for these people to

work in.

Mr. STUPAK. But didn’t you say you have to start with the primary care in order to get the specialists to come in?

Dr. BERTUCCI. I agree with that. We need buildings, though, to

put those people in. Right there in our particular parish we are

kind of unique in the fact that we do not have buildings to stick

people in, and even if the specialists wanted to come right now, we

wouldn’t have a place to put them.

Mr. STUPAK. Right.

Dr. BERTUCCI. So we need some of the SBA loans so that they

can build.

Mr. STUPAK. Sure.

Dr. BERTUCCI. We need some low-interest loans for people who

don’t qualify for SBA so they can build. So I think those are the

biggest things, and I think the bridge money so we can sustain our

clinics, especially the rural reimbursement, would help us tremendously in both maintaining our clinic and building a hospital.

Mr. STUPAK. Dr. DeSalvo?

Dr. DESALVO. You could come rip up the frayed carpet in our

stairwells so it wouldn’t be so hard for people to get up and down

the stairs and help us slap some paint on the walls, but aside from

that—which we will pay for the paint, by the way—I am a National

Health Service Corps person as well. I was assigned to Charity

Hospital and was retained, apparently, for all these years. And so

I think it is an excellent program if some of the bureaucracy is

weeded out so that if we know there are people who are using that

for loan repayment and they will be assigned to New Orleans.

Mr. STUPAK. Let me ask you this. Let me just follow this up a

little bit. And I know I did not want to talk about dollars, while

I got you here I only got a few minutes left, what about DSH dollars going to clinics and doctors?

Dr. DESALVO. I am sorry?

41

Mr. STUPAK. What about DSH going to clinics and doctors?

Dr. DESALVO. I am not a DSH expert, but from what I understand——

Mr. STUPAK. But you are a practical expert so I want practical

answers.

Dr. DESALVO [continuing.] experience is that the way we DSH in

Louisiana it doesn’t—we can’t apply for that through matching dollars at our clinic——

Mr. STUPAK. We have to get a State or Federal waiver, right?

Dr. DESALVO. I would have to refer that to Diane.

Mr. STUPAK. Ms. Rowland, we also get a State waiver, I believe,

if I am right.

Ms. ROWLAND. The DSH funds actually flow through hospital

and inpatient hospital care. So you would need a waiver under

Federal law to use them for alternative sources.

Mr. STUPAK. OK. So you need State waiver and Federal waiver?

Ms. ROWLAND. You need the State to request a Federal waiver.

It is the Federal Government that would—

Mr. STUPAK. But the State would still have to change its law,

though, to allow it to go other than hospitals to clinics. So you need

a change in State law, then they have to apply for the Federal 1115

waiver, correct?

Ms. ROWLAND. Right, and there was a previous waiver that was

pending at the time Katrina hit that you reactivated and as a

small point, I mean, I would say yes, we need money. We just need

money.

Mr. STUPAK. Right.

Ms. ROWLAND. But the SSBG’s for example is essentially a nocost extension is what we want.

Mr. STUPAK. Dr. Erwin?

Dr. ERWIN. I would like to see whatever way we could do it that

we develop an incentive to focus on partnerships of these primary

care clinics with specialty providers and hospitals. Where we have

been most successful at St. Thomas has been the ability through

collaborations and sometimes paying for the specialists, to be able

to provide timely outpatient specialty services. Everybody agrees

that the highest quality, most cost-efficient care is when the physician who knows the most about that specific illness manages the

patient. And when we get used to thinking of specialty care as the

tertiary hospital specialty care, and I think there are so many instances where the cardiologist helps patients out of the hospital by

managing their heart failure and the nephrologist helps prevent

patients going onto dialysis by appropriately intervening. So I

would really like to encourage you to help provide whatever incentive is possible to link the primary care clinics with specialty services and hospitalization.

Mr. STUPAK. OK. Dr. Franklin?

Dr. FRANKLIN. From our experience at Operation Blessing and

from our experience in the health clinics in New Orleans, I would

like to focus on cultural competence in medical translations being

part of the practical problems that we actually have to approach.

We have numerous individuals in the city who do not speak

English. We have had a population of Hispanic and Vietnamese before the storm, but the population, especially of non-English speakVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
42

ing Hispanics, has increased. Since my colleagues have done such

a good job of talking about the medical issues, DSH dollars, that

sort of thing, I would like to focus on eyeglasses, optical care. As

I said, imagine trying to find a job or fix your house when you can’t

see.

Mr. STUPAK. Dr. Wiltz?

Dr. WILTZ. Yes. Mr. Chairman, I think you actually hit on it

early on, the chicken or the egg; and I think the problem is we

need both concomitantly workforce development as well as infrastructure. Before I left, I saw an e-mail that I don’t know where

it generated from but there was something being bantered about

that there was a $15 million grant from DHH that was described

as a New Orleans Health Service Corps that was being offered, and

maybe one of the other panelists will allude on that. But I think

something in that regard that is expanded for all of Louisiana, particularly in the rural communities outside of New Orleans that

were sort of depended upon Charity Hospital for specialty and subspecialty care and of course the development of FQHC’s.

Mr. STUPAK. I think that $15 million was something Mr.

Melancon has been working on for a while. Maybe he can expand

on that a little bit more.

Let me ask this question here. Dr. Fontenot, if I live in New Orleans, I have lost my house, my job, I have no health insurance,

and let us say I have some type of cancer and I used to go to a

clinic at Big Charity for my chemotherapy, what do I do now?

Dr. FONTENOT. You probably still come to Charity, either through

the emergency room or through its primary care clinic and get referred to a sister public institution about 60 miles away where

there are oncology services available.

Mr. STUPAK. As Dr. Wiltz said, transportation isn’t the best in

New Orleans right now. So I am unemployed, don’t have any

money, I don’t have a house. Well, why can’t I go to one of the private hospitals there?

Dr. FONTENOT. Unless there is an emergency pending and you

need emergency care through their emergency department, I believe they would have difficulty in referring you to a private

oncologist in town because at that point, you would need diagnostic

services and you would need chemotherapy which is quite expensive and likely would be——

Mr. STUPAK. Are there any clinics there doing chemotherapy or

anything like that?

Dr. FONTENOT. Not for uninsured patients currently, no, sir.

Mr. STUPAK. If I went to emergency room at a private hospital,

would they accept me because it is chemotherapy? Does that qualify as an emergency?

Dr. FONTENOT. No, sir.

Mr. STUPAK. Because it is just a continuation of treatment of my

illness, right?

Dr. FONTENOT. Maintenance of, yes, treatment of your non-emergent illness.

Mr. STUPAK. My time has expired and I yield to the ranking

member for 10 minutes. Mr. Whitfield?

Mr. WHITFIELD. Thank you, Mr. Stupak. All of us were quite

moved I think by the statistics that you all presented in your testiVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
43

mony. 48 percent more people dying each month and 90 percent of

employees losing jobs at Charity University Hospital and so forth.

And it is so overwhelming what you face it is really difficult to decide where to begin.

But I would like to ask the panel, is there one entity within the

region that all of you work with to make presentations to the Federal Government and the State government on the needs of the

health care providers? Is there one entity that is speaking for all

of you or do you do it separately or how is that handled?

Dr. DESALVO. The way we have informally developed that kind

of communication is through the PATH network, the Partnership

for Access to Healthcare, so that even though it is a federation and

we don’t officially lobby, we do have an administrative entity, the

Louisiana Public Health Institute, that can bring us, convene us,

coordinate us, send out information and does things like make

these maps so that we can visually see where we need services and

then look at grids of gaps.

Mr. WHITFIELD. Right.

Dr. DESALVO. They also then help communicate with the State

government for us about what future resources might be.

Mr. WHITFIELD. OK. So PATH is sort of the lead agency for all

the health care providers in the area?

Dr. DESALVO. Not an agency, it is a collaboration.

Mr. WHITFIELD. OK. Collaboration.

Dr. FONTENOT. If I might, we actually communicate and have

very good communication with Dr. Cerise with the Department of

Health and Hospitals who is the Secretary of DHH. And so he is

kept in the loop as far as especially the regional needs and how we

work together.

Mr. WHITFIELD. Dr. Bertucci.

Dr. BERTUCCI. We also participate in the Recovery Council which

has representatives from Plaquemines, Cameron, St. Bernard, Orleans, and St. Tammany Parishes and also East Baton Rouge. So

we also give information to them and serve mainly as an information center so that we can give that out to people of the needs,

medically, psychiatrically, et cetera, of the different parishes. We

serve more as an informational type situation.

Dr. WILTZ. We also have the Regional 3 Consortium. Actually,

the Governor had a Health Care Commission that was convened

pre-Katrina and we were meeting on an ongoing basis to address

a lot of health care needs. Post Katrina, we continue to meet those

seven rural parishes that I represent, and there are some other regions that are also meeting and we do present to Dr. Cerise on an

ongoing basis.

Mr. WHITFIELD. All right. Now, prior to Katrina, how many hospitals were there in the New Orleans region? Does anyone know?

Dr. FONTENOT. I believe that there were about 12.

Mr. WHITFIELD. Twelve?

Dr. FONTENOT. Don’t hold me to that number specifically, but

there were about 4,400 hospital beds.

Mr. WHITFIELD. OK. And how many hospitals are operating

today?

44

Dr. FONTENOT. In Orleans Parish, there are four including a children’s hospital that does not treat adults, three others that are operating in Orleans Parish.

Mr. WHITFIELD. But in Bernard Parish there are zero, is that

correct?

Dr. FONTENOT. Bernard has none.

Dr. BERTUCCI. St. Bernard had 240 hospital beds but the population was 67,000. Right now we have zero beds and a population

of 25,000 that once the elderly and the Road Home Funds come we

assume more people will come; and in 2 years we anticipate about

35,000 back and are working diligently to try to get a 40-bed hospital.

Mr. WHITFIELD. And Dr. Wiltz, out in Franklin, you have a hospital in operation out there now?

Dr. WILTZ. Yes. As a matter of fact, we have a new hospital that

is being constructed. That will be open in July, but that was in the

works pre-Katrina.

Mr. WHITFIELD. Now, in the testimony it is quite obvious one of

the major problems that you have is primary care physicians, and

as someone that is a little bit biased toward these community

health centers, I mean, I really see community health centers as

being able to provide a major role in health care delivery around

the country myself. I may be wrong, but that is the way I feel.

Mr. WHITFIELD. Dr. Bertucci?

Dr. BERTUCCI. Well, I am a private physician and I have to say

this. I thank and I admire the public health system, don’t get me

wrong. But don’t discredit private fee-for-service doctors.

We get paid and compensated much less and provide tremendous

services very, very efficiently. We are very cost effective, very productive because we have to be. We don’t get subsidized, we don’t

get help. And we are trying to attract back the private primary

care and the private specialists because I think these people need

to be there, too.

We need the public health network as an umbrella, it is a safety

net, and also for service for the indigent; but we as primary care

doctors probably saw—I saw people for free all the time. So don’t

discredit the fee-for-service.

Mr. WHITFIELD. Well, I appreciate your comments on that. I

think many of us outside of these disaster situations have looked

at the community health centers being expanded to help address

the uninsured for lack of a better—or people who simply don’t have

access—people who go into the emergency rooms—keep them out

of the emergency rooms. And I agree with you, though, that we

don’t need to ignore fee-for-service primary care physician.

Dr. BERTUCCI. At our clinic and in my clinic before the hurricane,

no patient was ever turned away for money. Now, if they were

rude, that is a whole different story; but for money, it is a different

thing.

Mr. WHITFIELD. Right.

Dr. FRANKLIN. Mr. Whitfield, I would like to say that approximately three-quarters of the private physicians that were in Orleans Parish are no longer there. The Health Department continues

to get calls from private physicians who want to come back to the

city who are looking for employment, looking for an opportunity to

45

re-establish their practices, knowing that we have brick-and-mortar

opportunities for them to work.

Mr. WHITFIELD. Right. Three-quarters, these are fee-for-service

that are no longer there.

Dr. FRANKLIN. Yes, that is correct. That is the estimate, yes, sir.

Mr. WHITFIELD. Now, one of the things I remember from our

hearing in January, my memory may not be accurate so you all can

correct me but what raised this issue in my mind, Mr. Bertucci,

you were talking about the fee-for-service providers were penalized

by FEMA because you were a fee-for-service. You were not eligible

for funding, is that correct?

Dr. BERTUCCI. Actually, it is if the hospital was fee-for-service.

Mr. WHITFIELD. OK.

Dr. BERTUCCI. And therefore every time we applied for any type

of financial assistance, they said that you didn’t qualify because everything is based on pre-Katrina which is fee-for-service. And I will

just leave it at that.

Each time we ran into those dead ends, we tried to—never in the

history of the United States they said has a fee-for-service hospital

not come back. And I said, well, they are not coming back right

now. What do we do?

There is no answer to that. So it is not private physicians, this

is a hospital.

Mr. WHITFIELD. Yes. I am going to ask you a question and I

mean I know the focus of this hearing is what can we do to help,

and all of you answered the chairman’s question specifically and

you listed about 12 or 13 things that could be done immediately.

But I remember in that January hearing some of the what I will

say fee-for-service hospitals, private hospitals, were very close to

going back into operation because they said all of them had insurance and from the insurance proceeds they could build back and

get back into business. The State-operated hospitals were self-insured and with the size of the catastrophe that hit, there were not

enough State funds to get them back in operation. So at Chalmette,

if that was a private hospital, what about the insurance proceeds?

Dr. BERTUCCI. Chalmette was in a dilemma where it had just expanded our hospital by 17 ICU beds and 40 private beds, had

bought Methodist Hospital and Lakeland Hospital. So they also

lost those other facilities at the same time. I don’t know their insurance situation, although I saw an article in the paper so I don’t

want to quote things that are not true. But they did list the monies

that they did receive, but their intentions appear to be that they

are not coming back to this area. None that I know of at this point.

So we recruited a non-profit group, the Franciscans, to help us to

secure funds to make our dreams come true.

Mr. WHITFIELD. Yes, well, Mr. Chairman, as we said, this is an

overwhelming problem that we face, and I recognize the importance of fee-for-service and do everything we can to encourage private, paid physicians to come back. But I do hope that our committee, full committee as well as subcommittees, can work to try to

provide expedited facilities and funding for community health centers to provide that instant primary care help that is needed in

that area.

I will yield back the balance of my time.

46

Mr. STUPAK. There might be some good questions there for the

third panel and ranking member’s thoughts. Mr. Melancon, from

Louisiana for 10 minutes, please.

Mr. MELANCON. I want to thank you all for taking the time to

come here. I think the more I listen, the more questions I start

having in my mind. I am not an authority on health care, but I am

starting to see pieces starting to fall in and coming to understand

what is going on.

I guess what one of the things that we want to see happen, and

the chairman and I and others have talked about it, we don’t want

this to be you come here and testify and you go home and we will

kind of try a couple things and we will see you later. What our discussions have been are to bring the facts out as much as we can,

try and make incremental steps here at the beginning with recommendations from you what the Feds can do, what maybe we can

do to prod the Department of Health and Hospitals or whomever

to move things. But in roughly maybe 45 days or whatever the

chairman decides to come back and revisit that, whether it is here

in Washington or back in New Orleans and see what we have been

able to accomplish, see what you have been able to accomplish, see

what new problems are out there. And I guess the question to anyone in particular, do you think this would help us to start that

track towards getting health care in the southeast region of this

State back going in the right direction, and if so, do you have any

specific things, suggestions that we ought to be making sure that

gets done? Ms. DeSalvo?

Dr. DESALVO. Mr. Melancon, I mentioned this in my testimony

that I do think it would be helpful. I think the oversight has

caused some coordination in the community, being a sort of neutral

party, helps to step in. We have been meeting ourselves to death

for 18 months, so let us just remember that when we are doing it.

And I would also say that the funding relief issue is really urgent,

and I am not sure we can wait 45 days. We spend so much time

begging for dollars from foundations just to keep our doors open,

so while we are planning things, let us make sure we provide some

immediate funding relief in some way so that we can focus on the

other issues.

Mr. MELANCON. Doctor?

Dr. ERWIN. Yes, sir. I would certainly second that and I would

certainly hope that you do come to New Orleans and the other parishes again mainly because speaking just for myself, I am not involved a lot in policy. I am sort of in the forest and sort of laboring

every day and it is easy to kind of lose perspective. You are just

thinking about yourself and how to get through the day and the patients you are seeing and how can I get this particular person any

assistance, and it is so beneficial when people come to town who

have knowledge, who have an overview, and who have the ability

to change direction and to influence decision makers in Washington

and in the State and everywhere else. I would certainly hope that

you do come back and keep the focus that you are showing today

and have shown.

Mr. MELANCON. Dr. Bertucci?

Dr. BERTUCCI. Yes, I think it is important that we become your

information source so that we can tell you pluses and the minuses

47

of the things that we have been able to accomplish. I think that

is extremely important. I think we always say be careful what you

ask for because you might get it. And the problem is that right

now, we are asking for specific things; but in 6 months, I can tell

you the way things change, the problems will be different. So I do

think it is important that we have the opportunity to verbalize the

situation to you so you can have good information, updated information to make decisions on.

Mr. MELANCON. Dr. Wiltz?

Dr. WILTZ. I think it is critical you keep the spotlight on the

issue. I think it is critical that outcomes be measured and progress

be measured. I don’t think it is enough to throw money at any situation. I think you have to have accountability, and it is going to

be interesting. This coming week we are expecting to hear from

HRSA if all those applications are pending for new access points

as well as expanded medical capacities that have been backlogged

because you all just passed a Continued Resolution that opened

that funding up. If that comes to pass in the next 6 months, those

applications we have to be a mandator to get those facilities up and

running in the next 6 months. So it will be interesting to see if

those monies come. You know, we can give you a progress report

on how that went.

Mr. MELANCON. Dr. DeSalvo, let me suggest being from south

Louisiana, hearing politicians come down there and talk and take

pictures and come back here and forget what they saw and didn’t

follow-up in many instances, I have expressed to the leadership in

this House that we are tired of hearings. We want things to start

happening.

So what I think you see here in this committee, because of the

chairman of the full committee and the chairman of the subcommittee, Mr. Stupak, is an effort to do exactly what you are saying, is make the meetings that you have more meaningful and that

something comes out of them. And the chairman has assured me

that he stands by that. We have got a great staff here that understands the issues and I think will help us.

I want to encourage not only you but any panel members that

come to please stay in communication with us or the staff because

if you are anything like me, you are going to walk out the door and

say darn it, I forgot to talk about such and such.

So those ideas, those thoughts, don’t let them fly past. Make sure

that we get them because we want to do whatever we can possible.

We know that money is a necessary evil, and that is tough but we

have got to address that as time goes. But those things that will

move us incrementally toward resurrecting health care like it

should be in southeast Louisiana and for that matter a ripple effect

that is starting to go out into the country areas, we need to catch

it now before it gets to be too far gone.

Mr. Chairman, I yield back my time.

Mr. STUPAK. If I may follow-up here on one point. You mentioned

these HRSA applications pending before HRSA. How many are

there and how long have they been pending?

Dr. WILTZ. We submitted them last year. There was a statewide

strategic plan that involved most of the community health centers

with anticipating spread and expansion.

48

Mr. STUPAK. When last year?

Dr. WILTZ. I can get that information to you. I don’t have the

exact number.

Mr. STUPAK. OK. So it has been pending for a while?

Dr. WILTZ. Yes.

Mr. STUPAK. Have they given you any indication when you can

expect a decision?

Dr. WILTZ. We were thinking we would hear something this

week. There was no funding available until you all passed that continuing resolution. So we are expecting to hear something hopefully

this week or next week.

Mr. STUPAK. OK. Why would they not move your application, approving it pending funding? Why would you use funding as an excuse not to do your work until——

Dr. WILTZ. Some of them were approved without funding because

you all didn’t have a budget until the CR was passed is my understanding.

Mr. STUPAK. Right, but I would still think that your work would

go on, and when the funding came in you could move it. I mean,

you are sort of in a dire situation down there in New Orleans. I

mean, when we were doing the CR, there was never a question

there. The question was just how much money was going to be

there.

Dr. WILTZ. Yes, there is also some State legislation pending now

that if that goes through, we may have the opportunity to do an

even greater expansion project.

Mr. STUPAK. So if HRSA approves your applications, then the

State may help you expand these qualified clinics?

Dr. WILTZ. Yes.

Ms. ROWLAND. Mr. Chairman?

Mr. STUPAK. Yes.

Ms. ROWLAND. There is also monies in the Deficit Reduction Act

that allowed for development of community centers and access to

care that have not been expended yet. So there is additional discretionary funds——

Mr. STUPAK. Well, that was the 2005 Deficit Reduction Act I

think was signed into law in January 2006 if I remember correctly.

Ms. ROWLAND. And the Secretary set aside those funds and has

not yet allocated most of them, so that would be an issue you could

raise in your third panel.

Mr. STUPAK. Allocated because there is no request or allocated

because they just haven’t gotten around to it?

Ms. ROWLAND. As I understand it, it was set aside. There have

been obviously requests for various support for community health

centers but have not yet designated how they are going to allocate

those funds out from the Department.

Mr. STUPAK. But couldn’t the current health centers that we see

before us here today access that money then, the Deficit Reduction

Act of 2005 which was approved in January 2006?

Ms. ROWLAND. One would assume they could under the terms of

the Deficit Reduction Act.

Mr. STUPAK. I mean, that is 12, 14 months from here and we got

money sitting here, it appears to be.

49

Ms. ROWLAND. Well, I certainly think one of the things this committee can help do is to look at where there have been snags in

resources that were intended to be utilized quickly that have not

been yet utilized, changes that could be made to flow the funds.

While it is not about money, it actually is about the money to develop the resources.

Dr. WILTZ. I am just told that there are 287 new access point applications pending nationwide.

Mr. STUPAK. Well, they don’t have to wait until the 287th one approved. If they did the first 10, you could move those out, roll them

out, get them moving, right?

Dr. WILTZ. I agree, and as our middle name indicates in our clinic, it is called Teche Action Clinic, and we are ready to roll. If we

had the money, we could expand within 6 months.

Ms. ROWLAND. One of the things we learned from the Katrina experience is that we don’t have very effective emergency crisis management policies in any of our programs, whether it is Medicaid to

just quickly be able to extend coverage to people who lose their

homes and their insurance or to move the community health center

applications through the bureaucratic hurdles. And so I think one

thing to really look at is how can we simplify or set up streamlined

procedures that in a case like this can relieve the DSH funds and

move them quickly from being hospital-based to community-based

or to cover people or to set up ways to get these community health

center funds——

Mr. STUPAK. Sure but an emergency declaration is supposed to

move that red tape quickly so you can respond quickly to the needs

of the people who are devastated, and there has been no greater

devastation of any natural disaster in this country than this one.

So I would think that once you have a disaster declaration, that

the critical needs such as health care certainly would be moved and

go through this red tape a little quicker.

Ms. ROWLAND. Right, and just as Mr. Green noted, there is no

way that if it happened to Houston this year the procedures would

be any better or any quicker.

Mr. STUPAK. Yes. Go ahead and then I got to get back because

they want us to be out of here by 3 o’clock, and at the rate I am

going we will never get to 3 o’clock. We will still be on this panel

and we have got two more to go. Go ahead, Dr. Bertucci.

Dr. BERTUCCI. Just one example of finding problems is that when

the Social Service Block Grant came out, there was $110 million.

$30 million of that went to medicine, and our numbers got cut from

$10 to $7.5 to $5 to $3.2 million and this is medicine. Now, I mean

we are talking—we need access to funds for running our facilities

but also we need some to build facilities. And we are not a public

health clinic, so we need help, too, in order to build ourselves so

that we can handle the volume that we need to handle in our parish.

Mr. STUPAK. Next we will go to Mr. Burgess of Texas for questions. Ten minutes, Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman. Dr. Bertucci, let me

speak with you for just a minute and then we will go to some of

these other things that have come up, particularly the snags in the

50

facilitation. Now, your hospital is Port Chalmette hospital, is that

right?

Dr. BERTUCCI. The hospital is Chalmette Medical Center.

Mr. BURGESS. Chalmette Medical Center? And I visited that in

October 2005. Of all of the things that I saw when I was down

there that October, that hospital was probably the one about which

I will have nightmares the rest of my life because it looked exactly

like my community hospital in Texas, and I could well imagine

what would happen to my community in Texas if suddenly three

feet of mud, snakes, rodents, all the things that you talked about,

the oil spill. I mean, you didn’t need to just see the devastation,

you could smell it and taste it in the air still 5 or 6 weeks later.

And my understanding is that hospital no longer exists?

Dr. BERTUCCI. Six feet of water came up in 45 minutes. I was

actually there with 54 patients. And 6 feet of water came up in 45

minutes and 1 foot an hour to 13 feet. So this hospital got destroyed that day. 200 evacuees came over the railings and were

housed in the center of the hospital in the hallways and all had to

be evacuated by boat. The hospital was irreparable, and it is a total

destruction, yes.

Mr. BURGESS. Well, let me ask you a question because when I

was there obviously you couldn’t even get into the area unless you

signed a form for FEMA that you wouldn’t hold them responsible

for what happened to you. Are people repopulating the area now?

I noticed they were when we were there, even with those restrictions.

Dr. BERTUCCI. The most amazing thing is we have increased to

25,600. There are 11,000 houses that are being built. We had

28,000 before, but 11,000 according to the newspaper, the last article I saw, are being built. We had 1,400 businesses, now we have

372 and people go, that is not very good. I said, when you started

at zero, that is fantastic. We actually now have grocery stores, we

have coffee shops, we have restaurants. We have no retail stores

to buy clothes still, but people are coming back. The people of St.

Bernard were the sheetrock hangers, the painters, the roofers. If

they get their Road Home money, they will do this themselves; but

they have got to get that money, and right now the Road Home is

holding us up big time.

Mr. BURGESS. Let me ask you a question because this is a little

different from the Ninth Ward question. This area was hit by the

surge or the storm surge, is that correct? Not the levee breaks?

Dr. BERTUCCI. Actually, the water that I saw, and I saw water

coming that looked like it came from the industrial canal area, and

then we had the break over by Lake Borgne. So there were two

areas that flooded. The water that came in did not come as a wave.

I saw just the parking lot fill up and then like I said, it gradually

rose. I mean, 45 minutes is pretty fast.

Mr. BURGESS. Yes.

Dr. BERTUCCI. But it went up to 6 feet so it wasn’t like a wave

that came and took the hospital down.

Mr. BURGESS. Do you have a place to rebuild? If you talk about

bricks and mortar, do you have a place to build that is higher in

elevation or will you have to raise that site up?

51

Dr. BERTUCCI. Well, in order to coax the hospital back, we actually got 30 acres of land donated that is right on St. Bernard Highway. It is 8 feet higher than the other one. The hospital will be

built up. The St. Bernard Highway—we wanted access after a

storm to our hospital facility because you need it. St. Bernard

Highway in 2 or 3 days and you could drive back and forth all

along St. Bernard Highway. So the water receded very quickly. St.

Bernard Highway had 5 feet of water. If you build up 8 feet and

it is already 8 feet higher than where Chalmette Medical Center

is, the hospital should be able to survive any type of flooding situation if they do the levee systems the way they say.

Mr. BURGESS. Well, obviously, the fundamental safety question is

one that I think we take very seriously. How helpful has the Small

Business Administration been to you when you are on this effort

to try to rebuild?

Dr. BERTUCCI. We have a civil group there that does help quite

a bit, and they are working diligently with the Franciscans. I am

a doctor, and I am trying to do my medicine along with recruiting

the funds. So I can’t say that Small Business and I have been in

contact that often.

Mr. BURGESS. OK. Ms. Rowland, let us talk for just a minute.

You referenced right in reference to the chairman’s follow-up questions about the snags and facilitation of getting the funds. Now,

when we received a number of displaced persons in the Dallas-Ft.

Worth area, Secretary Leavitt came and said he was declaring a

public health emergency because of the persons who were displaced

by the hurricane and that funds would be made available. However, in Texas I know the mayors of Dallas and Ft. Worth have had

some concerns because they have difficulty getting the money that

has come to the State, they have had difficulty getting money from

the State then to filter back to the municipal level. Has that been

an issue where you are as well?

Ms. ROWLAND. Well, I think that when we did some evaluation

of the waivers that were granted to help the Medicaid patients to

be covered and to provide some uncompensated care funds, the

funding for that was actually delayed until the Deficit Reduction

Act could be enacted to provide the funding.

Mr. BURGESS. Wait a minute. Let us back up for a minute because we passed a supplemental appropriation bill of I think it was

$100 billion during the fall of 2005 after Katrina hit. It was almost

like we were force-feeding Louisiana dollars, so I guess I am a little

bit—I don’t understand why the Deficit Reduction Act is coming

into it even because those were monies that were appropriated several weeks before we did the Deficit Reduction Act.

Ms. ROWLAND. But it was actually through the Deficit Reduction

Act that the funding for those Medicaid waivers was actually put

in place and where the uncompensated care funds were. So it was

that that helped fund the services that were received in Texas. And

a lot of it is just there were administrative steps that had to be

gone through so that individuals showing up at a hospital could be

enrolled in the Medicaid program. They had to refer back to Texas,

and then a lot of the people who came to your facilities were uninsured people who were not on Medicaid, and that required the uncompensated care funds to flow.

52

Mr. BURGESS. Yes, separate out the Texas part for now. I am talking strictly of what was happening in Louisiana. Out of $100

billion that we passed in the fall of 2005, no dollars were available

for patient care until we passed the Deficit Reduction Act in January 2006?

Ms. ROWLAND. Well, certainly the Medicaid funds for those who

were covered by Medicaid were available and then the Supplemental and the Deficit Reduction Act provided the additional financing to cover the State’s share of those funds. So there were

Federal funds flowing but additional funds came through the Deficit Reduction Act.

Mr. BURGESS. Do you have any ideas as to the dollar figure of

Federal funds that have come to Louisiana? Does anyone on the

panel have a concept?

Mr. MELANCON. If the gentleman yields?

Mr. BURGESS. No, in fact, let me get you—you can share that

with me later. I wanted to ask Dr. Wiltz before I run out of time

about the health centers that you have that are in the pipeline.

That 287 was a figure for the entire country?

Dr. WILTZ. Right.

Mr. BURGESS. You have at least 10 that are on line for your area,

region 3?

Dr. WILTZ. In region 3 we have four that are pending that right

now.

Mr. BURGESS. That are pending? The applications are pending?

Dr. WILTZ. They actually received the initials for in the 90’s on

the initial applications.

Mr. BURGESS. And how long does it take then for HRSA to respond with funding if you received that high score?

Dr. WILTZ. We are hoping as I said at the hearing, the next few

weeks. Now, once we get the funds, we have a mandated time to

get up and running.

Mr. BURGESS. Were those applications in process before Katrina

hit?

Dr. WILTZ. Yes.

Mr. BURGESS. They were? What is the timeline from when the

need was recognized and those applications were initiated to where

we are today where we are perhaps on the brink of getting funding?

Dr. WILTZ. Maybe a year.

Mr. BURGESS. Well, Katrina was 18 months ago.

Dr. WILTZ. As I said earlier, we had a Health Care Commission

that they had a statewide strategic plan pre-Katrina. So we knew

there was a shortage of community health centers in the State already and it put in the pipeline for this expansion pre-Katrina. And

then when Katrina hit, all that got put on hold so more recently——

Mr. BURGESS. It got put on hold?

Dr. WILTZ. We had to resubmit it last year.

Mr. BURGESS. That was HRSA’s requirement that you resubmit

those clinics that you already knew you needed before you had a

health care disaster of this proportion.

Dr. WILTZ. I am trying to remember the timeline again, but we

get the initial score and then we didn’t get funding, I know that.

53

Mr. BURGESS. I am not being critical. It goes back to the issue

of the snags and the facilitation. Again, $100 billion that we sent

from here to you and Mississippi and to some extent Alabama, and

where is the help for the people? That is what is frustrating me

so much. Has it been more difficult to get those applications processed since Katrina with HRSA?

Dr. WILTZ. I wouldn’t say more difficult.

Mr. BURGESS. It was 18 months.

Dr. WILTZ. We transmitted them. I mean, as far as them getting

them? No, I think they have gotten them.

Mr. BURGESS. It is 18 months and your mortality rate is twice

what it was with half the people, we saw on the video, so I mean

that to me would qualify for a sense of urgency.

Dr. WILTZ. Yes.

Mr. BURGESS. If we were ever to have a Federal agency recognize

a sense of urgency, it seems that 18 months seems unconscionably

long to me, particularly if those applications had already been in

process before. Can you identify where it is that this snag is occurring, where this hold-up is occurring? Is it just with HRSA, is it

something that is happening at the local level?

Dr. WILTZ. No, I don’t think it is at the local level. I think we

all recognize that model is one that can work, and we have to get

letters of approval and support from all the local folks. So we have

gotten those. I don’t know why. I could not answer that, where the

snafu is.

Mr. BURGESS. OK. Mr. Chairman, I hope we are able to devote

some time to winnowing that question down.

Mr. STUPAK. Hopefully the third panel. Next, Ms. DeGette from

Colorado for 10 minutes.

Ms. DEGETTE. Thank you very much, Mr. Chairman. If we can

have the map of operating clinics and hospitals put up on the

screen?

[Slide shown.]

Ms. DEGETTE. This is my question. We hear everybody—and by

the way, everybody here is so dedicated. Some of you I have been

working with for a long time, ever since this terrible tragedy; and

I am always struck by the commitment of all the health care professionals, in particular the front-line providers, the doctors, the

nurses, everybody that is out there. It is extraordinary to see.

But my question is this. In the 18 months since Hurricane

Katrina, what we have seen is a number of clinics springing up,

and we have heard the success stories of some of them today. Each

one seems to be pursuing different sources of funding with varying

degrees of comparative success and working together at some level.

Maybe I will start with Dr. Franklin with this question. Are these

clinics springing up primarily because a need is seen by some

group and then the group pursues funding or is there some coordination of these clinics and if not or if it is minimal, could we have

better coordination so that the clinics that we are getting are really

being used to respond to patient needs?

Dr. FRANKLIN. Ever since I returned from Dallas as an evacuee,

we have been working together on a regular basis, sometimes twice

a week as a group to coordinate our location based on the availabilVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
54

ity of facilities because remember that we have a number of facilities that were just simply destroyed.

Ms. DEGETTE. Right.

Dr. FRANKLIN. The city of New Orleans, for instance, had more

than 10 operating locations and is now down to four. I don’t want

to speak for Dr. DeSalvo, but I know that Covenant House was a

location that was under negotiation early on, had to be worked

through in terms of it as a permanent location. So we have spent

a lot of time working together to organize the types of services we

are going to provide, the communities we are working in, et cetera,

et cetera.

Ms. DEGETTE. But it still seems to me that we have huge unmet

needs and everything from psychiatric care to chronic long-term

care for cancer patients and diabetics and anybody with long-term

chronic issues. What kinds of plans are being made to have a comprehensive system that is going to address all of those issues? Dr.

DeSalvo, did you want to talk to that?

Dr. DESALVO. I do. We are trying to think beyond tomorrow as

you say, and so for example, we are trying to move beyond sharing

services like mammography, for example, where he is doing that

for us and think about how we systematize what we are doing to

create a medical home system of care, not just a bunch of little

medical homes that talk to each other.

Ms. DEGETTE. And how are you doing that, Doctor?

Dr. DESALVO. We are doing that through PATH which is our umbrella organization. So it is not a single entity, it is not a governmental agency, it is a not-for-profit agency that is run by the Louisiana Public Health Institute through which we all participate. We

have leadership there, administrative leadership, but we don’t really have the funds to systematize ourselves. That is an issue which

we are working on and sorting that out.

But for example, sharing health information about patients so

that if a patient is at Vanges Clinic normally and works maybe

near my clinic and needs to pop in to get a follow-up, I can access

that record and the patient doesn’t have to go back to the clinic by

their home. So really, we are making it easier and more accessible

for the patients.

We are also working together to begin to measure how well we

are doing care, what is the quality of care, how acceptable are we

so we have some idea of where the gaps are and how we could improve.

And then we estimate. For example, we are running some numbers we think that based upon the number of uninsured in the city

that just for that population alone we need to add another 30 physicians or so to get up to about 66 physicians. And we are putting

some price on that and trying to sort that out. Where would we

find that money and how could we grow together?

Ms. DEGETTE. Doctor you wanted to add to that?

Dr. BERTUCCI. Right now we are trying to set up medical homes

in our clinic also. Of course, with three and now soon to be four

physicians, that is extremely difficult. Part of the problem is that

we are not computer savvy, so we have four physicians to treat

25,000 people. That comes out to one doctor in about 5,000 people.

So it is kind of hard to learn to use a computer, and the computer

55

actually slows us down initially because it is a 2-year learning

curve for this. You are going to slow down five to seven patients

a day. And with that it is difficult for us to incorporate it when you

are the only doctors there. Where do we send those five to seven

patients that we are not going to be able to see?

But we did partner up with LSU as far as trying to get some specialty help. At least they are trying to. This is the plan, that we

are doing investigations for a medical home, we are trying to get

a computer system and we have some specialists to back up if we

can do that.

Ms. DEGETTE. Dr. Fontenot, do you want to add to that?

Dr. FONTENOT. Just to say that we have as the PATH group surfaced sort of as the primary care group with its hospital partner

which historically has been Charity Hospital. But we do include

mental health providers and to provide true medical homes, we are

coming up with the same idea which is to look at outcomes. Funding needs to follow the patient, but it really needs to be predicated

on outcomes and accountability. And I think the group of people

you see here in front of you, including Dr. Bertucci, are really intent on proving that we are providing quality care.

Ms. DEGETTE. Dr. Fontenot, I wanted to ask you another question. I have got an article from Times-Picayune called ‘‘Hospitals

Run Out of Space, Emergency Room Patients Wait Hours for Beds

to be Available’’. And this article is from last week. I mean, it is

not like from a month after the hurricane. And it says things like

Jack Fin says we are in crisis in New Orleans, there is not a bed

anywhere in the city, that it is getting worse. As soon as a bed

opens up it gets filled. I wonder if you can talk to me why this is

still going on and why it is getting worse?

Dr. FONTENOT. Well, in my humble opinion, part of the problem

is lack of access to primary care. Many of our patients are showing

up at our emergency department and our hospital sicker with

chronic medical problems because they have lost access to their primary health care and primary care provider. So part of the problem

is certainly a lack of access to primary care. We are trying to be

part of the solution to that, actually initiated our own primary care

clinics in November 2005, have had some FEMA reimbursed trailers sitting on our parking lot because of local bureaucratic red tape

that are intended to be placed in community settings as temporary

at least but to increase primary care access. These guys have been

doing a yeoman’s job and doing the best they can, but they are certainly at capacity; and I think if there is one thing we could do immediately is open up additional primary care. But the second step

for that is when Dr. Bertucci identifies a cardiology problem or an

oncology problem, he has to have a place to send those patients.

And so specialty access is almost as important or equally so.

Ms. DEGETTE. Yes, Dr. Bertucci?

Dr. BERTUCCI. I think the one other thing is that as we see them

in the physician’s office, instead of them going through the emergency room, we can make them direct admits. We can do a history,

physical, write the orders, and have that person admitted. Sometimes it is just for observation. But we can alleviate that emergency room admission so to speak by directly admitting them to the

hospital for observation with a specialist that we have contact with.

56

It is difficult. I mean, we see very, very sick people right now.

These are not the normal people that we were seeing. The physicians, the primary care doctors, we are out of our element a little

bit in what we are handling; but we are doing it because we are

the only people there. And when you go to send somebody to a specialist, whether it be a bladder doctor, an orthopedist, whatever,

they are not there. You are talking about a 30- to 60-mile drive;

and we need to set up some type of coordinated system to get the

specialist back, along with the primary care, so we can do the medical homes, we can do the electronic medical records, et cetera.

Ms. DEGETTE. Are you all working under some kind of a jointly—

I know there was a plan developed which was submitted to Secretary Leavitt and then he kind of rejected it and said he wanted

to go to this insurance program. But other than that, is there any

kind of long-term plan that you are all operating on to—it seems

to me what we need to do, we need to fully develop the primary

care system so that people don’t have to wait in line. Then we need

a whole system of specialty care for folks so they can have a place

to be referred, and then we still need to—and I am going to talk

about this with the next panel—we still need to get a safety-net

hospital system in place in the absence of Charity. So with all of

that, is there some kind of plan to do that, Dr. Fontenot?

Dr. FONTENOT. Yes, I believe there is, and I think you have described it quite articulately because you need the primary care,

specialty care, you need hospital partners to provide the hospitalbased services, the expense of MRIs, the CAT scans, the surgical

procedures that need to be done. And I think that with PATH as

a chassis that we can certainly build on that and go forward. But

we are certainly planning, have been, even prior to the storm actually the PATH group existed. I have to tell you at that point, it was

a much looser coalition with different agendas. I think that one of

the bright spots of the storm is that it has caused a coalescence I

think of a group of those of us who are committed to provide services to this patient population.

Ms. DEGETTE. And just one last question. Do you think that the

primary thing the Federal Government can do is provide the funding streams that you have all talked about or do we also need to

break some bureaucratic and regulatory barriers as well to help

you realize that plan?

Dr. FONTENOT. I think you have hit it on the head. I think additionally is to try to help figure out some incentives and recruitment. I know that Dr. Cerise will probably be talking later today

about recruitment efforts and how we can increase that because

you will hear I think a person on this panel that we really need

providers.

Ms. DEGETTE. Thank you.

Dr. WILTZ. Can I summarize that? Local problems deserve local

solutions by local people using Federal money, if you can send it.

Ms. DEGETTE. That is not always the way the Federal Government feels, but thank you for sharing your view.

Mr. STUPAK. Mr. Ferguson, 10 minutes, please. Dr. Bertucci?

Dr. BERTUCCI. I have to say this or I can’t go back to my parish.

When you asked about the storm surge, the MR-GO was one of our

57

biggest problems, and obviously that is being addressed. If I don’t

say that, they won’t let me back in that parish.

Dr. FONTENOT. Then you will only have three doctors.

Dr. BERTUCCI. Then we will only have three doctors, you are

right. So I just want you to know, we are working on that issue.

The storm surge that came, our levee system on the MR-GO was

18 feet, supposed to be, high. Of course, erosion had made it some

15. The wave that came through the MR-GO was 21 feet high.

Now, what happened was that wave came, yes, there was a storm

surge, but eventually it eroded through our levee system. Thank

you.

Mr. STUPAK. Mr. Ferguson for 10 minutes.

Mr. FERGUSON. Thank you, Mr. Chairman. I want to thank all

of our witnesses for your testimony today and your work to shed

some light on some of the challenges that we all face together with

regard to particularly the health care challenges post-Katrina. I,

like many, many other people, had an opportunity to spend several

days over that Labor Day weekend following the storm just volunteering. We spent our time in Baton Rouge where so many of the

folks had been brought out. We actually worked in a First Baptist

Church in Baton Rouge where many moms and their newborns

who had been airlifted out of the city were brought and there

was—we have four little ones at home, so it was a nice opportunity

to help some folks with their newborns and their little children and

their families.

We also did some work at the River Center Shelter just distributing clothes with some of the Red Cross volunteers. But it really,

for me just thinking back, just to that personal experience, highlights really some of the health care challenges that you all are

working to try to help solve; and I appreciate you sharing some of

your experiences with us today.

I just want to pick up on a couple of comments that a couple of

my colleagues here have made and questions they have asked, and

I wanted to ask Dr. DeSalvo, if you could perhaps elaborate a little

bit further on the concept of the medical home. I know Ms. DeGette

talked about this a little bit, and I am familiar with some of what

you talked about in your testimony; but could you maybe expand

on that a little bit further and maybe talk about specifically what

you are doing at Tulane with regard to this concept, this medical

home concept?

Dr. DESALVO. Medical home has actually become a buzzword in

health care nationally at a time when we needed something like

that to describe what we wanted to do post-storm. Before the storm

we all really had an approach to this through the hospital-based

care and very siloed care. So physician, and then you needed mental health, and then you referred elsewhere.

A medical home is really a change in that approach. It is an approach to care where multidisciplinary teams that are generally led

by a physician have a relationship with the patient. And so the values that that medical home has for things like patient-centeredness

which includes cultural competency but also quality and helping

patients self-manage their chronic disease and then using health

information technology to support care. So to share health information with all the other providers, taking care of that patient, with

58

the patient themselves so they can understand their medical

issues, and then to do things like clinical decision support so that

if we forget to order something that is evidence based and preventive, the computer if you will helps us remember and work with the

patient to make them better. So it has some essential components

of team-based care management supported by health information

technology, and it also encompasses this idea that it is very accessible to the patients; and for us in New Orleans, that definitely

means geographically accessible, hence the map. We have been

using these maps since the early days to really visually see where

we actually have placed care in our city, where the lights are coming back on and people are coming home, and where we think we

might need to put new medical homes. It is insufficient by itself.

They have to be linked to each other and then to secondary level

care, specialty care, and then to a hospital when necessary. But it

really should be the multidisciplinary entry point for the patient

into the system.

Mr. FERGUSON. Chairman Stupak was talking a little bit before

about the funding that is available through the Deficit Reduction

Act and that some of those monies are still there. They are sitting

there, they are not spent yet. In your estimation, what things can

we be doing to help folks like you and your colleagues access some

of these funds?

Dr. DESALVO. On our back-of-the-envelope calculations that we

have been doing at home, we think there is sufficient money in the

Deficit Reduction Act’s allocation, and there is a category 5 the

GAO reports about which is—at least when the report came out

was about $136 million that could be used to restore health care

services, but I don’t have any policy experience. It seems to me that

that is a sort of bucket of money we could use, and it would go a

really long way because primary care is incredibly inexpensive.

And that sort of money has already been allocated if you will and

there are already providers over here trying to do the right thing,

and we just need to put them together. In fact, we even have the

mechanisms for the money to flow because of the SSBG, the Social

Services Block Grant. We spent many months making contracts

and relationships from the HHS to the States to a quasi-governmental agency which then allocated it to the PATH network

through the LPHI so that each of the clinics could then benefit

from funding based upon a pretty rigorous budget that we put together. So there is already a mechanism through which we could

allocate those funds.

And if I could, I think the idea is if we don’t do that, if we don’t

provide some bridge support for these clinics, we are going to go

away. We are going to crash. And then we are going to go back to

a system that was not working well for us which was using a lot

of emergency rooms for care. And so it is a really important opportunity.

Mr. FERGUSON. It also seems like you have got a model that

seems to be working. We have some funding available which could

help it work, continue to work well. It would be tragic if we

couldn’t get our act together here collectively. Did you want to add

something to that?

59

Dr. BERTUCCI. Yes. I saw a sign and it said get well soon. And

it said, we prefer, stay healthy longer. So I think that preventative

medicine is a big thing.

The only problem I saw with the medical home because I am a

dinosaur primary care doctor who was raised by, see a patient,

make some money, see a patient, make some money. And it is hard

now to break into the system that the idea of this is that you are

not paid by patient contact but by outcome, by trying to prevent

the patient from coming in the hospital. You save money, everybody makes more money. It is difficult for me to conceive.

The second problem is that primary care doctors, we are people

doctors. We like seeing patients. If somebody sat there and said

you don’t have to see 40 patients anymore, I would say, I like seeing 40 patients. I mean, I like people and I like patients. So it is

hard for me to delegate that out to other ancillary people, but that

has to be learned.

You have an opportunity now as you change the medical schools

and everything else to train these people number one, with electronic medical records. I never used the computer until the hurricane, and I am much better at it. I actually made a power point

but I got it here too late. But you can learn. We are teachable, OK?

But the students come and these are the people that you have got

to teach these concepts if you want them to work. The only thing

I fear and let me tell you, I am a firm believer in patients taking

responsibility for their illness; and when you get so many ancillary

people involved, sometimes I worry that the patients start to depend on them and not take responsibility for their disease. So that

is just something we can watch and we can learn, too.

So I see a good benefit to the medical home, I see a great benefit

to the electronic medical record, and I think it will work but we

need to really start with a training situation and bringing the people out and training the primary care as they come in.

Ms. ROWLAND. Mr. Ferguson, I think it is important to note that

while everyone is talking about building capacity, putting community health centers in, that those centers rely on financing and ultimately just sending appropriated dollars to run those centers isn’t

what keeps them going. What actually keeps them going is to provide health care coverage that some of the patients in those centers

actually have health insurance paying for their care.

Today the average community health center receives more of its

revenues from the Medicaid program than from the Public Health

Service Grant dollars because they are seeing about three-quarters

of their patients with Medicaid coverage and a quarter who are uninsured.

So I think looking at the Louisiana situation as just an issue of

putting public health resources on the table is not going to sustain

these clinics over the long run. They really also need to address

their tremendously high rate of uninsurance.

Mr. FERGUSON. I have got a minute-and-a-half. Go ahead.

Dr. FRANKLIN. The short term issue is so critical, I would like to

remember everyone in this room the importance of the short-term

issue. Our health fairs would not have been such a success, Operation Blessing would not be as busy as it is unless we had thousands of people who needed health care today, tomorrow, the next

60

day. So a one-size-fits-all solution is not where we need to be today,

tomorrow, and the next day.

Clearly we have all worked to goals to improve our ability to respond to outcomes, provide information regarding outcomes, et

cetera, but you can see before you a number of different types of

health care providers, different times in our careers, different skill

sets in terms of providing the care to patients, different solutions

for different organizations.

And so I would like to emphasize to this committee just having

a community health center approach is not enough. We need all

levels of approaches to the solution.

Mr. FERGUSON. Thank you very much. I yield back, Mr. Chairman.

Mr. STUPAK. Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman.

Mr. Koehl, you indicated in your opening remarks that you have

seen a 48 percent increase in the death rate in New Orleans.

Mr. KOEHL. Those numbers come from Dr. Kevin Stephens’ office, a 48 increase per capita in the death rate post-Katrina.

Mr. WALDEN. Now, I guess the question that comes to mind is

a lot of people fled New Orleans and did not come back. Is part of

the reason there is a higher death rate is those who were sickest

couldn’t leave and are there? I mean, what are the contributing factors? That is such an astounding increase in the death rate.

Mr. KOEHL. Lack of primary care seems to be the major issue,

and without the lack of primary care, you don’t have a doctor a

year ago telling you that you had high blood pressure.

Mr. WALDEN. Right.

Mr. KOEHL. So what happens is you present yourself in a clinic

situation with a heart attack when a year ago one prescription of

a diuretic possibly and another hypertensive medication would

have prevented that heart attack. So the lack of primary care for

the last 18 months has exacerbated this problem greatly.

Mr. WALDEN. So the makeup of the population has remained

similar?

Mr. KOEHL. For the most part except this population is now uninsured and doesn’t have anywhere to go for primary care.

Mr. WALDEN. They don’t have the access.

Dr. BERTUCCI. I think the other thing you have to realize the

amount of stress these people were living under.

Mr. WALDEN. I can’t, no.

Dr. BERTUCCI. Stress will exacerbate every disease entity you

have got, whether it be diabetes, coronary artery disease, it makes

no difference. As we loaded people off the roof of the hospital into

the boats, they didn’t say boo. When we put them in helicopters,

they were all in shock. And as you sit and see patients now, even

the stoic patients—I mean, these are guys that worked in business

offices, lawyers, everybody, they are getting depressed because they

are exhibiting what I call emotional fatigue.

Mr. WALDEN. Sure.

Dr. BERTUCCI. They used up all their reserve energy and now

they can’t handle and cope anymore. So I think stress is a big, big

part besides lack of access to care. Stress and dealing with everything that—they have got to deal with insurance companies, they

61

have got to rebuild their homes, they have got to get a new job,

they have got to handle—all their families are displaced. When you

sit down with a family, all these families live together now. You go

and you say, well, where is your mom? Well, they all moved. They

are all over. I mean they are in four different spots when they used

to be within two blocks of each other.

Mr. WALDEN. I had to step out of the room for a few minutes,

and I don’t know if you answered this but you raised an issue, Dr.

Bertucci is it about your inability to get an SBA loan. Why? That

is what I don’t understand.

Dr. BERTUCCI. What had happened is my partner would not come

back. So when I went to the SBA, they said, well, your partner has

to sign that he will take the SBA loan, too. I said, well, he is not

coming back. And I said, so what do I do about that? I had to go

get his name removed and everything else. Then when I reapplied,

again this is what I was told. I am not a bad credit risk. I was

number one. I don’t owe any money, and sometimes these SBA

loans are forgiven. And I said, well, I don’t want it forgiven, I just

want a low-interest loan so I can rebuild my office. And this has

been five appeals worth and the papers must be this high. We have

jumped through every hoop that they have asked us to do, and we

don’t have that money.

Now, I am working with the Franciscans, and I am very happy

with them so I don’t want them to think I am going to go build

an office and move away. But the reality, and I am sure other doctors are going through this same situation, and we need that monies and we also need some monies for people that weren’t there before the storm that may want to come back, some low-interest

loans to help them build a building, not just the ones that were

there before. And they need to speed it up. The red tape is a killer.

Mr. WALDEN. I guess that is what stuns me in the course of this

hearing today is the fact you still have people, I assume from these

videos, that are showing up the night before or 5 in the morning

or whatever and waiting in lines and yet don’t I recall that there

was a lot of money sent out before the DRA for DSH payments like

to Charity Hospital? I think Dr. Burgess indicated it is like a quarter-of-a-billion dollars was sent to Louisiana? What has happened

to that money to help in this?

Dr. FONTENOT. Well, remember that the DSH money that flowed

to the hospital only flows if service is provided, not a free check.

Mr. WALDEN. I got you.

Dr. FONTENOT. So having been out of the hospital business for

a period of months, immediately post storm we reopened clinics,

started the tents that you saw in the parking lots, and talked with

CMS about whether there would be some reimbursements because

these are not licensed facilities.

Remember, we have never been through this before. These were

medical tents.

Mr. WALDEN. Hard to have joint commission come and do their

evaluations I assume?

Dr. FONTENOT. Exactly. Then we actually got back into the inpatient business temporarily for the trauma facility and a leased facility in an adjacent parish and actually just opened portions of

University Hospital in November. Some of those DSH monies now

62

over the last year have flowed to other hospital institutions who

have been providing care. So there has been DSH money flowing,

it is just not all been directed to the public hospital system.

Mr. WALDEN. OK. And I guess what I would like to sort out, too,

I mean, we have obviously voted to send a lot of money. I have.

I am from Oregon. We don’t get hurricanes thankfully. We have

forest fires and a few things, but they are not as devastating to

people and communities generally. I guess what I am trying to figure out, we have allocated a lot of money. What sort of impediments do you have to be able to access that and do some of those—

are there issues like that the State needs to do something, ask for

something that are holding up distribution of the money?

Dr. FONTENOT. I think that in panel 3. Dr. Cerise is going to be

speaking to you about that——

Mr. WALDEN. All right.

Dr. FONTENOT. And that probably would be better left to him for

discussion.

Mr. WALDEN. So none of the rest of you have any ideas on that?

Dr. DeSalvo? You are smiling. You just don’t want to say. Dr.

Bertucci maybe?

Dr. BERTUCCI. I think that we need more access to the Louisiana

Recovery Authority so that we can get some of our community

block grant money for buildings and structures. The infrastructure

seems to be a taboo. Everybody says don’t ask for this, don’t ask

for that. You are asking us what we need, and so we have said we

need funding and we need buildings and we need a hospital in St.

Bernard. The infrastructure, when you come to buildings, brick and

mortar, everybody goes don’t do that——

Mr. WALDEN. But if we get back to what Dr. Fontenot said, you

don’t get DSH payments without a facility in effect, right? So you

don’t get the money to pay for the services if you don’t have the

bricks and mortar for the physicians to come back to and the

nurses and everybody else that we need. Seems to me the first

thing you do is establish some sort of physical facility so you can

call it a hospital and then be able to practice medicine. You know,

we do this in other emergencies around the world. If it is tents, it

seems like you would call out the National Guard. I don’t know.

Dr. FONTENOT. Or begin to allow DSH money to cover formerly

unallowable costs, specifically physician costs. Those historically

have not been covered for the public hospital, nor for any other

health care provider. So that certainly is an option.

Mr. WALDEN. OK. Ms. Rowland?

Ms. ROWLAND. You know, often it sounds like the DSH program

is a block grant which has flexible spending under it; but the DSH

program actually was set up to provide additional payments for

public hospitals when the Medicaid reimbursement formula was

changed. So it has to be at least linked to direct-patient care. And

I think you are right that one of the things we could look at as a

better way of dealing with emergencies such as this is to have some

more flexibility in terms of how quickly DSH funds could be reallocated. But the real funds that we keep talking about are discretionary, both the Social Services Block Grant and then in the DRA

there were additional funds set up that were discretionary funds

that could have been used.

63

Mr. WALDEN. And where are those monies now?

Ms. ROWLAND. Those have not yet been expended according to

the recent report that just came out from the GAO. Those funds

have been set aside and not yet expended.

Mr. WALDEN. By whom?

Ms. ROWLAND. By the Department of Health and Human Services.

Mr. WALDEN. So DHS has those monies that we authorized, and

they have not gotten to Louisiana?

Ms. ROWLAND. It was $2 billion and they used about $1.5 billion

to allocate out for the Medicaid waivers that were given to the

States where people were evacuated to and to Louisiana itself, but

they also had a section V they call it which allowed for grants to

be made to develop access to care and resources, and those have

not been fully expended.

Mr. WALDEN. $1.5 billion of the $2 billion has been?

Ms. ROWLAND. And those were paying for the medical care costs

of individuals either on Medicaid in Louisiana, Mississippi, Alabama, and the evacuees or for uncompensated care in those States.

Mr. WALDEN. OK. One final question because again, I get asked

this stuff in my district and I have supported the emergency relief

and all. But one of the questions that consistently comes up is, are

you spending our tax money to rebuild buildings that are going to

get blown away in the next hurricane or flooded out? What is the

answer I should give? I know at Charity Hospital I think I heard

this morning that—or maybe it was you, Dr. Bertucci, that said

somebody was offering ground that would be 8 feet higher but don’t

I recall the flood of your building was 13 feet? So you are still 5

feet under water.

Dr. BERTUCCI. Well, yes. Actually what is going to happen is it

is 8 feet higher, and the hospital will be built up 8 feet. So you are

talking about 16 feet. So I think that is No. 1. Second, the floods

that have occurred, if you look, obviously are on a 40-year type of

a term. Well, you had the what, 1927 flood, rise in tide. You had

Betsy in 1965, and then you have Katrina. I am not saying that

we don’t want to prepare for that, but the reality is that we can—

if they fix the MR-GO—we didn’t flood from the hurricane, we

flooded from the levies breaking. So if we could fix the MR-GO,

raise the levies up to what they said they were going to fix, we

should be able to weather those type of storms. Now, there is no

guarantee. That is why I think it is hard to recruit people to this

area, number one, to live in what were are living in, two, to practice in the situation we are practicing in. Without facilities, it is

impossible. The people, though, amazingly, multigenerational, they

want to come home. And with the hospital you are going to get

your elderly people back, you are going to get your specialists

back—you can’t get the specialists without the hospital and without the old people, I mean, nice old people.

Mr. WALDEN. Mr. Chairman, I know my time has expired. I just

wanted to say thank you for what you do in your communities. The

commitment you all must be adhering to is hard for us to really

fully appreciate I think unless we were on the ground there. So

thank you and your colleagues for what you do to try and improve

64

the health care and the lives of the people of Louisiana and the

Gulf Coast. Thank you, Mr. Chairman.

Mr. STUPAK. Thank you. Mrs. Blackburn, I understand you want

to pass on this panel until next panel? One question? Go ahead.

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I want to

thank all of you. I appreciated the attendance and the interest

when we did our first hearing in Louisiana last year to follow up

on this issue. And Mr. Walden was on the line of questioning

where I want to go, and I do have questions for Dr. Cerise when

he comes about the funding. And I want to clarify that I am understanding right. Ms. Rowland, you are saying $2 billion was appropriated, $1.5 billion has been spent?

Mrs. ROWLAND. Well, $1.5 billion was actually allocated out and

the States are filing claims against it, so it hasn’t totally been

spent but it was allocated to the States.

Mrs. BLACKBURN. All right. And the section V money is not fully

expended is what you were saying?

Ms. ROWLAND. Correct.

Mrs. BLACKBURN. OK. I wanted to seek clarification on that, and

then Dr. Bertucci, I think you said the LRA, you all were having

trouble accessing the funds via that?

Dr. BERTUCCI. Actually I met with the LRA subcommittee, and

again I am not supposed to get controversial but what I was told

was that medicine was not a priority when we met. They sat down

and a survey in the beginning of the hurricane and said, what are

the needs? What would make you come back?

Mrs. BLACKBURN. OK.

Dr. BERTUCCI. Now, what made them come back were levies,

jobs, housing. So that is very important. So they did put those

ahead of us—police, schools, churches, fire, medicine. So we were

told as we met that the reason that we had not been there was

that medicine was not a priority. Now, I am assuming we are a priority now, and I am hoping after this meeting we get some access

to them. The problem comes that we are being told now that maybe

the infrastructure monies that they had were already delegated out

to other hospitals and different other situations.

And I want to say one thing real quick. Thank the United States

of America and all of you and everybody who sent donations down

here to help us through this. Louisiana greatly appreciates it.

Mrs. BLACKBURN. OK. And then of you all who are practicing

medicine, how many of you are practicing in a brick-and-mortar facility? OK. All right. And then the Operation Blessing, is that in

a brick-and-mortar yet?

Mr. KOEHL. No, it is not.

Mrs. BLACKBURN. It is not? OK. So that is still in a temporary

or a tent?

Mr. KOEHL. No, it is mobile units brought together——

Mrs. BLACKBURN. In the Wal-Mart?

Mr. KOEHL. No, we are not in the Wal-Mart.

Mrs. BLACKBURN. OK.

Mr. KOEHL. We are East Orleans on Reed Boulevard.

Mrs. BLACKBURN. All right. Thank you.

65

Dr. DESALVO. Mrs. Blackburn, for clarification, our clinic was a

men’s dorm that we are renovating. It is not really a clinic though

we are in it and we have air-conditioning.

Mrs. BLACKBURN. Now, has the Health Care Authority in Louisiana going to change their process on how they permit? I know they

were giving permits even though you all had your generators and

your storage in the basements, and they were not supposed to be

doing that. They were supposed to be on the fourth floor. Have they

changed the way that they are going about giving the permitting?

Does anybody know?

Dr. WILTZ. The State enacted a new building code to all new construction, so all new construction has to meet——

Mrs. BLACKBURN. New construction, right?

Dr. WILTZ. Yes.

Mrs. BLACKBURN. OK. Thank you for that.

Dr. FONTENOT. At Charity Hospital it is important to remember

that our switchgear is still in the basement. FEMA will not allow

you to rebuild anything that is not out of the flood plain without

mitigation, et cetera. But they do require with our repair of University Hospital back to its previous status that we provide some asset

protection which will include a little flood wall to keep water from

getting into the basement. But again, they only allowed that because it is considered a temporary facility.

Mrs. BLACKBURN. OK. I know the State of Louisiana was self-insuring. Have they changed that process so that they are no longer

self-insuring their infrastructure? Dr. Wiltz, do you know that? If

not, I will ask Dr. Cerise on panel three.

Dr. WILTZ. No, I do not know that.

Mrs. BLACKBURN. Nobody knows? OK. Thank you, Mr. Chairman.

Mr. STUPAK. Thank you. On behalf of the full committee, thanks

for being here today and helping us out. We look forward to continuing to work with you. This will not be the last hearing. It will

not be a year. We will keep the pressure on, and you will be seeing

a lot of us. Thank you for coming.

Dr. WILTZ. Thank you.

Mr. STUPAK. We are looking forward to hearing from our next

panel. Dr. Alan Miller, interim senior vice president for Health

Services, Tulane University Health Sciences Center; Mr. Gary

Muller, president/CEO, West Jefferson Medical Center; Dr. Pat

Quinlan, CEO, Ochsner Health System; Mr. Leslie Hirsch, president/CEO, Touro Infirmary; and Mr. Donald Smithburg, executive

vice president/CEO, Louisiana State Health Care Services Division.

If those folks would please come forward?

Gentlemen, as you know, this is Oversight and Investigations

hearing of the Energy and Commerce Committee. We swear-in all

of our witnesses.

[Witnesses sworn]

Mr. STUPAK. Thank you. The witnesses are now sworn. We will

start with Dr. Miller. We have your testimony. If you would try to

summarize it there in 5 minutes that would be of great help to us,

and thank you for being here.

66

STATEMENT OF ALAN MILLER, PH.D., M.D., INTERIM SENIOR

VICE PRESIDENT FOR HEALTH SERVICES, TULANE UNIVERSITY HEALTH SCIENCES CENTER

Dr. MILLER. Thank you for the opportunity to speak about the

state of health care in the New Orleans region 18 months after

Katrina, and Tulane University’s role in the recovery.

Since Hurricane Katrina, we have seen enormous progress in

some areas, in other critical areas we have seen shockingly little

progress resulting in a stalemate that will make reform more difficult and threaten the existence of our training programs.

I want to thank the committee members for your support for the

region. I am Alan Miller. I represent Tulane University, an institution of higher education that not only provides health care but also

trains our future doctors. The past year-and-a-half has been challenging for everyone in New Orleans, especially those of us trying

to rebuild the broken health care system, provide care, and train

physicians. Tulane University Health Sciences Center suffered

losses of greater than $200 million in property damage, lost research assets, and revenue. Through the storm and since, Tulane,

the largest employer in Orleans Parish, has continued to do exactly

what it has done since 1834, provide health care, educate physicians, and advance medical knowledge.

When Katrina struck, it left our medical students, residents, faculty, and staff scattered across the country. In 3 weeks, a medical

school for Tulane students taught by Tulane faculty was up and

running at the Baylor College of Medicine, and our residents were

placed in training sites in Texas, Louisiana, and throughout the

country.

By July 2006, there was a 51 percent reduction in the total number of physicians filing claims in region 1. Loss of clinical faculty

at Tulane and LSU not only decreased the available physician

workforce but reduced the clinical faculty needed to teach future

physicians. With the public hospitals down, care for the uninsured

has been assumed by private hospitals and physicians. State Medicaid DSH has historically been directed to the safety-net hospital

system. With the closure of Charity, there remains a major gap in

funding that care. Since Katrina, Tulane faculty has provided $6.8

million in uncompensated care, and we have absorbed $5 million

in unreimbursed training costs. Despite this, Tulane has retained

faculty by guaranteeing salaries through June 2007. In effect, a

private, non-profit educational institution has been using its impaired and limited financial resources to underwrite health care

and graduate medical education and help preserve the health care

workforce. Tulane cannot continue to do this and survive.

In order to preserve the physician workforce, we need immediate funding for providing care. Approximately $30 million per year is

needed to provide basic reimbursement to area physicians for uncompensated care. We ask that you consider a mechanism to provide funding directly to providers. We ask that Congress consider

a grant program to provide incentives to recruit clinical faculty to

teaching institutions in the hurricane-affected region, for loan forgiveness, relocation, and bridge funding.

Additionally, there must be a focus on the future of GME. This

is a long-term issue but requires immediate attention. Teaching

67

faculty and residents provided a large portion of the care for most

underinsured patients in the U.S. Moving medical education to the

front burner of health care redesign is critical. Some look at medical residents as moveable parts that could be rearranged to maximize CMS reimbursement. This is far from the truth. Issues of program interrelationship, critical mass, and quality educational experience must be considered or accreditation will be at risk.

Pre-Katrina, Tulane trained 520 residents. At any one time, 240

of those residents were on rotation at Charity. Today Tulane trains

a total of 327 residents. Special CMS waivers were required to

allow residents to continue their training at new sites. Protracted

negotiations took place requiring Tulane to hire outside counsel

simply to navigate the process. This should not be allowed to happen in future disasters.

Katrina revealed a major flaw in the way we fund GME. When

Katrina hit, the medical schools were left with the responsibility

for resident-in-training and salaries but were unable to seek reimbursement from closed hospitals and most cases the hospitals that

accepted them.

For the protection of all but most critically that of the trainee,

medical schools must have greater control over both training and

funding when a disaster results in total or near total closure of a

teaching hospital. We ask that the committees consider a hearing

to specifically deal with the issues surrounding GME. In addition,

Tulane offers to host a panel of all stakeholders to re-evaluate resident training and financing when disruption of training occurs.

Of critical importance to our medical schools is the New Orleans

VA Hospital. Pre-Katrina, Tulane faculty and 100 residents provided 70 percent of the patient care at the VA. Outpatient clinics

have reopened in the downtown location where there are 26 Tulane

residents and visits are up to 75 percent of pre-storm. It is essential to re-establish a hospital in downtown New Orleans. Veterans

have expressed a strong desire to have their care resumed by their

physicians and the system that has served them well. The facility

must remain proximal to the medical schools so that highly skilled

Tulane and LSU physicians can provide state-of-the art care.

The gridlock we find ourselves in is destructive, both short and

long term for our hospitals, medical schools, and the public we

serve. The time has come for all to set aside their differences, share

vital data, and have an objective party lead constructive negotiations.

We have many challenges to overcome. With the support of the

American people and leaders such as yourselves, we will recover.

Thank you again for your time and support.

[The prepared statement of Dr. Miller appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you, Dr. Miller. Mr. Muller, please, for 5

minutes.

STATEMENT OF A. GARY MULLER, PRESIDENT/CEO, WEST

JEFFERSON MEDICAL CENTER

Mr. MULLER. Mr. Chairman and members of the committee, I am

Gary Muller, president and CEO of West Jefferson Medical Center.

I am grateful the committee has expressed a continued interest in

68

the worsening state of the health care system in the New Orleans

region.

West Jefferson Medical Center, located 10 miles from downtown

New Orleans, is a 451-bed public community hospital and health

system with programs and services across a complete continuum of

care. West Jefferson was one of three hospitals that did not close

after Hurricane Katrina and is now one of the eight safety-net hospitals serving all patients. Pre-Katrina we were projecting an $8 million profit in 2005.

When I testified before this committee January 2006, we had incurred operating losses of $30 million. I come to you this time with

a heavier burden of $48 million in operating losses.

Recruiting nurses and physicians has become a near impossibility, and the supply and demand of the entire health care workforce

has reached a crisis. Prior to Hurricane Katrina, we spent a total

of $2 million annually on agency nurses. Currently we are forced

to spend $1.1 million each month which was $13 million in 2006.

It is extremely difficult even to have a physician visit our city for

the possibility of working there.

Certain financial commitments are necessary to sustain hospital

operations in our area. The 2007 Wage Index update that was effective October 2006 was based on wage data from Medicare Cost

Reports beginning during fiscal year 2003. Thus, there was almost

a 3-year lag between the data being used to develop the wage index

and the actual implementation of the wage index that incorporates

the data. Under the CMS methodology for incorporating changes,

our index will not begin to reflect the changes we have experienced

in labor costs until October 2008. I am requesting that you consider

a special wage index adjustment for hospitals in the affected area

to help offset some of the losses.

West Jefferson is supportive of the CMS Medicaid proposed rule

on intergovernmental transfers and certified public expenditures.

As we understand the proposed rules, CMS will require States to

direct Federal funds directly back to governmentally operated

health care providers. This certainly seems aligned with how the

Federal Government intended these funds to be used in the first

place. For West Jefferson, we believe this will result in equitable

distribution of funds directly to our hospital without going through

the State. We worked diligently to offer language to the Stafford

Act that would qualify hospitals as eligible recipients of the community disaster loan program. With hard work of our entire delegation, we were successful in securing that funding. It was vital for

our hospital in the few months following the storm, and we incurred substantial financial losses.

Both the House and Senate appear to be on the verge of floor action to permit the forgiveness of CDL which has been the practice

pre-Katrina. I strongly ask for your support to give these loans

their currently obligated payback and we cannot do that.

We have implemented an operations improvement action plan

whereby approximately $8 million of savings or revenue enhancements have been identified at West Jeff. Most of the cost savings

center on reducing agency nurse costs which included only two

nurses pre-Katrina and grew to 92 agency nurses that we employ

presently. We have also improved efficiencies so that the emerVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
69

gency room can flow better with the increase in patient volumes.

West Jeff also supports two federally qualified health centers in

our service area to support the medical home model that you have

heard about earlier.

One day last week, we were simply overwhelmed with 32 admissions waiting in our emergency department. Simply put, every

available bed in our hospital, which was 55 more than pre-Katrina,

was occupied; and we had 32 admitted patients waiting on stretchers in the hallway of the emergency department. Our ambulances

and our paramedics routinely wait with these patients which takes

these guys and ladies off the streets to serve the patients in need.

Unfortunately this is quickly becoming the norm as there are

simply not enough staffed beds in the New Orleans region to care

for the volume of patients. We put in a phone call to the Department of Health and Hospitals, and the next day the Secretary, Dr.

Cerise, was at our hospital offering assistance and potential solutions. He has also been helpful with his support of the uncompensated care pool that was developed at the State level to offset some

of our growing indigent care costs. He is also responsive to West

Jefferson’s plan to open 12 more mental health beds by funding

them. Nevertheless, the shortage of beds, particularly psychiatric

and acute care, is at a critical point; and more funds would allow

us to open more beds.

However, I remain optimistic that our issues will eventually be

resolved by both public and private hospitals, community clinic providers, payers, and governmental officials at the State and Federal

levels to provide a united solution in the new model that will improve care for all citizens of Louisiana. I have great faith that our

Federal and State leaders will not abandon us. Together we can

make a difference.

Thank you very much for your time and your interest.

[The prepared statement of Mr. Muller appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you, Mr. Muller. Dr. Quinlan.

STATEMENT OF PAT QUINLAN, M.D., CEO, OCHSNER HEALTH

SYSTEM

Dr. QUINLAN. Thank you, Mr. Chairman. I want to thank you

and the committee and other Members of Congress who have actually come to New Orleans. You have to see it to begin to understand it. Seeing is beginning to believe. I want to remind everyone,

whatever you have seen, you have only seen a small part of it; but

we appreciate your interest.

Particularly after speaking with your staff, I think this effort will

make a difference; and I personally am very hopeful. There is much

to be done. Many people have worked together to answer the kind

of questions that you have raised here.

I would like to tell you a little bit about us. We are Ochsner

Health System, an independent, non-profit organization made up of

seven hospitals and 32 clinics, employing about 8,400 people. We

are the largest private employer in the State of Louisiana. We have

as a result borne much of the brunt of this storm. It is also of historic interest I think for you to know that Alan Ochsner, our nameVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
70

sake, made the first connection between smoking and lung cancer;

and for that he was ridiculed by the medical establishment.

We are one of only three hospitals. Our other two sister hospitals

in Jefferson Parish took care of the patients during the storm. We

have been on the point since the beginning. We have done this despite ongoing interruption of our care during and after Katrina,

and we have cared for everyone who came through the doors. Importantly we are located just a few hundred yards from Orleans

Parish border, so sometimes the discussion gets a little misleading

for people who don’t know the geography.

We made the decision to stay open because simply that is our

public duty to do it. Since Hurricane Katrina, Ochsner professionals have quietly gone about the business of taking care of thousands of people despite the fact of receiving significant damage to

our facilities. We have been diligent in restoring our facilities and

moving ahead with the idea we will just keep going until we run

out of gas because so many people depend on us.

We also had to provide food and shelter for our staff as well as

pay them for their increased long hours during this time. Our extensive disaster preparations played a major role in our ability to

mitigate its damages and our ability to provide full services, even

under emergency conditions, and this preparedness allowed us to

continue to meet the needs of the community. As short-handed as

they are, I think it would have been much worse if we had not been

prepared.

We have had numerous and extensive financial losses that I

think were, for the purpose of brevity, were covered in our submitted testimony.

I would like to tell you about clinical care. It is something that

I think is at the heart of the question here. We currently employ

over 600 physicians and about 130 mid-levels. That is about 750

people who take care of people directly and importantly receive no

direct care for taking care of patients. That is one reason we bear

a disproportionate share because we have this large group.

We don’t seem to fit the standard stereotype I think what you

think of in medicine. We are basically everything. We are a large

academic institution. We are a large ambulatory system and we are

also a hospital system. Basically our Government is not prepared

to deal with organizations like that, the kind of organizations actually you need most during a crisis.

We are one of the largest private, non-university based academic

institutions in the country with over 350 residents and fellows. We

have about 70 guest residents from Tulane and LSU. We provide

advanced research, translational research, and conduct hundreds of

clinical trials. In addition, we provide training for over 400 allied

health students. These are the folks who make hospitals run—as

well as over 700 medical students from both LSU and Tulane with

little or no funding to support that mission.

The importance of Ochsner’s graduate medical education program has increased greatly since Katrina because we are the only

fully functional academic center in New Orleans right now. We currently have done everything we can to support our schools. We

want them to come back. They are important for our future as a

State. We know that a significant number of physicians locate to

71

practice where they train, and we are training the next generation

with our colleagues.

The sad reality is we are bleeding red ink as a result of holding

this fragile health care system and medical education system together. We are caught in the middle of an inflexible bureaucracy.

Basically we have State, local, and Federal Governments living off

of our balance sheets at the moment; and we can’t do it much

longer.

Simply put, well-intended money to help us as providers is not

reaching us on a timely basis; and when it does, it is insufficient

to meet our needs. Basically, we put the company on the line to do

the right thing and the bet is still out. Despite our efforts at retention, we had no layoffs; we have laid off no one. We still lost over

2,000 employees and more than 100 physicians after the storm because people just decided they had had enough. As a result, we are

experiencing a shortage of highly trained physicians, nurses, and

support staff. Recruitment and retention continues to be a major

issue for us. We are spending $20 million annually in employment

agency fees to staff critical areas to stay open. We are losing money

to stay open and meet the public need. Our wages have increased

close to 11 percent. While our health care system costs have increased almost 11 percent, the Medicare wage index decreased almost four percent; and the difference is something we cannot sustain.

To attract talent, we need to cooperate, to operate, and to increase our profitability as wages increase as well; and we have

been unable to do that. A permanent fix, as Gary mentioned, to the

Medicare wage index would be most helpful in addressing this

issue of sustainability.

In 2006 the Ochsner Clinic was forced to increase physician sala- ries by $6 million or 5 percent, and we anticipate a similar increase

this spring.

In addition, we are often forced to pay significant recruitment bonuses to attract staff at all levels. We are committed to remaining

full capability until the end.

Ochsner Health Systems also faces a $4.4 million in outstanding

unemployment claims despite the fact that we had no layoffs. This

is an issue between the State and us and the Federal Government,

and in my submitted testimony, we have a suggestion in mind.

Funding for uncompensated care is also an issue for us. Ochsner

has done more than its fair share for caring for the uninsured in

the region. We have seen over 40,000 patients in our system, and

our inpatient costs alone cost over $25.5 million. We have been reimbursed about $12 million for that. Please note that I am referring to costs and not charges, and these refer to hospital services

only and does not address our clinic load.

With over 1 million clinic visit a year and over half of our revenue coming from physician services, our approach is simply not understood by government at all levels. We are more than a hospital

system, we are a medical system. Our uninsured and Medicaid volumes have increased 50 percent from pre-Katrina levels. The time

between providing the care and receiving reimbursement has become excessive. We recommend that money for reimbursement for

the care of the uninsured follow the patient directly and not go

72

through multiple parties in order to expedite these funds receiving

providers of all kinds on a timely basis. Predictable funding is absolutely essential to predicable access for patients as you heard

from the previous panel. And access is at the core of good medical

care.

I would like to talk about our efforts to expand capability and the

retention of health professionals.

Mr. STUPAK. Could I ask you to summarize a little bit there? We

are way over.

Dr. QUINLAN. Yes.

Mr. STUPAK. Thanks.

Dr. QUINLAN. OK. Basically we have a lot to do. We have acquired new hospitals, some of which were in the news for failing

and we will need some help in restoring those to make sure for the

next crisis that they will be there. And also for the professionals

who depend upon them for the livelihood. They will have a place

to work and a place to stay.

I would like to say just in closing, I think the promise of ongoing

supervision and collaboration with this committee will make all the

difference between what we had before and what we will get in the

future. Thank you for your efforts.

[The prepared statement of Dr. Quinlan appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you, Doctor. Mr. Smithburg, please, for 5

minutes.

STATEMENT OF DONALD R. SMITHBURG, EXECUTIVE VICE

PRESIDENT/CEO, LOUISIANA STATE UNIVERSITY, HEALTH

CARE SERVICES DIVISION

Mr. SMITHBURG. Chairman Stupak, Ranking Member Whitfield,

members of the subcommittee, I am Don Smithburg, CEO of the

LSU Health Care Services division which comprises most of the

State public hospitals and clinics that serve as the public teaching

system in Louisiana. I also represent the facilities that Dr.

Fontenot showed you in her brief video during the first panel.

Many members of this subcommittee, as well as a delegation led

by Representative Clyburn, took time out to travel to New Orleans

several times to survey the devastation. I have had the privilege

personally spending quality time with each of you and your staff

in the field and very much appreciate that and your commitment

to our region and its people.

Ms. Blackburn asked of the previous panel a few question about

bricks and mortar, so let me tell you very briefly our story in that

regard. Immediately after Katrina destroyed our buildings, we established limited clinic and urgent care services in 10 hospitals,

then in the Convention Center. We operated a major clinic in a vacated department store right next door to the Superdome, and in

November 2006, just a few months ago, we reopened part of our

University Hospital. FEMA indeed funded this renovation, provided the facility would be operated only on a temporary basis.

This small interim hospital now operates 20 clinics which is in

stark contrast to the 160 clinics that existed on the campus before

Katrina. LSU plans to open seven neighborhood clinics in the area

as soon as permits are finally granted by the city.

73

With the destruction of Charity Hospital, our flagship, the region

lost its only level one trauma center as noted by Representative

DeGette and other members. LSU then leased space at a suburban

Ochsner facility and began providing trauma services there in April

2006. Trauma moved back to the interim hospital just last month.

Also, LSU has indeed entered into formal collaboration with the

VA to build and operate a joint facility to permanently replace public and VA hospitals. While this innovative project will not be realized for a few years, the partnership and the promise of a stateof-the-art academic health center does help us resolve some of our

short-term challenges, such as attracting and retaining LSU and

Tulane faculty and researchers, not to mention the thousands of

jobs and significant value to the region’s economy. And let me be

clear. LSU sees this project, this VA collaborative, as a meaningful

step toward health reform, not the same old Charity model. We

more than everyone want to get away from the so-called two-tiered

financing of health care.

And pre-Katrina, 70 percent of the practicing doctors in Louisiana completed all or part of their training at Charity and University Hospitals. But our educational programs are in grave jeopardy

as noted by Mr. Whitfield. We lost our radiology and surgery program and most of our orthopedic surgeons. We no longer have

trainees in oncology or rheumatology. Other key programs are still

relocated far out of town. Surgeons are under increased strain because of the manpower shortages and enormous trauma demands.

Just a word about reimbursement. Public hospitals rely heavily

on the Medicaid DSH program in Louisiana and across this Nation.

Unfortunately, CMS considers costs associated with payment of

non-faculty positions to be unallowable under DSH. They are not

regarded as hospital costs. We have been working to address this

rule since 1999, and now would be an ideal time to address it.

Another Medicaid financing issue is CMS’s proposed Medicaid

regulation that will cut billions from the program. We simply are

in no position to absorb these additional cost cuts.

Mental health. There has been a significant loss of capacity in

the mental health system as a result of Katrina. Only about 40 of

the 400 lost psych beds have been restored in the area so far.

There has indeed been an exponential increase in mental illness.

ER’s are under strain because of the volume of the patients whose

conditions require special facilities and expertise not currently

available. ER’s weren’t designed to accommodate the needs of these

patients and certainly not in the volume we see today. According

to press reports, police often are unable to find a hospital able and

willing to accept mentally ill citizens. They are booking many of

them in jail.

Emergency room overcrowding existed prior to Katrina but has

been significantly exacerbated since then. Several panelists have

already noted that. One way to alleviate the situation is implementation of the medical home clinic concept promoted by the State

and its health care Collaborative referenced by the chairman in his

comments as well as other panelists before me. This medical home

will be the Holy Grail of recovery and reform for it will address

issues such as electronic record interoperability that Dr. Verges

noted in his remarks.

74

And then lastly, workforce. There has been a mass exodus of

physicians and other medical personnel from New Orleans. They

are in huge and gravely short supply. As you know, members, our

challenges are great. We must overcome political in-fighting and

self-interest so that the interests of the patients are not lost. Our

task is to finally level the playing field of the entire health care

community to arrive at solutions that transcend parochialism on

behalf of the patient. As noted in my written testimony, we cannot

accomplish our mission without additional Federal assistance in

the form of increased funding and regulatory changes, not just for

recovery but for reform.

It is my hope that the attention this subcommittee can help facilitate a productive dialog and produce positive changes for the

citizens of our region.

Thank you so much.

[The prepared statement of Mr. Smithburg appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you, Mr. Smithburg. Mr. Hirsch, please, for

5 minutes.

STATEMENT OF LESLIE D. HIRSCH, PRESIDENT/CEO, TOURO

INFIRMARY

Mr. HIRSCH. Thank you, sir. Chairman Stupak, Ranking Member

Whitfield, and members of the subcommittee, thank you for inviting me to testify today and for continuing to keep New Orleans and

post-Katrina health care a national priority.

I am here today to speak about a number of issues that continue

to plague Touro and other hospitals in New Orleans. I am the

president and CEO of Touro Infirmary. Thank you for your support

of New Orleans in the 18 months since Katrina devastated our city.

We are grateful for your continued interest.

The delivery of health care in New Orleans today is a much

greater challenge than it was in the first few months following the

storm. Conditions have worsened and continue to do so as more individuals return to New Orleans and as the demands on the health

care system increase. Health care is a core requirement of the city’s

recovery, and the current system is in jeopardy. Additional Federal

support is desperately needed to help stabilize and improve the situation.

Touro Infirmary was founded 154 years ago and is a faith-based

community, not-for-profit organization. It wasn’t until Hurricane

Katrina struck that Touro would confront its greatest challenge

ever. For only the second time in its history, Touro Infirmary

closed on September 1, 2005, as we were forced to evacuate 238 patients as well as hundreds of staff and family members. We are

very proud to be the first hospital to reopen in the city just 27 days

later and to be a critical part of New Orleans’ recovery, along with

our colleague institutions that have also shouldered a great burden.

Touro’s reopening was critical to the city being repopulated, and

since then we have played a safety-net provider role; and this has

occurred at a huge financial cost. Katrina caused over $60 million

in property damage and business interruption losses. We have had

substantial operating deficits since the storm, and the Touro GovVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
75

erning Board recently approved the deficit budget for 2007. We continue to erode our cash reserves at a rapid pace and endure the impact of resulting changes in our bond and credit ratings.

The situation as you have heard today in Orleans Parish is particularly challenging as the number of acute beds in operation remains dangerously low at about 500 to serve a population estimated at 200,000.

With 2,000 employees, Touro is presently staffed for 280 beds.

There are a significant number of issues that have had a negative

impact on the operation of hospitals in the New Orleans metro area

and the health care delivery system. The amount of uncompensated

care provided by area hospitals and in the increased percentage of

population that is uninsured is unprecedented and exceeds national

levels. There is also a significant portion of the population that is

underinsured.

Touro’s charges for uncompensated care have skyrocketed from

$17 million pre-Katrina to $41 million in 2006, an increase of 141

percent. Our emergency department has seen a dramatic increase

in volume post-Katrina from approximately 20,000 visits a year to

30,000. Uninsured patients originating in Touro’s emergency department are responsible for about 90 percent of Touro’s uncompensated care. This is an unsustainable position for Touro and is

an unfunded mandate that we willingly accept but must be addressed in terms of the financial viability of our hospital.

There has been a steep rise in the cost of labor, excessive reliance on contract labor, and shortages of critical health care personnel to fill both direct care and support positions. The national nursing shortages exacerbated in post-Katrina New Orleans, and salary

rates have risen significantly. The use of contract or agency labor

particularly with respect to registered nurses is a large component

of the labor shortage issue. At Touro, the cost for each man-hour

paid increased 20.4 percent from 2005 to 2006 driven largely by the

cost of temporary labor which increased nearly 500 percent. Annually, the cost of a full-time equivalent registered nurse provided via

a staffing agency is $50,000 higher than the cost for a similar

nurse with salary and benefits employed by the hospital. 17 percent of our labor costs last year was for contract labor and amounted to nearly $14 million.

Graduate medical education. Post-Katrina Touro and other hospitals expanded their residency training programs to absorb as

many residents as possible, thereby supporting and protecting the

future of graduate medical education in New Orleans. We increased

from 18 to 52, however because of this it has been very costly in

that the Federal rule does not permit Federal full reimbursement

in the first year. Instead, costs must be averaged over a 3-year period; and in effect, we are being penalized. This rule did not envision the hardship created by Katrina. Our incremental costs associated with this for the 3 years of the averaging will be $9 million,

and of this amount, $4.5 million is related to the 3-year averaging

requirement.

Property and casualty has also skyrocketed. We are up 374 percent. At the same time, our coverage has declined. We have taken

a number of steps to help ourselves, but yet some of these measVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
76

ures have not been seen fit to be funded by FEMA which I could

elaborate on in greater detail.

Our recommendations are simply to implement health care redesign that provides participants with freedom of choice to obtain

health care services and assures that funding follows the patient

and is not institution specific. Approve cost-based reimbursement

for the next 3 years for hospitals in hurricane-affected parishes,

and particularly, for hospitals located in the hardest-hit area, region 1. Treat our hospitals as critical access hospitals similar to

what has been done for rural institutions or those institutions in

rural areas.

As noted before, approve a Medicare wage index now that reflects the current conditions and don’t wait 3 years for the rates to

catch up. Increase funding for uncompensated care and consider

special grants for those hospitals most affected. Approve waivers

for graduate medical education so the problem that I described before will not affect those institutions that stepped up, and also approve additional family practice residency training slots to increase

the supply of primary care physicians and waive the administrative

barriers that are in front of adding those programs.

Increase access to physical rehabilitation services. Physical rehab

service particularly for brain injury patients are in short supply;

and at no cost to Medicare, rehab hospitals could be permitted to

change status to become rehabilitation units of general hospitals

without the current 1-year reduced payment penalty. Approve additional funding to increase health manpower and revise existing

programs to incentivize physicians and others, nurses, et cetera, to

come to New Orleans for perhaps a 3-year period with grant support. Designate us an underserved area for this purpose, and provide hospitals with direct funding to provide similar incentives.

Deploy Federal resources to help relieve pressure on emergency

rooms in the area. DMAT teams were very useful after the storm

but left well before the population returned. DMAT’s should be reconsidered and redeployed to help alleviate the excessive delays in

treatment and overcrowding that currently exists in hospital emergency rooms. Finally, please consider additional funding to offset

the cost increases in property and casualty insurance that I noted

before.

I thank you again for the opportunity to be here.

[The prepared statement of Mr. Hirsch appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you and thank you to all the witnesses for

being here. We will start with the questioning, 10 minutes for each.

You know, you all put in countless hours and energy and your

talent to try to solve the health care problems that New Orleans

faces, especially in region 1. And yet the health care system, as we

have seen today, seems to be deteriorating and not getting much

better.

I asked the other panel, but let me ask this a little differently

because of the makeup of this panel. Give me one thing that is

breaking down in the Government and the private or public sector’s

ability to solve some of your challenges. Mr. Hirsch concluded with

his. I talked with him about DMAT. I don’t know if that is something we should do right now or anything we could do right now

77

to help alleviate the problems; but Dr. Miller, let us start with you

and we will go right down the line and give Mr. Hirsch a chance

to think about that one. What could we do? Give me one thing we

could do right now that you need the Government to put some

pressure on—besides the dollar part. We understand dollars.

Dr. MILLER. Certainly one of the greatest challenges for us as a

training institution which will affect the current and future supply

of physicians is the difficulties related to our graduated medical

education programs, being able to move residents from the hospital

where they trained prior to that hospital going down to new locations; and as Mr. Hirsch pointed out, those new locations getting

adequately paid for those residents so that they can reimburse the

medical schools. And we are all under very careful scrutiny by our

accrediting agencies, and we have to make sure that the quality of

the educational experience and the interaction between medicine,

surgery, pathology, all of those trainings are intact.

So certainly we need flexibility within CMS and we need a clear

understanding of what the criteria are for acceptable training sites.

Mr. STUPAK. Mr. Muller?

Mr. MULLER. Access to nurses. We simply could open more beds

if we had more nurses. Every hospital in town could open more

beds if they had more nurses.

Mr. STUPAK. You have the physical space?

Mr. MULLER. Oh, absolutely. We have the physical space. We

have the support staff basically. But the nurses are not there. We

cannot go on paying agency nurses because they cost like we have

been told twice as much.

Mr. STUPAK. What is the barrier? Just no nurses in the area? Is

that just it?

Mr. MULLER. Yes. Well, there are many barriers but the main

one, there are no nurses in the area.

Mr. STUPAK. And that is housing or——

Mr. MULLER. People really don’t want to move back for various

reasons, schools, levees, housing, other things. In fact, when you

compare living and working in New Orleans to living and working

in Austin, TX, Ann Arbor, MI, there is no choice for quality of life

at this point. It is really nice to come to a city where the streets

are clean and thing are going on like it is in Washington. You cannot attract nurses to come back to an environment like this.

Now, another answer, though, is we received volunteer Veterans

Administration nurses at West Jefferson for about 6 months. They

were wonderful. They enjoyed doing it, they had jobs. I think something needs to be done I believe at that level that will cost less.

We cannot hire agency nurses forever.

Mr. STUPAK. OK. Mr. Quinlan?

Dr. QUINLAN. It lapses a little bit into the financial piece, but I

think if we could make reimbursement reflect current costs, I think

some of that is by design that makes sense in ordinary circumstances. But if we could review some of these administrative

rules to recognize that this is an unprecedented situation and it

should reflect current reality, I think it would put us on a different

footing because sustainability is how you make your plans going

forward, and in the absence of predictable revenue stream, you

have to think differently.

78

Mr. STUPAK. Give me a specific on your reimbursement you are

talking about, such as critical access hospitals?

Dr. QUINLAN. Well, that would be huge if we could do that, but

I remember about in the first week saying, if we could have a critical access designation, this would be tremendous for us.

Mr. STUPAK. And how long would that have to stay for? There

is always a concern that once you do it, it never goes back.

Dr. QUINLAN. Pick a number.

Mr. STUPAK. A year? Two years?

Dr. QUINLAN. We can live with anything to tell you the truth. It

is taking I think a year-to-year or a biannual sort of thing where

you would judge it against certain criteria. It would allow us to

have that sort of wherewithal to deal with this.

Mr. STUPAK. Mr. Smithburg?

Mr. SMITHBURG. First I agree with the comments made by my

colleague panelists. I am going to add another one. Everything, Mr.

Chairman, seems to touch money in one way or another.

FEMA has already been budgeted, and as I appreciate appropriated and authorized dollars. And so in the case of the publics,

it is a matter of dislodging funding to fit within the FEMA center

lane. And in the case of the mental health crisis, while we have

tried to find several facilities to lease, at the end of the day we

have finally landed on one that will work so that we can stand up

a mental health hospital to support the community, but it requires

FEMA’s approval and that is an issue that we continue to have

trouble getting across.

Mr. STUPAK. FEMA approval for what, for allow more cost or——

Mr. SMITHBURG. No, FEMA approval to replace that which was

destroyed by Katrina in the form of mental health beds. And we

have a beat on leasing a facility that requires renovation that

should be eligible by FEMA. And I think that would help the community greatly.

Mr. STUPAK. OK. Has FEMA resolved your money yet for Old

Charity? The last time we had a hearing that was a big point of

contention, and they were going to do it right away they told us.

So what ever happened there?

Mr. SMITHBURG. It is still being evaluated, Mr. Chairman. They

did bring in another team, the fourth different evaluation team is

now in to Big Charity to adjudicate that claim if you will. But

FEMA has helped us get into University Hospital as a temporary

facility.

Mr. STUPAK. What is the dollar difference we are at yet?

Mr. SMITHBURG. I don’t know. The last official dollar difference

is the same place we were before which was $225 million. But I

think they have a new group in there that is looking at it a little

more objectively.

Mr. STUPAK. OK. Mr. Hirsch?

Mr. HIRSCH. A couple of ideas. It was mentioned earlier about

the frustrations in New Orleans and Louisiana among the different

groups, the State, the Federal Government, as well as of other interested parties. And I don’t know to the degree that this is practical or realistic, but to the degree that Congress or someone can

play a role in mediating or trying to arbitrate the situation so to

speak. There are a lot of people working with a lot of good intenVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00082 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
79

tions, in some cases, frankly, at cross-purposes; and people need to

get together and have what I would call a real conversation and

try to reach a middle ground and compromise. That has been a big

part of the problem. I don’t think that the parties are all speaking

with each other.

Mr. STUPAK. Mr. Dingell has asked the Secretaries of HHS,

FEMA, some of the others, to sit down as a group. Would you be

supportive of that?

Mr. HIRSCH. Absolutely, as well as all representatives or representative constituencies of the industry, the private——

Mr. STUPAK. Well, that is why our first panel was so big. I know

I was harassed a little bit because of the size of the panel. But we

didn’t feel like we could exclude anybody because you all have a

stake in it. We want to get you together and get you talking.

Mr. HIRSCH. And I think that would be wonderful and that is—

I think that situation is what is going on there and that is a big

roadblock is if the parties aren’t speaking.

The other thing, some of the comments that were made earlier

about the requirements of DSH, some of those requirements preclude for instance, say, Don’s organization and us at Touro, we at

Touro, from potentially contracting for services and not having to

have patients go 60 miles, not having backlogs as well. So that is

something that I think is real. It ought to be considered.

And finally, one of the recommendations that I noted in terms of

access to physical rehabilitation services. We think that is an easy

lift. We are a hospital within a hospital now, and if we could convert without a 1-year penalty, we believe we could get certain

economies and increase access. So that is something that we are

working on.

Mr. STUPAK. Let me ask this question. We have talked a lot

about dollars following the patient, and that has been throughout

both sides of this dais today talking about it. However, the fear

that sort of comes out is as the dollars follow the patient, the private hospitals if you will, will only take the healthiest patient and

the less healthy, those with HIV’s, the prisoner patient, would be

left then to the public. And as we try to work this out, it is not

just this committee, but 435 of us in the House of Representatives

alone, it is a hard built-in bias, whatever you want to call it, to

break. People are afraid that if we do that, some people will skim

off the healthiest patients and leave the poorest. Care to comment

on that, Mr. Muller?

Mr. MULLER. We are taking them right now and would be glad

to.

Mr. STUPAK. That is what we are hearing from your lost revenue

and things like that.

Mr. MULLER. That is correct. We are a public hospital. Our mission is to take care of people. We have patients lined up every day

to come to West Jefferson. We have a continuum of care. If the

money followed the patient, it is a win-win. It is not a problem

with us.

Mr. STUPAK. And your comment, Mr. Quinlan?

Dr. QUINLAN. Yes, I would just reiterate the same thing. We are

already doing this, and I think what we really need to do is allow

people to vote with their feet and I think it is very important that

80

they do that. It helps us all keep better—there is a degree of competition that is healthy, and I would say that is true in any walk

of life, including medicine, and trust the common sense of patients

to take care of themselves best.

I would like to add one thing. Taking care of this primary care

network is probably the most important thing you can do to take

care of hospitals because let people do what each does best and no

more than that.

Mr. STUPAK. Mr. Smithburg, you want to comment on that?

Mr. SMITHBURG. Well, there is no doubt that the not-for-profit,

faith-based and private institutions are carrying their heavy loads

since the storm. There is no doubt about that. And after the storm,

we lost all of our employees, and our budget was cut by about $200

million. A good amount of that was actually redeployed to help support my colleague—institutions and caring for those patents that

would have otherwise been cared for in our institution. You see,

New Orleans has a tradition whereby between 90 and 95 percent

of the uninsured got their care at the Charity Hospital, and the

balance of the uninsured, the remaining five to 10 percent, was

spread around all of the other community facilities. Katrina turned

that upside down. And I don’t know that she leveled the playing

field but she certainly changed the playbook.

And so to the extent that rules, regulations can be addressed to

allow for what heretofore were non-allowable costs to be allowable,

at least for an interim period of time, I think that helps the entire

environment.

Mr. STUPAK. Thank you. Thank you again to the entire panel.

Mr. Whitfield, for 10 minutes, please?

Mr. WHITFIELD. Thank you, Mr. Chairman. Thank you all for

taking time to come and be with us today. As I was listening to

your testimony, I know Dr. Quinlan, you made the comment that

we can’t do this much longer and we are committed until the end.

I think, Mr. Hirsch, you talked about operating deficit and eroding

cash reserves; and I am assuming that all of you representing the

institutions you represent are in that same boat. Am I accurate in

that? I mean, are the eroding cash reserves in a deficit situation

and your emergency rooms are being overrun; and that is why I

know in the first panel so much emphasis was being placed on this

primary care or getting that going which would be of some assistance to you. But Dr. Quinlan, if things continue to go the way they

are going now, how much longer can you operate?

Dr. QUINLAN. That is a good question. What we have done is, unlike trying to make a statement, we realize that we are just not

going to put the patients in the middle. We are approaching the

point where we will have to restrict our policies because if we go

under, we can’t help anybody. And due to the size of our organization, the impact of that failure would be huge and the impact

would be felt by our colleague institutions throughout.

The difficulty is that it is all related. I think the key to us would

be that as we cut back, what we would have to do is probably not

keep up with wages and benefits; and this vicious cycle we are in

in losing personnel would be accelerated. And when that starts to

happen, that is what we are afraid of. You know, cycles, you are

81

either getting better or you are getting worse. And I feel we are

sort of hovering right now.

Mr. WHITFIELD. Yes. And do all of you face significant unemployment claims that you are liable for?

Mr. HIRSCH. Yes.

Mr. WHITFIELD. OK. And you, Dr. Miller?

Dr. MILLER. I am just not aware because a University is in a different situation than a hospital.

Dr. QUINLAN. Well, to your point, as I understand it, there was

significant relief from Congress for unemployment relief, but it did

not apply to not-for-profits.

Mr. WHITFIELD. Oh, it did not apply?

Dr. QUINLAN. It did not apply for not-for-profits. And in our case

it is particularly irritating because the unemployment claim we feel

was unfounded in the first place. So we didn’t get the relief but we

got the bill. That is a tough one to take.

Mr. WHITFIELD. Right. Chairman Stupak and I were talking during your testimony about the critical access hospital designation

which means you are reimbursed at cost plus. That would be a tremendous help to all of you making it happen immediately, correct?

Dr. MILLER. Yes, sir.

Mr. WHITFIELD. That would really be a significant help, wouldn’t

it?

Dr. MILLER. I just think one thing—and certainly not to minimize the issues of the hospitals because that is very critical. We

can’t forget the physicians in the equation.

To every extent, we all represent physicians as part of our organizations, but as little as it has been, there has been some relief

for the hospital but there has really been no relief for the physicians. So a patient is admitted through the emergency room and

there is a potential for the hospital to gain some reimbursement for

it. But that patient has to be seen by a physician or perhaps several physicians, and they are not getting reimbursed for it. And the

threat there is that we lose more physicians. It has been stated

earlier today that we are down to about 50 percent of our preKatrina physicians in region 1. It is significantly more severe than

that in Orleans Parish; and I am sure as you know in St. Bernard,

it is even more so. And unless we fix the physician situation while

we fix the hospital situation, we will wind up with wonderful hospitals and no doctors to take care of the patients.

Dr. QUINLAN. I would concur with that, but I would add that

with our new hospitals that we have acquired that were in trouble,

when physicians come in—these are voluntary staff—come in to see

patients, we pay them Medicare rates because we are trying to do

everything we can to keep them afloat.

If you do work, you need to get paid. I think that is not a bad

policy in general for the Government to observe.

Mr. WHITFIELD. Mr. Muller.

Mr. MULLER. Yes. If I could, we feel the same way about physicians. We have actually gained physicians at West Jefferson, most

from St. Bernard, some from Orleans Parish because we ended up

being dry.

But we have done a couple things, one is to share what we could

back to the physicians in terms of what we could legally to keep

82

their offices open, like Dr. Bertucci is trying to do. Second, we are

paying them for uncompensated care now in the emergency room;

but that is coming out of the hospital’s budget which makes our

deficit worse. So additional money for physicians is good.

Mr. WHITFIELD. Part of the responsibility of this subcommittee is

to come up with proposals, and I know that we have a gentleman

from Louisiana on the committee now who is certainly focused on

this issue. And I hope that as a result of this hearing we can come

forth with four or five proposals like critical access hospital and

something related to community health centers and other things to

try to expedite something through.

And many of you were talking about the nursing situation, the

shortage of nursing; and yet Mr. Koehl I believe talked about that

in Louisiana, the State had made a decision that they would not

allow nurses to come in from outside this State unless they were

licensed. Help me with this. Is that right or did you hear his comment or did you know anything about that.

Dr. QUINLAN. I heard his comment. I am not familiar with the

issue.

Mr. WHITFIELD. Well, maybe the next panel could address that

because it does seem a little bit odd that with such a shortage that

the State would, at least from the testimony from that witness, be

an obstacle to bringing more nurses in.

And then another thing that concerns me I think in someone’s

testimony and I forgot who, it mentioned in the testimony that on

9/11, 2001, that the Federal Government stepped in immediately

and provided some immediate assistance to hospitals in the New

York area as well as the Washington, DC area. And would anyone

want to elaborate about that? Mr. Muller.

Mr. MULLER. I would be glad to. We received a DMAT 12 days

after the storm. The DMAT went from positioned in Tennessee,

State of Mississippi, didn’t do anything, went back to Baton Rouge,

didn’t do anything, and we got it and we were the first DMAT.

Now, there is more that the Government could have done. I don’t

want to go back, but some of the things going forward could be

more grants for health care personnel.

Dr. QUINLAN. I think perhaps you are alluding to the HRSA

grants that after 9/11 hospitals closed—largely took people out in

anticipation of a wave of casualties that didn’t occur. That sort of

thing would be great for us and would also be important for the

future where—how else can the Federal Government get funds to

hospitals? They need to keep them afloat virtually.

That is the kind of thing that would help because I have run into

so many people who would like to help but were unable to for a

host of reasons that you know all too well, and the HRSA grant

possibility is giving the kind of flexibility to assess what the need

is and meet it in a timely fashion.

Mr. WHITFIELD. Yes, because I mean, the key thing now is being

able to be flexible.

Dr. QUINLAN. That is right.

Mr. WHITFIELD. And one of the frustrating things is health care

is so complex that it seems like every time you try to do anything,

your hands are tied or it is this regulation or that regulation. It

is micromanaged so it is very frustrating. And then our staff had

83

looked up on the DRA money for example, and I am not being critical of the State of Louisiana because with the catastrophe the size

of the catastrophe, but it is my understanding DRA money that the

State of Louisiana has is $140 million left still unspent, SSBG

money $142 million left unspent, DSH money currently $250 million unspent. I won’t even get into the uncompensated care poor or

the CDBG monies.

So hopefully this hearing will focus on some of these things, and

we can come forth with some sort of legislative proposal to help

move it along. But thank you all very much for being here. Listening to everyone you can see why the depression rate is up in Louisiana because it is so frustrating. Thank you very much.

Mr. STUPAK. Ms. DeGette for 10 minutes.

Ms. DEGETTE. Thank you, Mr. Chairman. I want to follow up on

some of the questions that the chairman was asking. We have been

talking about this notion of having some of the State’s DSH money

reprogrammed to follow the patients, and I have got to say for the

gentlemen who are here from the private hospitals, and I say this

a lot but I will say publicly again, thank you, because your hospitals treated so many of these patients and are continuing to do

so now with minimal reimbursements. And it really has been an

extraordinary community effort.

Dr. Quinlan, I have been in your hospital and seen some of the

work that you are doing. I am wondering if the three of you gentlemen, Dr. Miller, Mr. Muller, and Dr. Quinlan, can tell me about

what would need to be done to reprogram the State’s DSH monies

to follow these patients and what rules would we need to change

at the State and Federal levels. Dr. Miller?

Dr. MILLER. Well, again, currently the way that the State DSH

dollars are used, they basically are centered around patient care

that has been delivered in the safety-net hospital system with a

small amount going to other hospitals that provide significant

amounts.

Ms. DEGETTE. Believe you me, I know how DSH works. What I

am asking you is what Federal rules and State rules would need

to be changed to reprogram these dollars?

Dr. MILLER. Again, I am going to let the hospital CEOs talk for

the hospitals, and I will talk for the physicians because again, we

have a group of 200 physicians at Tulane University. And the rules

need to be changed to allow DSH payments go directly to health

care providers other than facilities, and that may be physicians,

nurse practitioners, and other health care providers.

Ms. DEGETTE. How long a period would you think that that reprogramming would need to occur?

Dr. MILLER. Well, it certainly needs to occur until we have a stable health care system back up in the region and decisions are

made about what we are going to have in terms of a safety-net hospital, how big it is going to be, and when it is going to be available.

And so that during the period of time when we are between where

we are now and where we are going, there needs to be some type

of alternative system.

Ms. DEGETTE. Two to 3 years is what they have been saying to

me.

84

Dr. MILLER. And again, that will depend on how quickly we can

get the system stabilized.

Ms. DEGETTE. Mr. Muller, would you have anything to add?

Mr. MULLER. Absolutely. There is a lot of money. The DSH

money in Louisiana is large. The reason we are saying let it follow

the patient is because it is there now.

Ms. DEGETTE. You know, again, I understand. What specific regulations would we need to change?

Mr. MULLER. My testimony had actually two things, one is the

Medicaid proposed rule that would allow the funds that were certified by—now, the certification is done by the public hospitals. And

so the certified funds are matched with Federal funds that come in.

We are asking the Federal rule to come directly to the provider.

Don’t go to the State. That is already a proposed rule.

The other thing is a certification of the public expenditures,

needs to be something that comes back directly to the provider; and

then we can deal with the physician. I think if we get a lot of that

money, which in our case would be multi-millions, we would share

more of the physicians.

Ms. DEGETTE. And I will ask you the same question I asked Dr.

Miller. For what period of time do you think that funding arrangement should occur, that the DSH money should go directly to the

hospitals and then onto the providers?

Mr. MULLER. I support having a major teaching hospital in New

Orleans. It will take 6 to eight 8 to have that come up. You got

others that will tell you other dates but——

Ms. DEGETTE. So you are saying the same thing he does as

long—for the period until that public safety-net hospital gets built,

you think that that should happen?

Mr. MULLER. Until we have a fully functioning safety-net system

outside of my hospital and Dr. Quinlan’s and others, we should

have those funds come directly to our hospitals.

Ms. DEGETTE. And for that period of time, would your hospital

commit to serving all of the safety-net patients including the ones

Mr. Stupak was talking about like the severely mentally ill and

people with a plethora of conditions and so on?

Mr. MULLER. West Jefferson has a continuum of care. We are

doing it today, we will do it until we run out of money.

Ms. DEGETTE. Dr. Quinlan?

Dr. QUINLAN. With regard to the proposed changes, what I would

like to do is give you a written response so it could be most helpful.

Ms. DEGETTE. That would be excellent. Thank you.

Dr. QUINLAN. Yes. The second piece on the timing, it should be

an event-based decision, not a calendar-based decision. Decide

what things need to be dealt with and then if there are certain

benchmarks or milestones that need to be reached——

Ms. DEGETTE. But what event would you base the decision on?

Dr. QUINLAN. I think the health care we designed—I have been

involved with this committee since its inception, and that I think

that is an important piece to determine what is the best way to do

this in an ongoing fashion, rather than trying to look backward,

how do we look forward and meet the needs of patients. And that

is——

Ms. DEGETTE. What event is that, I am sorry?

85

Dr. QUINLAN. Excuse me?

Ms. DEGETTE. What event would you base—you said it needs to

be an even-based decision.

Dr. QUINLAN. OK. Well, the event for example would be do we

have a written plan that is acceptable for all the major stakeholders how we are going to deal with health care in the next year or

two.

Ms. DEGETTE. Would that include LSU?

Dr. QUINLAN. Of course.

Ms. DEGETTE. OK. And do you support the concept of the rebuilding of a major safety-net hospital?

Dr. QUINLAN. Yes, I do.

Ms. DEGETTE. Mr. Smithburg, I want to ask you, from your perspective, do you think a temporary reprogramming of DSH monies

can be developed in a way that won’t prevent LSU from building

a public hospital in downtown New Orleans?

Mr. SMITHBURG. You know, you used the term, let the dollar follow the patient.

Ms. DEGETTE. It was actually Dr. Quinlan’s term that I adopted.

Mr. SMITHBURG. Indeed. Thank you for the clarification. It is a

much bandied-about term in Louisiana and I know in other States

as well. I think what has evolved is that through the Collaborative

that some of us served on, the Governor’s Collaborative on Health

Care Redesign, it tried to actually define what that is because one

of the fears, of course, is that what happens to the patient when

the dollar isn’t following them?

Do they fall back on a safety-net system that has historically in

the New Orleans region also been one of the primary academic

flagship institutions? And so the collaborative that we worked on

collaboratively came up with a plan that said, there just isn’t

enough DSH money for, based on actuarial studies, for there to be

enough money to follow all of the uninsured patients in the market.

In fact, it would cost another half-a-billion dollars conservatively

estimated. And then of course, Secretary Leavitt came through the

State and proposed another plan after he and Governor Blanco had

commissioned the Collaborative; and it called for an insurance plan

that did away with the safety-net hospitals, use those funds to insure about 40 percent of the uninsured. So it was kind of a perfect

storm as far as we were concerned in the public teaching hospital

arena.

So at the end of the day, clearly, Representative DeGette, something needs to be done to protect the business plans of the community hospitals that are doing an outstanding job. But I fear that if

it is a 3-year window or a 5-year window, when we get our permanent LSU VA Tulane hospital up and running in 5 to 7 years,

whatever it is, if then we say, OK, they are the safety net, they

are going to go back to taking care of 95 percent of the uninsured

as was the case pre-Katrina, we are right back to the two-tiered

funding system again and we will not have advanced the ball in

terms of health care reform and perhaps quality and the like.

So I think it is a dangerous proposition to enter into, without

some very tight accountability expectations and with an expectation that we are still working toward a real reform of the system,

not your grandmother’s Charity Hospital system again.

86

Ms. DEGETTE. I agree with that and I think these things can be

worked out because on the one hand, I think everyone agrees we

need to—and Mr. Chairman, maybe this is why we brought everybody here together because I think everybody agrees we need to reimburse the private hospitals who have been treating these patients. On the other hand, I think everybody, including the private

hospitals agrees we need to rebuild Charity and not in the same

footprint. The very concept of disproportionate share hospital,

which is actually an issue Mr. Whitfield and I have worked on extensively together, is a hospital that treats a disproportionate

share of uninsured patients. So that wouldn’t qualify for, except for

maybe lately, some of the private hospitals. So the very concept of

these monies would be that it would go to a public safety-net hospital. So whether the way we reimburse the private hospitals is

through DSH or some other method and the way we think about

Charity going down the road is not through a two-tier system. We

have still got to work this thing out, and I would think we should

be able to.

So I appreciate all of you working on it, and I neglected to say

hello to my old friend Mr. Hirsch who used to work at St. Joseph’s

Hospital in Denver, Colorado.

Mr. HIRSCH. Thank you.

Ms. DEGETTE. So anyway, I think this can be done, and I think

a lot of what is trying to be done by Congress and by the providers

and the local governments is trying to figure out a reimbursement

method that fits. It is sort of a square peg into a round hole or vice

versa, a scenario where you are trying to think of these pots of

money and how can you get them. But I don’t think anybody, and

Dr. Quinlan and the others can correct me if I am wrong, I don’t

see DSH money as a long-term solution to how we treat these uninsured patients.

Dr. QUINLAN. No, and I think what you are saying is exactly correct. We have to make sure that this is a comprehensive plan, not

reactionary or piecemeal because each one of these major factors

affects the others. This is a variable equation with no constants.

We have got to get something that we can build from and have a

plan that is sustainable, and I don’t think it is just about DSH

money and it is not just about primary care, it is about how do we

weave together a health care system that is coherent?

Ms. DEGETTE. And that health care system has to include an upto-date public safety-net teaching hospital and a clinical system

with all of the things we have talked about, electronic records——

Dr. QUINLAN. But the order in which you do that is very important. I don’t believe we start out with a hospital and then figure

out the primary care network that supports it and all the things

that go with that. I think it is how do we decide what our goals

are, what caliber of education do we want in that region, what caliber of care do we want for patients. Is it going to be something they

can walk to, bus to, or bicycle to, and will they be connected in a

way that you can actually manage the health of the population as

opposed to individuals on a sporadic basis? And we need to spend

the time to do it right up front, rather than rushing to just do

something on a very large scale. Now, I do think the short-term

needs are immediate and really need to be dealt with; but that is

87

not a substitute for a planned-for approach to a comprehensive solution.

Ms. DEGETTE. I agree. On the other hand, it has been 18

months, and so we need to start to come up with that plan pretty

darned quick.

Mr. HIRSCH. May I just add that I think it is important to remember that some of this also depends on the socioeconomics of an

area, specific locations. We have a lot of people in our area that are

underinsured as opposed to other parts of the country. And take

Touro, for instance. We are right in the heart of the city, so we are

an urban center; and people will vote with their feet. And so we

have to I think keep in mind that even before the storm as well

as after the storm certainly that much worse, all these private hospitals and some more than others have been providing a lot of free

care; and I think it is important to think about DSH or some other

mechanism well into the future, and I certainly support the rebuilding of an academic medical center. I look at it that way as opposed to just a safety net because the health sciences are so important to our city. But I think for a long time to come, hospitals in

urban areas, especially New Orleans, will be affected by the uninsured some more disproportionately than others.

Mr. MELANCON [presiding]. Thank you, Ms. DeGette. I think Dr.

Burgess is next up for 10 minutes.

Mr. BURGESS. I thank you and let me just start out with this observation. In October 2005, I did visit New Orleans as a guest of

East Jefferson and West Jefferson Hospitals, Ochsner Hospital.

They asked me to come down there because they had a plan that

they had worked out with their medical staffs to stay open, keep

their bondholders happy in New York, and it hinged around shaking some money loose from the Federal Government. And the hospitals were going to function as the intermediary through which

that money flowed, not only to keep the hospitals open, keep the

nursing staff employed, but also to reimburse the physicians for the

patients that they were seeing. At this point, when I talked to doctors down there, they had not had any mailed delivered in 2

months’ time, their accounts receivable were a shambles, and they

were basically living off of their kids’ college funds in order to keep

their practices open. I thought it was a very insightful, responsible

way to deal with a crisis the likes of which none of us had ever

seen before. And it is with some pain that I acknowledge we were

never able to deliver what seemed to be a very reasonable request

by the hospitals that stayed open through the storm and were still

standing after all of the trouble that occurred in the days after the

storm.

So let us go back for just a moment to the DSH funds. My understanding is there is about a billion dollars a year in disproportionate share hospital funds for the Louisiana area? Now, the $250 million that we always talk about, is that the money that was from

the last quarter of 2005 that wasn’t spent because Charity no loner

existed and is there an ongoing stream of DSH funds that are coming through the State for administration of care for insured individuals and underinsured individuals?

88

Mr. SMITHBURG. Dr. Burgess, I will take a crack at that, but that

may be a good question to ask of State officials on the next panel

as well.

But of the billion dollars roughly speaking about $600 million of

that goes to the public hospital system, the State public hospital

system, or it did before the storm. Right now it is about $450 million. And then a good chunk of it goes to the State psychiatric facilities and for rural hospitals. The breakdown could be provided by

the State officials, however.

Mr. BURGESS. So those dollars are now distributed to other State

facilities outside of New Orleans?

Mr. SMITHBURG. In the case of the LSU public hospitals, again

we had a pretty significant reduction in our DSH dollars after the

storm and then some that we previously had in New Orleans that

remain, we redeployed to some of our other hospitals that picked

up the slack in Baton Rouge, Lafayette, Home Louisiana, and then

outright cut.

Mr. BURGESS. I don’t now whether you noticed but it is a recurring theme with me that I am just astounded by the amount of dollars that have been pumped into a problem and again, we don’t

seem to have helped anyone on the ground. You know, I haven’t

been in public service that long, but it is enormously frustrating to

me. I get criticized at home because we are spending so much

money on this, and then at the same time, we have not helped anyone in the process. So I do wonder what happens to $100 billion

in appropriations that we sent down in 2005. I wonder what happens to $2 billion we sent to the DRA. I wonder what happens to

$2 billion a year that is available in DSH funds. And at some point,

I hope someone can give me some type of spreadsheet that will give

me some insight into that to at least give me some comfort. Someone, and I don’t remember who, talked about some of the barriers

for the critical access hospitals, but that seemed to me when that

discussion was going on, very similar to the plan that was outlined

by East Jefferson, West Jefferson, Ochsner Hospitals in October

2005. So I think it was actually Chairman Stupak who asked the

question, what can we do at this level to see that those funds actually go into those critical access hospitals and are there for immediate distribution? Does anyone have an insight into that?

Dr. QUINLAN. You will need to change the definition of eligibility.

They are size-limited. I think they can only have 25 inpatients. It

depends on how you define critical access. It was defined with a

rural environment in mind.

Mr. BURGESS. Well, perhaps we could denote a special category

for a special, once-in-a-lifetime catastrophe.

Dr. QUINLAN. I agree with you. It is called flexibility, and that

is what has been absent in all this.

Mr. BURGESS. Well, you are right on that.

Mr. MULLER. Dr. Burgess, can I follow up and show you what

could be done? West Jefferson is about eight miles from a critical

access hospital. St. Charles Parish is right next to Jefferson Parish

on the west bank. St. Charles Parish has a critical access hospital.

West Jefferson is not, of course.

Mr. BURGESS. Since you volunteered that information, Mr. Muller, let me ask you a question about the nursing. You said that you

89

are spending a lot more money on agency nurses than what you

would spend on nurses who were salaried and on your staff?

Mr. MULLER. About twice as much, yes.

Mr. BURGESS. Where does the agency get their nurses?

Mr. MULLER. All over the world. They get them from California,

Michigan, and everywhere else; and they fly in, we pay for them.

Mr. BURGESS. The question that Mr. Whitfield brought up about

the licensure issue, is that something that concerns you? Is that

going to be a problem with the agency?

Mr. MULLER. We have not had that issue with our agency

nurses, no.

Dr. QUINLAN. I believe that was referring to volunteers.

Mr. BURGESS. Just to volunteers? But if you have a nurse from

Dublin, Ireland, who is licensed to practice nursing in Ireland——

Dr. QUINLAN. That is a different story altogether. That is a visa

question which is something we could receive help on certainly. We

are planning on pouring a large number of nurses from out of the

country as well to meet this need, about 100, and we have been

shepherding this with the help of our delegation actually, shepherding their immigration along. But that is the sort of complexity

we are—if we could address that—because we are in the midst of

a national shortage that is just exacerbated by our particular situation.

Mr. BURGESS. But even if you are able to steal nurses from Detroit, Michigan, are you going to have the licensure issue that

comes up in a month’s time?

Mr. MULLER. No, I don’t believe so.

Mr. BURGESS. How does the agency get around that?

Mr. MULLER. They work out the requirements with the State

Board of Nursing.

Mr. BURGESS. So there is a reciprocity agreement?

Dr. QUINLAN. They are travelers and these are people that do

this for a living basically, at least for a period in their lives. So

they have licenses at different States as well.

Mr. BURGESS. One of the other issues that came up was that we

are not able to reimburse CRNA’s and physicians under some CMS

rules, that those funds have to go directly to an institution and not

to a provider.

Dr. QUINLAN. Right.

Mr. BURGESS. Again, is there some flexibility that we can provide

you that we are not that would allow you to pay these providers

and keep them in the area?

Mr. SMITHBURG. Hi, Dr. Burgess. I will be one of those to take

a crack at that. In fact, when I was your constituent in north

Texas, I worked for a hospital system where CRNA costs were indeed considered allowable by the fiscal intermediary which is the

same fiscal intermediary that oversees Louisiana as well. So there

seems to be some variability in interpretation of those allowable

rules in different regions of the country.

So it is one of the reasons why I feel very strongly it is something

we need to pursue.

Mr. BURGESS. So that must be a question for the third panel.

Dr. QUINLAN. We will get you a written response as well to see

if we can help you with your options.

90

Mr. BURGESS. Very good. Dr. Quinlan, just in the time I have

left, you talked about a coalition for the uninsured, your overall

health care redesign and developing a plan for the delivery of that

health care. Can you kind of just give us some insight as to where

that is in the development process, who is involved, and where it

is going?

Dr. QUINLAN. Yes, actually there are a number of players, many

of whom—it is a sort of a reconstitution of the previous redesign

plan that we just wanted to get back together and pose an alternative to what we see basically—I shouldn’t say happening, just

not happening—and many of the critical players on the ground including the PATH group that you saw, many of the hospitals including Tulane and East Jefferson and West Jefferson, most of the

major players, Dwayne from Charity. We are trying to come together in a way saying—I think the key piece for us is to do a pilot

program that involves only region 1. That is the area that took the

brunt of the damage. It is something that gets away from what was

alluded to as dueling spreadsheets. The smaller the area, the more

precise you can be with the information about the number of the

uninsured, where they in fact live, where the clinics need, and so

forth—logistical questions around how do you actually get the care

to people. And that is what we have been focusing on. I think by

the end of this month we probably should have something that is

a good start on an alternative system, and I would ask everyone’s

patience. Designing health care systems for coalition of people who

have day jobs is a difficult task but I think one that, given our

areas of expertise, that we can come up with a framework of a

credible alternative.

Mr. BURGESS. Let me just for one final thought if I could, we

have been focusing on the inflexibility at the Federal level, primarily through HHS and CMS. Are there any areas where you can

help us with the problem of flexibility that you are having more at

the local or the State level? Are there areas there where perhaps

we need to be focusing some effort, some energy?

Dr. QUINLAN. There is a recent, relatively small development but

is another bottleneck. What we are all trying to do is find bottlenecks and resolve them. As I understand it, our own State Licensing Board for physicians has outsourced that function, and we have

noticed there has been a significant delay now in getting the people

we finally were successful in recruiting into the State, getting them

licensed. Our most recent was a neurosurgeon who is on the payroll

but can’t get his license. And he trained at LSU, incidentally, and

he came from Texas.

Mr. BURGESS. Now wait a minute. We need him back.

Dr. QUINLAN. I know. I will swap you in two draft choices,

maybe.

Mr. BURGESS. Mr. Smithburg, you alluded to something about a

cap that is on the reimbursement for public hospitals under some

of the reimbursement. But that is largely a State-imposed cap, is

that not correct?

Mr. SMITHBURG. Dr. Burgess, that is correct. There is a State-imposed cap on Medicaid. There is a public program and a private

program, if you will, or all other——

91

Mr. BURGESS. I know my time has expired, but if we work on

flexibility from our end, will you help us work on flexibility at the

State level as well?

Mr. SMITHBURG. You can count on it. Yes, sir.

Mr. BURGESS. Thank you.

Mr. MELANCON. Thank you, Dr. Burgess. I recognize Mrs.

Blackburn.

Mrs. BLACKBURN. Thank you, Mr. Chairman. I thank you all for

your patience and your endurance today.

I am going to start out with a homework question for each of

you, and please understand, going back to the first hearing that we

did in New Orleans following Katrina where we were told if we can

just get some money, if you will just get us some money down here,

we can take care of this. And now we are hearing from you we

can’t find the money, we don’t know where the money is. I feel like

we are playing a game of Where is Waldo at some point. So pencils

and papers, here we go for the homework, and then if you will submit this to us we want to be certain that you all have access to

the funds you need, that you are able to do the work that you need

to do. But I think we also have to—we are not having a hearing

on the implosion of the Mississippi health care system, we are having one on the implosion of the Louisiana and New Orleans, and

so help us work through this with finding where the money is.

The DRA money, you all were appropriated $2 billion to Katrinaaffected areas. Louisiana got $918.2 million of that. They have

spent $778.7 million. There is $140 million left unspent. How much

have you applied for, how much have you received, and how much

are you waiting to hear from?

SSBG money. You got $220.9 million. $78 million has been spent,

$142 million is left. Same question, what did you apply for, what

did you receive, how much have you not heard about?

DSH, money. You are getting about a billion a year, $250 million

has been unspent, and then what are your outstanding balances

with DSH.

Workforce recruitment money. And Dr. Quinlan, I know you are

probably using this on some of those nurses that you are bringing

from——

Dr. QUINLAN. We are not. I21Mrs. BLACKBURN. OK. I thought

with all of these nurses that you were bringing from around the

world from places like Michigan, down south you might need an interpreter for them, right?

Dr. QUINLAN. Right.

Mrs. BLACKBURN. OK. Workforce recruitment money, Louisiana

has gotten $15 million. They have been sent $15 million. And then

the uncompensated care pool, $120 million has gone to Louisiana.

So kind of help us as a committee get our hands around, out of

that money what have you applied for, what have you received,

what have you not heard from, so we have a better idea of what

is outstanding. Now, the CDBG money, I know Louisiana—LSU

has a $300 million request in on that I do believe, and those are

specific to you all with LSU.

So anyway, those first five areas, answer those. Mr. Smithburg,

let me come to you quickly. I want to get these in before we go to

92

vote, so I am going to speed it up, Mr. Chairman, and see if we

can get through this.

LSU is looking at seven neighborhood clinics in New Orleans as

soon as you get through the zoning and the red tape. Can you not

get somebody with the city of New Orleans to help speed that process along for you all? What is the barrier there? Can you articulate

that for me?

Mr. SMITHBURG. I wish I could, and the next panel may have a

panelist that might be in a better position to answer that. It has

been an arduous process. We are riding a game plan along with

way with many of these issues, but I am hoping that we are within

100 days of being able to deploy these mobile clinics that have actually been sitting in our parking lot for some 8 months.

Mrs. BLACKBURN. Seven or 8 months the clinics have been sitting

there and all the other hospitals, out of the goodness of their heart,

are soaking up this care and the city of New Orleans is not approving these clinics, am I stating that properly?

Mr. SMITHBURG. Yes, ma’am.

Mrs. BLACKBURN. All right. Do we know if the problem is primarily with the State or with the city?

Mr. SMITHBURG. Oh, I know it is not with the State, and I believe it is at a point now where an ordinance has been passed to

grant a temporary zoning variance. So we may be a few months off

now.

Mrs. BLACKBURN. OK. On page 4 of your testimony, you talked

about the VA and moving forward on that. This is an issue that

has been highlighted time and again with us, so speak for the

record briefly about how you all are meeting the needs of the existing VA population.

Mr. SMITHBURG. Well, again, I think on the next panel you will

have a representative from the Gulf Coast on that.

Mrs. BLACKBURN. OK. Do you care to make any further comment?

Mr. SMITHBURG. I would note, and thank you for the question,

that the VA LSU Tulane collaborative is really one of the most exciting, innovative propositions to come before our market or really

any in a long, long time; and should we be able to receive the

CDBG infrastructure funding to get that launched, I think that is

going to be good for preserving, protecting, and growing medical

education as well as of course re-engaging more beds for the community.

Mrs. BLACKBURN. OK. I want to go to your comments about the

DSH payments on page 6 and you talked about the methodology.

And reading this, my thought was when you look at Louisiana’s

health care system, are you saying that it had some specific strains

and stresses and some amount of brokenness pre-Katrina and then

this has exacerbated the problem? And I would like to hear how

you would respond to that, and then I concur with Congressman

Burgess in looking at what we do to address the financing situation

that you all are dealing with. You know, the state of the system

pre-Katrina and then if there was an exacerbation of that situation, what degree you would place with that?

Mr. SMITHBURG. Clearly before the storm, there were broken

parts of the health care delivery system across the entire delivery

93

spectrum; and it boiled down to, of course, money, in my view anyway, that there were not enough resources to cover the needs of the

uninsured, the underinsured.

We are a small business State. Ninety-five percent of our businesses have 50 or fewer workers. So almost by definition there is

going to be a huge uninsured population. And while there is a

structure I believe in place, a knitted together fabric of safety-net

facilities, it is desperately under funded and since Katrina and the

fact that those antiquated facilities were wiped out, my brethren

here at the table have had to pick up the slack. And so it is exacerbated indeed.

Mrs. BLACKBURN. Well, we find it amazing that you are not able

to get approval in the city of New Orleans when your brethren at

the table have been picking up that slack. And to find that just

having been down there in the city holding these hearings and then

to see that there still has not been a real solution to that issue, it

is a touch of a head-scratcher, if you will, especially with the mobile clinics being sitting in New Orleans. I mean, it makes you

wonder, is there a still permitting problem? Are we still trying to

figure out who is going to have a hospital that is permitted? So,

we are concerned about that.

I have two more questions that I wanted to get to. I am going

to submit these to you. One deals with your outpatient facilities

and your long-term care beds, the other is going to deal with the

mental health component that you have mentioned. We will submit

those to you, and I am going to yield my time back so you can get

your questions in before we vote.

Mr. MELANCON. I thank the gentle lady from Tennessee. Let me

start by asking I guess everybody that is sitting at the table. Has

anybody from the Department of Health and Human Services come

and said to you, ‘‘I am here to help you. Tell me what it is that

you need for us to do so that we can help you get back up and running?’’ At all? Anywhere?

Mr. MULLER. I can start. Six days after the storm, actually Secretary Leavitt, Dr. McClellan, Dr. Gerberding flew into New Orleans, met with I believe Dr. Quinlan and myself and a representative of East Jefferson; and that was the start. I think since then,

we have had large meetings. I really haven’t gotten into the details

of those, Congressman, but no one has come to West Jefferson if

that is your question.

Mr. MELANCON. OK. Anyone else?

Mr. SMITHBURG. Yes, Mr. Chairman. I would like to note on the

upside, actually, right after the storm the U.S. Public Health Service, a component of USHHS, has been on the ground since the

storm, is still on the ground, and they have been miracle workers

in my view anyway. And also CMS, right after the storm, worked

with Tulane and LSU to deal with some of the graduate medical

education vagaries as a result of our facilities being wiped out.

There are numerous other issues that we have enumerated, but

there has been some help, yes.

Mr. HIRSCH. Mr. Chairman, after the storm, when Touro closed

and as we were starting to reopen, we actually had the help of the

Public Health Service, we had the 82d Airborne which was invaluable, we had some National Guard. We also had others to help us,

94

and from FEMA, we had the DMATs. I think part of the problem

was they left before the population came back but they were helpful while they were there. But that was way, way, way before we

had population. Colleagues mentioned some of the other aspects

with Secretary Leavitt and some of the other issues; and then I

think just recently with the staff of this committee coming, and I

think once before there was another group that came in to interview us and that is at least for me why I am here today.

Mr. MELANCON. Well, if I remember correctly, we are over 18

months since the storm and so what I am gathering here is that

immediately they came in and said we are here to help you but you

really haven’t seen any help since that. Would that be an honest

expression?

Mr. HIRSCH. Well, I think people——

Dr. QUINLAN. Are hard at work but they are stuck.

Mr. MELANCON. OK.

Dr. MILLER. The one agency, Congressman, that needs to be

lauded, it is not directly related to our patient care mission but certainly health care in general is the National Institutes of Health

who were there from the beginning, have supported the academic

missions of Tulane, LSU, and the other institutions that do research including Ochsner have been at the forefront, they have

been there for us, and they have come through. So I want to make

sure they get credit for that.

Mr. MELANCON. Dr. Quinlan, you said they were stuck. Can you

elaborate on that?

Dr. QUINLAN. Well, we have been to a number of meetings in

which many of the principals were at the table with the express

purpose of bringing resolution to some of the problems we had, but

it was unfortunately a continuing story of why they couldn’t do

things as opposed to how they would get it done and that is—this

idea of flexibility, the idea of having rules which are appropriate

to the situation as opposed to generic national rules. I think they

were as frustrated as we are by the process, and that is where the

idea of the goal of bringing people together in a non-partisan way,

that there are some solutions that need to be crafted with the administration and Congress working together to make sure that

these rules that were created years ago are actually appropriate for

today’s problems.

Mr. MELANCON. Yes, and I think if my understanding is correct

the way the system works the Secretary of the Department has the

ability to waive rules in special instances. Of course the inference

that I have been getting is this sets a precedent. The precedent has

been set. The storm was a precedent.

Dr. QUINLAN. Yes. If that isn’t a precedent-setting event, I don’t

know what is.

Mr. MELANCON. Yes, I agree with you. And I am going to submit

into the record some numbers that came from—Gulf Coast recovery

numbers—some of the frustration, so that my committee members

will know, there was some legislation in some of these appropriations that provided that no State could get more than 54 percent

of the monies that were appropriated regardless of the fact whether

we had 80 percent or not. There is monies that I think people need

to understand, there are three words, one is appropriated, one is

95

allocated, and the other is expended. Appropriated and allocated

are the most common you hear, expended is the one you hear least.

As of February 5, out of $110 billion, about $52.8 billion, and this

is across the board from the Federal Government from our appropriation, has hit the ground where it counts, and that is where the

people are struggling. We have done disaster cleanup, we have—

Small Business Administration—do you want to hear some really

poor statistics? Dr. Bertucci was talking about it. SBA has received

224,000-plus applications, 102,000 and some change of which were

declined, 87,000 loans have been approved, and only 62,000 loans

have been disbursed, totaling $2,932,000 since the storm, and SBA

was allocated $1.7 billion.

Let us talk about the Collaborative if we can real quick. The

three private hospitals. Each of you suggested that one way to

solve the health care access in the region is to reprogram the disproportionate share monies. How can we do this specifically, and

we can’t go on long because of time constraints. But how can this

be done and what rules or laws need to be changed at both the

State and the Federal levels in order for us to accomplish this?

Mr. MULLER. Let me just start and again emphasize the Medicaid proposed rule to come directly to the providers, us certify the

uncompensated indigent care, and have the money come direct,

don’t go through the State. That would be real easy to do.

Mr. MELANCON. OK. Would you all have any problem—as I appreciated this $250-$300 million are getting left on the table because of Big Charity being down. Let me walk through this

thought. I don’t want to take away the money and then have some

of the concerns that have been expressed here. But if there is someway to put a sunset over a period of time and allocate only that

money for the use, with that sunset coming and of course if the

time is passed and everything is gone—what I am trying to figure

out is how do I get this Big Charity building off the table so that

we can move forward with health care and planning for an education facility and a safety-net facility, whatever it may be? And

that is where I am trying to get. I don’t want to take control over

the State legislature or the Governor, whoever he or she may be,

and start dictating what they need to do in the State of Louisiana.

So is that some commonsensical or is that a problem? Mr.

Smithburg, let me start with you because you got the most at stake

here.

Mr. SMITHBURG. Well, certainly I am continuing to get traction

on that VA Collaborative is, I think, paramount in addition to—and

I agree with Dr. Quinlan—getting primary care system up and running. For some reason, health care redesign has been morphed into

what do we do with the Big Charity Hospital and the system therein? They are two totally separate issues.

Mr. MELANCON. Right.

Mr. SMITHBURG. And I think to the extent you can keep those

separate as you have suggested, I think the better for all of us.

Mr. MELANCON. I thank you. Any other comments on that? And

I agree. And that is where I am trying to get. I think that is the

way we make these incremental steps is to put that big building,

because that seems to be the problem or the mindset, off on the

side as we work on the immediate problems.

96

It looks to me like restructuring the State’s disproportionate

share monies will funnel at least some resources away from the

State’s charity system in the near term, and I have that concern

as I have expressed that your hospitals may not pick up your fair

share of the truly sick, even if the DSH dollars follow the patient.

Of course, the expression of cherry pick has been put out there. I

am new to the health care arena, but I am starting to understand;

and I need a firm commitment that you are not going to be turning

away people if we work out the DSH dollars and the services that

need to be applied in the area.

Mr. MULLER. I will make that commitment for West Jefferson. I

can’t speak for anyone else, but we are doing it, our board—and I

know Dr. Quinlan said here they are here but until we run out of

money, we are going to be there taking care of every patient that

walks in the door.

Mr. HIRSCH. I will just say for Touro, we have been doing it for

154 years, we will continue to do it; and we do it by the laws of

morality. When people come into the emergency room, our doctors

treat them irrespective of their ability to pay and will continue to

do it. And plus, it is the law of the land. But we do it because it

is the right thing to do.

Mr. MELANCON. The ER room is different.

Mr. HIRSCH. Right, but if there is a system of care in place that

we can participate in, absolutely, we will participate.

Mr. MELANCON. Then can I ask, is there some method that we

can document and track this money over time so that we are making sure that we keep all the players honest.

Dr. QUINLAN. We have to do that to be credible but I—the dollars

follow the patient is such a nice phrase, but I would like to add

it has to be enough dollars follow the patient because what we

don’t want is this——

Dr. QUINLAN. Well, it is an idea where it looks good and let us

walk away from it. If there aren’t enough dollars, then all this begins to fall apart.

Mr. MELANCON. Yes. My time is running out. We have got votes

I think we have got to go take. But let me ask you. You had the

Collaborative. It was sent, it was supposed to deal with region 1

of the State of Louisiana, and what we were going to do to try to

get that area of the State back up. If I understand it, all of you

were at the table participating in that original Collaborative,

butted heads, knock-down, drag-out—I have got a nodding no. But

the Collaborative went to DHH. So what you are saying is no, you

weren’t involved in the——

Dr. QUINLAN. We weren’t butting heads, it was a very collegial

approach. It was a clear——

Mr. MELANCON. Well, I——

Dr. QUINLAN. No, I am serious. We often think that it was some

sort of conflict. The need was so great and our common interests

were so great—yes, we wrung our hands because the question is

do we have enough to get the job done. And we were not given the

task with enough information to address the broader question.

That is why it ended up being a medical home issue. And it did

become—our direction became something that had to work with the

97

State and as we reconstituted this, we wanted to go back to region

1 and have something that we could be more specific about.

Mr. MELANCON. Yes, and I have got some further questions but

we need to go and vote. I want to thank you all for being here; and

if there is any contact or expressions that you need to make to myself or staff, please do not hesitate. We are going to try and work

through this thing over a period of time.

I will turn the chair back over.

Mr. STUPAK [presiding]. As Mr. Melancon said, we do have to

vote on the floor. We have 7 minutes left to vote, so we are going

to recess for one-half hour before our last panel.

Thank you all for coming. We will see you all back in about halfhour.

[Recess.]

Mr. STUPAK. The subcommittee will come to order.

We are ready for the next panel. The Honorable Leslie Norwalk,

Acting Administrator, Centers for Medicare and Medicaid Services,

Washington, DC; Dr. Fred Cerise, secretary of the Louisiana Department of Health and Hospitals; Dr. Robert Lynch, director of

the South Central Veterans Affairs Health Care Network; and Dr.

Kevin Stephens, director, City of New Orleans Health Department.

As is customary for the Subcommittee on Oversight Investigations of the Energy and Commerce Committee, I will ask you all

to rise and take the oath.

[Witnesses sworn.]

All witnesses answered in the affirmative. We will start with Ms.

Norwalk, Acting Director for Centers for Medicare and Medicaid,

for 5 minutes, for an opening statement,

STATEMENT OF LESLIE NORWALK, ACTING ADMINISTRATOR,

CENTERS FOR MEDICARE AND MEDICAID SERVICES

Ms. NORWALK. Thank you, Mr. Chairman, members of the subcommittee. On August 29, 2005, Hurricane Katrina struck the Gulf

Coast just east of New Orleans near Gulfport, Mississippi. The

storm’s tremendous impact was exacerbated by the failure of the

Lake Pontchartrain levee around New Orleans on August 30. With

the added blow of Hurricane Rita on September 23, 2005, more

than 4 million people were evacuated, tens of thousands of businesses, and over 100,000 homes were destroyed. Over 685,000 families were forced to relocate, and at least eight hospitals were ruined. Over 1,400 people died.

While the storms were devastating and tragic, Louisiana has the

opportunity to embark upon implementing the most far-reaching

improvements in their health care system since the charity system

was created hundreds of years ago in the early 1700’s. The heath

care system in New Orleans is in essence two systems, one for the

insured and one for the uninsured. There have been a series of reports and studies both pre- and post-Katrina that address the deficiencies of the health care system in Louisiana. There may be debate on the detail, but I would say that most everyone agrees the

system is broken and needs attention. It is time to level the playing

field and provide the poor and uninsured the same opportunities

that those fortunate enough to be insured have, the ability to receive quality care and choose their own health care provider.

98

The infrastructure, economics, and premise of the way the poor

are served in the charity system is outdated and no longer aligns

with today’s health care environment. What better way to roll out

a new system of care than to start in the great city of New Orleans

and then extend it to the entire State? This will require a major

educational effort and cultural change, but I believe as many others do that all Louisiana citizens will benefit from a new health

care system.

The public health and medical crisis across the Gulf Coast required immediate action to prevent the further loss of life. Medicare and Medicaid are health insurance programs, however, and

were not designed for disaster relief. This, combined with the extent of devastation in the region, posed significant challenges. On

August 31, 2005, Secretary Leavitt declared a Federal public

health emergency for the Gulf Coast region permitting CMS to

waive program requirements to ensure the region’s health care

needs could be met. CMS proposed to—proceeded to waiver modify

certain Medicare and Medicaid conditions of participation, certification requirements, and pre-approval requirements which enabled

the remaining health care infrastructure to deliver vital services.

CMS also quickly established a special multi-State Medicaid

demonstration to help ensure continuous access to health care services for displaced hurricane victims. Individuals contemporarily enroll in Medicaid or SCHIP in host State and receive benefits for up

to 5 months. In addition, the Deficit Reduction Act gave CMS authority to pay the non-Federal share of regular Medicaid and SCHIP expenditures in certain counties and parishes.

Finally, States were able to participate in an uncompensated

care pool to help cover medically necessary services for evacuees

without health insurance coverage.

By January 31, 2006, CMS had granted approval to a total of 32

States or territories to participate in these demonstrations. Of

those, eight were also approved for the uncompensated care pool.

Turning now to funding, HHS has made available more than

$2.8 billion in Katrina-related funding in fiscal year 2006 to help

respond to the health-related needs of people affected by the disaster. This includes $2 billion appropriated by the DRA for payments

to eligible States. To date, over $1.75 billion has been made available to 32 States for a range of health care items and services, associated administrative costs, uncompensated care costs, and Medicaid and S-CHIP costs in the immediately affected Gulf Coast region.

Last month, HHS also made available an additional $160 million

for payments to facilities facing financial pressure because of regional wage changes not reflected in Medicare payment systems.

Finally, on March 31, just a couple of weeks ago, CMS provided a

$15 million grant to promote professional health care work force

sustainability in the greater New Orleans area.

I want to emphasize that when we distributed these funds

among the States we first consulted with them on their needs and

provided funding based on their requests. Specifically we have provided $831.6 million to Louisiana. Of this amount, Louisiana used

$130.9 million to pay providers for claims under its uncompensated

care pool. The vast majority of funds provided to Louisiana, nearly

99

$700 million, was through section 6201 of the DRA. This money

was used by Louisiana to pay its matching obligation under the

State Medicaid Program. By relieving Louisiana of its Medicaid obligation, it is effectively freeing up the mountain of State funds.

Although the challenges of addressing Louisiana’s immediate and

longer-term health care needs have been daunting, they present

real opportunities. Working together, we have the opportunity to

transform the Louisiana health care system. A recent Public Affairs Research Council describes the system as ‘‘outdated and uncommon, a system that begs for reform.’’

The great tragedy and challenges brought by Katrina galvanized

a unified movement to improve health care for the people of Louisiana. CMS has been an active partner in this effort from the outset

providing dedicated staff, technical advisors, access to data, and

other assistance to assist Louisiana in a health care redesign collaborative and developing a practical blueprint for evidenced-based,

quality-driven health care system in Louisiana.

The Collaborative unveiled its blueprint with a concept paper on

October 20, 2006, and CMS has been working steadily with them

since that time to clarify key elements. CMS and HHS have

pledged support for a large-scale Medicaid waiver and Medicare

demonstration to bring about the Collaborative goals, provided they

are consistent with our mutually agreed-upon principles for rebuilding.

CMS will continue to engage the State in discussions over how

the demonstrations and waivers might be structured and make expertise available to assist in their efforts.

Thank you and I look forward to answering whatever questions

you might have.

[The prepared statement of Ms. Norwalk appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you, Ms. Norwalk. Dr. Lynch, please, for 5

minutes.

STATEMENT OF ROBERT LYNCH, M.D., DIRECTOR, SOUTH

CENTRAL VETERANS AFFAIRS HEALTH CARE NETWORK

Dr. LYNCH. Mr. Chairman and members of the committee, I want

to start by thanking you for the universal support the U.S. Congress has given to the Department of Veterans Affairs in its rebuilding and recovery efforts not only in southeastern Louisiana

but along the entire Gulf Coast region. Through that support, our

veterans and the VA employees living along the Gulf Coast continue to make great strides along the road to recovery.

Hurricanes Katrina and Rita challenged our country with two of

its greatest natural disasters. While Hurricane Rita did little permanent damage to VA’s infrastructure, Hurricane Katrina, on the

other hand, produced unprecedented damage to its medical center

in New Orleans. Our medical center, the community we serve, and

the homes of veterans and employees sustained destruction on a

monumental scale.

Today I will describe our ongoing and planned health care restoration efforts in New Orleans. I will speak first to VA health care

recovery activities and its future plans in New Orleans. Next I will

address the Memorandum of Understanding that was signed beVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00103 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
100

tween VA and the Louisiana State University System and actions

associated with it. Finally I will discuss VA’s relationship with

LSU and the State of Louisiana as the State of Louisiana progresses in its analysis of State health care reform.

Forty-eight hours following Hurricane Katrina’s landfall, as

quickly as weather conditions permitted, the VA damage assessment team was dispatched to the Gulf Region to survey the eight

facilities at New Orleans, Louisiana, Biloxi, Mississippi, and Gulfport, Mississippi. At New Orleans, the team found the VA facility

initially weathered the storm with minimal damage. However, following the hurricane, water from the breached levees flooded the

entire medical district and the medical center. Flooding of the basement and the sub-basement in the main building of the VA Medical

Center rendered it inoperable as these areas housed the facilities,

major electrical, mechanical, and dietetics equipment.

The Medical Center’s longstanding academic partner, the LSU

Health Care Services Division, had Charity and University Hospital sustain similar types of damage. While University Hospital

has reopened, Charity is permanently closed.

In the immediate aftermath of Hurricane Katrina, VA’s commitment to the Gulf Coast region’s veterans remains steadfast. VA deployed a system of 12 mobile clinics, in coordination with local authorities, to provide urgent and emergent care to include first aid,

immunizations, and prescriptions. Specifically in Louisiana, mobile

clinics provided care at Baton Rouge, Hammond, Jennings, Kinder,

Lafayette, Lake Charles, Laplace, and Slidell. Those VA mobile

clinics treated 5,000 veterans and over 11,000 non-veterans in the

aftermath of Hurricanes Katrina and Rita.

To address the health care of veterans in the greater New Orleans area, the VA expanded the capacity of its existing communitybased outpatient clinic, or CBOC, in Baton Rouge. We converted

the ninth and 10th floors of the Medical Center, formerly the Nursing Home in New Orleans, into exam rooms and began offering primary care services there in December 2005. Three months later, in

March 2006, limited specialty care clinics were also added to those

units.

Temporary facilities located in Laplace, which is in St. John’s

Parish, and Slidell were leased as an alternative—as alternative

sites of care. Tents were erected in Hammond to provide basic services.

With the support of Congress, the VA was authorized to accelerate the activation of community-based outpatient clinics where part

of our capital asset—long-term capital asset plan and opened a permanent clinic in Hammond in August 2006. We remain in leased

space in Slidell and plan to construct a permanent clinic there in

3 to 5 years. The St. John’s community-based outpatient clinic is

anticipated to open in October 2007.

Basic outpatient mental health services are provided at each of

the clinic locations. Currently inpatient mental health services is

coordinated with the Alexandria, Louisiana VA Medical Center.

Dental clinic services were re-established in April of 2006 by leasing space in Mandeville, Louisiana. In Baton Rouge, we leased the

old clinic building there in 2006 and are using that facility to house

101

the medical center’s clinical laboratory as well as select administrative support functions.

As a result of these actions, the southeast Louisiana veterans’

health care system, formerly known as the New Orleans VA Medical Center, served over 29,000 veterans in fiscal year 2006. This is

72 percent of the previous year’s workload in the year before Hurricane Katrina. In fiscal year 2007, workload to date is growing at

an annualized rate of 10 percent over last year and is expected to

increase as housing is restocked in the area.

To help our staff and support the community, VA worked with

its academic affiliates, Tulane University School of Medicine and

the LSU School of Medicine to place VA faculty, medical staff, residents, and student trainees at VA medical centers throughout our

Business 16 network. With the VA’s inpatient units shut down, 102

medical center employees that includes nurses, health technicians,

medical support assistance, operating room technicians, and certified registered nurse anesthetists and radiology technologists

were temporarily deployed in July 2006 under a FEMA task order

to provide critically needed staff to support local health care institutions.

In terms of future VA services in New Orleans, we continue to

explore our long-term options for re-establishing surgical capabilities and inpatient services in New Orleans. In the interim, these

services are coordinated through sister VA medical centers in Louisiana, Mississippi, and Texas, as well as selective referrals to community hospitals in the New Orleans area at VA expense. We are

actively pursuing options for expanding our outpatient mental

health services as well to meet both current and future veteran

needs.

Projects for the re-establishment of radiology and outpatient

pharmacy services on the grounds of the old medical center are

under way and expected to be completed later this calendar year.

In preparation for the construction of a replacement medical center, VA has initiated its space planning process. Interviews of architecture and engineering firms to design the new facility are complete. A selection is expected this spring. The replacement medical

center is expected to provide acute medical, surgical, mental

health, and tertiary care services as well as long-term care.

As required by Public Law 109–148, VA compiled and presented

its long-term plans for the construction of a replacement hospital

in New Orleans in February 2006. That report is entitled ‘‘Report

to Congress on Plans for Re-establishing a VA Medical Center in

New Orleans’’. In that report, VA identified its principal objectives

regarding the New Orleans area as being not only to restore services to Veterans in the most cost-effective manner but also to assist

in the restoration of health care and medical education in New Orleans. Recognizing the successful history for sharing and collaboration between VA and LSU health care services division, as well as

the potential for future efficiencies, the report included the construction of facilities on a single campus with support services

shared with LSU was the preferred option.

As a result of the report, VA and LSU leadership signed a Memorandum of Understanding agreeing to jointly study state-of-the-art

health care delivery options in New Orleans. This MOU established

102

the foundation for developing a collaborative approach to operating

a replacement facility.

From that, a group of experts from both organizations, called the

Cooperative Opportunity Study Group, or COSG, was charged with

determining if any mutually beneficial sharing could occur between

the two organizations. In the group’s June 2006 report delivered to

the former VA’s Under Secretary for Health, it concluded that both

organizations could leverage their strengths, provide significant operating efficiencies, and allow us to better serve our beneficiaries.

Congress subsequently authorized VA to pursue the project to replace the New Orleans facility as a collaborative effort consistent

with the COSG report.

In September 2006, the Collaborative Opportunities Planning

Group, or COPG, was established to develop an operational plan

for sharing between the organizations based on the foundations of

the COSG. The COPG is co-led by VA and LSU representatives,

representatives of the Tulane University School of Medicine and

the State of Louisiana Division of Administration are also part of

this group and its planning discussions.

A critical component of the charge of the COPG is to determine

if the proposed sharing options identified in the regional COSG report are viable, and if they are, to begin the work of developing

timelines and formulating the framework for space planning and

design for a joint replacement facility. To date, the COPG has

made significant progress by reviewing literally dozens of clinical

and administrative functions to determine if the function would

best be provided via a sharing arrangement, between VA and LSU,

or independently owned and operated by both entities.

The final report of the COPG is to be presented this September.

Mr. STUPAK. Doctor, can you summarize, please?

Dr. LYNCH. Yes, please. VA remains excited about the MOU with

the LSU in the context of health care redesign in Louisiana. We

support all the principles behind it. At the same time, health care

redesign seems to face some obstacles and delays in Louisiana. Because of this, we are committed to exercising due diligence to our

veteran beneficiaries and to the taxpayers and are concurrently exploring other options for initiating reconstruction of our VA Medical Center in southeast Louisiana. In furtherance of this, we plan

to begin a site search to identify alternative locations in the near

future while we continue our work with LSU on our collaborative

plans.

In conclusion, Mr. Chairman, we consider the committee and

Louisiana delegation to be partners with VA and seeing the southeast Louisiana veterans continue to receive high-quality health

care that they have come to expect and deserve. Congress appropriated over $1.2 billion supplemental funding for recovery and rebuilding efforts in VA. This includes $625 million for the construction of our placement medical center in New Orleans.

Our commitment to outstanding health care for veterans will

continue as well our collaboration/exploration with LSU.

Thank you for the opportunity to be here today. I appreciate it,

and I will take the opportunity to answer any questions.

[The prepared statement of Dr. Lynch appears at the conclusion

of the hearing.]

103

Mr. STUPAK. Thank you. Dr. Cerise.

STATEMENT OF FRED CERISE, M.D., SECRETARY, LOUISIANA

DEPARTMENT OF HEALTH AND HOSPITALS

Dr. CERISE. Thank you, Mr. Chairman, and members of the subcommittee for the opportunity to testify today on the continuing

concerns and immediate health care needs in the New Orleans region.

Let me start by saying I have heard Congressman Dingell’s directive earlier this session and commit to you that I will call Secretary Leavitt’s office upon leaving here today and discuss follow

up of this discussion that we are having here.

You have heard much about the loss of compassion in the health

care delivery system in the New Orleans region, from preventative

services to acute care, hospital services to post-acute and long-term

care services.

Our challenge is twofold, to first meet immediate needs while

second, ensuring that in the process we support the rebirth of a

better overall system of care, particularly in the Katrina and Rita

affected areas. This vision is for a system to replace the loss capacity. It is one that adheres to the aims set forth by the Institute of

Medicine. It is a patient-centered system predicated on access to

primary care coordinated among providers, supported by a system

of electronic medical records to improve safety, quality, and efficiency.

The current gaps in the delivery system created by Katrina have

provided the opportunity for that type of system’s change. As we

move forward with the health care reform for Louisiana, we must

also ensure that the New Orleans region can recover to meet our

citizens’ health care needs today.

My testimony today will focus on the short-term health care

needs in the New Orleans region. Louisiana appreciates the assistance Congress has provided for health care. For example, $680 million in Medicaid relief and $134 million in uncompensated care reimbursement which came at a critical juncture in early 2006 as the

State was implementing budget cuts in almost all programs including health care. The State actually had a rule that we had issued

cutting reimbursement payments to Medicaid providers by roughly

10 percent across the board.

Subsequently the State has been able to provide assistance including $52 million in uncompensated care for community hospital

services rendered during fiscal year 2006, $120 million in uncompensated care for community hospital services during State fiscal

year 2007, $38 million to increase Medicaid payments to hospital

and in an attempt to sustain capacity for post-acute care, direct

service workers caring for elderly and individuals with disabilities

in the Medicaid program received a $2 an hour salary increase at

an annualized cost of $110 million.

Still more assistance is needed to meet the extraordinary needs

that we are faced with. I am going to summarize a few areas. You

have heard about these earlier today as well.

Primary care capacity. Using Federal standards, we have a

shortage of 49 primary care physicians in the New Orleans region

available to serve the Medicaid uninsured population which is afVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00107 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
104

fecting all other components of the system. We propose to establish

primary care capacity in a manner consistent with the redesigned

system of care envisioned by the Health Care Redesign Collaborative by sustaining operational support provided by SSBG funds

to safety-net clinics and by funding new medical homes of sufficient

size and scope to meet the needs of the uninsured population.

Still roadblocks to increasing access to outpatient care include

the inability to use disproportionate share, or DSH, funding for

non-hospital based care and the inability to use DSH to reimburse

for physician services remains an issue. In order to receive DHS

funds today, health care services must be funded through a hospital. While the State has created great capacity in a clinic system

associated with public hospitals, current DSH rules limit flexibility

and development of further outpatient capacity.

We propose that the State be allowed flexibility to use DSH

funds to support non-hospital based clinic care and allow DSH

funds for physician services. This solution does not require additional Federal funding, just flexibility.

In terms of workforce recruitment retention, you have heard a lot

about this already. The New Orleans region is experiencing shortages of physicians, behavioral health providers, nurses, other professional staff, and competition for workers is high including rising

labor costs, lengths of stay in hospitals are increasing. I would

point to two solutions. You have heard about one in terms of the

Medicare wage index. The Medicare calculations do not account for

the unforeseen labor cost increases seen in the region post-Katrina.

HHS awarded Louisiana $71 million one-time grant to address

this. That is certainly helpful. Hospitals and skilled nursing facilities estimate this is about one-third of the need to address this increased wages relevant to the Medicare program.

Second, to date the State has received a $15 million grant from

HHS to fund the Greater New Orleans Health Services Corps to

provide incentives for physicians, dentists, nurses, and other professional staff to meet the needs in the region. We requested funding for this program. We think that program would cost—our estimates are $120 million to fully supply and meet the needs in the

region today, and so we would ask for that support. In exchange

for the financial support, providers must commit to serve in that

region for 3 years.

And then finally in the area of behavioral health, the shortage

of community services that we had prior to Katrina was exacerbated by the hurricane resulting in greater reliance on an alreadycrowded hospital emergency infrastructure. In addition, we have

lost psychiatric beds in the area. We propose funding and implementation of a 5-year plan for behavioral health services and expending Medicaid coverage to people with severe mental illness.

This 5-year plan would include direct treatment dollars for the full

continuum of behavioral health care as well as continued funding

of the existing FEMA disaster relief grant for crisis counseling.

The concept paper put forward to HHS also included a request

to include those individuals with serious mental illness as a Medicaid eligible population. This would allow us to provide broader access to services for these individuals.

105

I have outlined other needs in my written testimony, including

such things as support for implementation of electronic records as

was pointed out earlier today, as well as section 8 housing vouchers

to be used with permanent supportive housing for people with developmental disabilities.

I appreciate your continued interest in the recovery of the greater New Orleans region. The State has worked collaboratively with

Federal the city officials as well as community providers, and I

have heard your directive earlier today and commit to continue this

work to address those critical needs highlighted today.

Thank you for the opportunity to testify.

[The prepared statement of Dr. Cerise appears at the conclusion

of the hearing.]

Mr. STUPAK. Thank you and thank you Dr. Cerise. I noticed you

have been here all day, so I appreciate that. Dr. Stephens?

STATEMENT OF KEVIN U. STEPHENS, SR., M.D., DIRECTOR,

CITY OF NEW ORLEANS HEALTH DEPARTMENT

Dr. STEPHENS. I am Dr. Kevin Stephens, the director for the New

Orleans Health Department. To Chairman Stupak and the Ranking Member Whitfield, and distinguished members of the Subcommittee on Oversight and Investigations, thank you for inviting

me here today to speak on the state of health care in New Orleans.

Mayor C. Ray Nagin and his administration welcome dialog, and

we are hopeful that this hearing will spur positive change as we

work not only to rebuild our city’s infrastructure and neighborhoods, but also to develop a state-of-the art, modern health care delivery system.

I would like to acknowledge and thank Secretary Michael Leavitt

who was represented by Ms. Norwalk, for all the support that the

Department of Health and Humans Services has given to the City

Health Department specifically. And in fact, Secretary Leavitt—I

first met him on August 24, 2005, less than 1 week before Hurricane Katrina. We both visited the Pontchartrain Senior Citizen

Center and spoke with community leaders and senior citizens

about Medicare. We developed a professional relationship which

has continued in the aftermath of Hurricane Katrina, and additionally I would like to thank Dr. Cerise for his support of this city as

well as Dr. Lynch of the Veterans Affairs; and we are looking forward to having a long, productive relationship with the Veterans

Affairs and we are looking to strengthen our partnership with

them.

I want to just three or four things here, talk about the pre-existing problems and Katrina’s impact on it, the role of the New Orleans Health Department, mental health, and some recent mortality

trends that we have observed.

Since the storm and floods, only four of the eight hospitals in the

parish have reopened at decreased capacity. The City Health Department which employed more than 200 health professionals lost

more than 60 percent of its staff and closed eight of its clinics. Yet,

as traumatic as this devastation was, it has given us a unique opportunity to redesign and rebuild a model health care delivery system that corrects the gaps and failures of the past.

106

The New Orleans population, which was more than 450,000 people before Hurricane Katrina is now estimated to be between

230,000 and 250,000 citizens. Even with this temporarily reduced

population, approximately 20 percent of our citizens or more than

30,000 people are uninsured. The city has a rapidly increasing indigent worker population, some of which speak no English. In providing health care services, these citizens has placed such a tremendous burden on our health care providers of the surrounding parishes and those that are in New Orleans.

Another challenge has been the decrease in the number of health

care providers. According to a 2006 Blue Cross/Blue Shield report,

New Orleans had 2,038 physicians pre-Katrina and only 510 physicians post-Katrina. This is a 72 percent decrease which highlights

the relative loss of medical professionals. Other evidence can be

found in a study conducted by the Louisiana State Department of

Health and Hospitals where out of 202 primary physician who responded, only 154 were still practicing, and only 73 accepted patients dependent on Medicaid as a source of payment. Clearly,

more providers are needed in Orleans Parish, particularly those

who care for the uninsured and underinsured.

There is a similar story as it pertains to the capacity of Orleans

Parish hospitals. According to the 2006 report by

PriceWaterhouseCooper, New Orleans had 2,258 beds before

Katrina and according to a recent report by Metropolitan Hospital

Association, Orleans Parish now has 625 staffed beds, a reduction

of 75 percent.

Fortunately, our neighboring Jefferson Parish, they have lost far

less capacity; and with its number of hospital beds decreasing from

1,922 to 1,636, Jefferson Parish hospitals have been responsive in

absorbing patients from Orleans Parish. But this not negate the

critical need for more hospital beds to open in Orleans Parish and

to meet the needs of our ever-increasing population.

The City of New Orleans Health Department must play a significant role in improving the health of the residents of our city. We

need to full staff our clinics and expand the offering to include all

preventative and primary care services. Since health outcomes are

largely controlled by personal lifestyle choices, public health professionals must play a critical role in educating the public about

health risk and behavior modification. We think this is the ultimate solution because that is how you really decrease primary

care—and hospital beds is by getting people to change their personal lifestyle choices.

Mental health, the provision of mental health services pose a

particular challenge in this region, an that has experienced severe

loss, death, and destruction. And so we think that despite this

need, it has fewer than 50 hospital beds for inpatient psychiatric

care, about 17 percent pre-Katrina capacity.

And finally, the mortality rates, as a doctor and health care provider, I noted a dramatic increase in the number of death notices

in the newspaper. This observation was supported by further

deaths of two of the staff people of my own department within a

short period of time and anecdotal accounts of families going to

more funerals than ever. Due to the lack of State data for this

problem, we engaged in a count of death notices in the Times-PicaVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00110 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
107

yune and compared it to a parallel period before Hurricane

Katrina.

To validate our methodology, we compared the number of deaths

notices printed in the newspaper in 2002 and 2003 compared to the

published State data from death certificates. In both cases, we

noted the difference between the two was not statistically significant. In 2003 we averaged 924 deaths per month according to

death notices. In contrast, for the first 6 months in 2006 we averaged 1,317 death notices per month. This means that approximately 7,902 citizens expired within the first 6 months of 2006 as

compared to 5,544 for the first 6 months in 2003. The observations

as well as the severity of health problems treated in our Health Recovery Week strongly suggest that our citizens are becoming sick

and are dying at a more accelerated rate than prior to Hurricane

Katrina.

We believe these findings are significant, but the city has

reached it limits as to its ability to research this important issue.

It is critical that the State and Federal agencies immediately study

these trends as well as the cause of death. This information can be

used to develop appropriate intervention.

In conclusion, clearly the health care system in New Orleans is

far from normal, and we are working diligently to make improvements. The City of New Orleans Health Department has three proposals to comprehensively and systematically rebuild our health

care system.

Number 1, all citizens should have immediate access to primary,

preventative, and mental health care services. People are suffering

now and we must respond.

Number 2, the city needs more hospital beds. The shortage of

hospital beds has reached a crisis proportion and on some days ambulances have to wait hours on emergency room ramps to offload

patients.

Number 3, we must receive the resource to rebuild the New Orleans Health Department. Our Health Department is a necessary

partner in the repair and reconstruction of the city’s health care

delivery system.

Our health system has serious inadequacies and gaps prior to

Hurricane Katrina, but the storm ruptured it to a point that many

more of our citizens have lost access to health care services.

I would like to thank you for your attention to New Orleans, and

we look forward to working with you to solve these problems.

[The prepared statement of Dr. Stephens appears at the conclusion of the hearing.]

Mr. STUPAK. Thank you, Dr. Stephens. Doctor, if I may, you indicated and I was a little surprised by the statement that the number of deaths since Hurricane Katrina was not statistically significant, yet we have had another panel say they are up about 48 percent. I think if you look at the Times-Picayune newspaper obituaries before Hurricane Katrina, you had about 30 a day. Now you are

averaging about 60, 61 a day. That is a rather significant increase

in the number of deaths per month since Hurricane Katrina.

Dr. STEPHENS. Yes, and I said they have been significant. I didn’t

say they were insignificant.

108

Mr. STUPAK. Then I must have misunderstood you. My apologies

if I did. Let me ask you this. In the Times-Picayune, there was an

article, Friday, March 10, about the trailers that came 9 months

ago. There are eight exam rooms that were supposed to be strategically deployed around the city and we are still waiting for a permit.

Can you tell me what is the status of that?

Dr. STEPHENS. Well, the permitting is not in the prevue of the

Health Department——

Mr. STUPAK. I realize that.

Dr. STEPHENS. I can tell you what I know.

Mr. STUPAK. OK.

Dr. STEPHENS. In the city council meeting a week ago they

passed the zoning variance they needed for the placement of the

trailers in the school zone.

Mr. STUPAK. We are all set to put those trailers out there?

Dr. STEPHENS. Well, I am not sure where they are in the process.

I know they got the biggest hurdle which is getting it through city

council. But as I reflect back upon it, a couple things, one——

Mr. STUPAK. You have to provide a certificate as public health?

Dr. STEPHENS. No.

Mr. STUPAK. OK.

Dr. STEPHENS. I have nothing to do with that process at all. But

when it came to my attention, I did go and ask what we could do

to help.

Mr. STUPAK. Dr. Cerise, there was a question earlier or a statement earlier about the nurses, volunteer nurses coming in. I think

it was with Operation Blessing where at the end of the month they

can that be resolved between now and then end of the month?

Dr. CERISE. Listening to the earlier testimony, I checked with the

Board of Nursing and the process—and they are not aware—they

are not denying nurses access to the area. Unless there is a

credentialing problem, inability to verify credentials or something

like that, they are not doing that; and they told me that they don’t

have plans to do that.

Mr. STUPAK. Would you get Mr. Koehl after this and get this

thing——

Dr. CERISE. We will make sure we make clarify that. And if I

could on the death rate, we did our office of Vital Statistics did look

at this a little bit over a year after Katrina, and it is tough to come

to a rate when you don’t know the population for sure. And so we

were able to do some comparison before in 2004–05 and 2005–06

and the number of deaths of people from New Orleans who are residing in Louisiana, where we would have a death certificate on

them, was about 41 percent of the deaths in a prior year period.

We also have that broken down by cause of death and we——

Mr. STUPAK. Right, but I understand we have less people now in

New Orleans than we did before. So if it was 31 deaths before with

a full New Orleans and now we got half of New Orleans and we

got 60 deaths, that is a tremendous——

Dr. CERISE. That is where I said the difficulty is with a moving

population, but looking at absolute numbers, it was about 41 percent a year after.

Mr. STUPAK. Would you work with Dr. Stephens to get that one

resolved? Ms. Norwalk, in your testimony on page 4 you indicate

109

CMS established a special 1115 Demonstration Waiver Program to

help insured, continuity of health care services for victims of Hurricane Katrina, basically the evacuees, correct?

Dr. CERISE. Absolutely.

Mr. STUPAK. Why can’t we put a program——

Ms. NORWALK. That is the way that the DRA funds work it——

Mr. STUPAK. Why can’t we do a special demonstration project,

waiver 1115 for all of New Orleans right now? We have a number

of things besides money. We have community health centers that

have been applications pending before Hurricane Katrina struck

still not approved. We have got the volunteer nurse issue which I

think we might have resolved. We have an underserved area, we

need health information technology, we need PATH to specialty

services, workforce development, you name it, we got a number of

problems. Why can’t we get together and do a special demonstration project because things are not very well here in New Orleans?

Ms. NORWALK. Well, that is what we have been working with the

State to do, in fact, is to work both on a Medicaid waiver as well

as doing Medicare demonstration.

Mr. STUPAK. OK. But you rejected The Cooperative plan which

is really for region 1, wasn’t it?

Ms. NORWALK. Well, it was a concept paper that was submitted

by the State on behalf of the Collaborative. I wouldn’t say that we

rejected it. We had been working with the State to figure out what

it is that the State wants to submit. I can ask Fred if that was a

waiver that was submitted or merely concept paper that——

Mr. STUPAK. Well, wasn’t the Collaborative—wasn’t that really

sort of like to put a pilot program in region 1, those four parishes

we have been talking about today to try to get health care delivery

system as quickly as possible up in New Orleans?

Ms. NORWALK. We submitted our paper.

Dr. CERISE. What we were asked to submit was a concept paper

by October 20 which we submitted for the New Orleans area. I

think some of the earlier discussion has been in terms of the rejection of that. We are still in discussion with CMS on this issue.

Mr. STUPAK. What are the issues that have to be resolved? Our

goal here is to get, like yours, is to get health care back to—what

else has to be done here to get this region 1 Collaborative effort

going here? What has to be done? What waivers do we need at both

the State level and then we will go to the Federal level?

Dr. CERISE. We have stepped back—the State has—look, we put

forth a concept paper and I apologize going into some detail but it

is rather complex. We put forward a concept paper working in cooperation with CMS that said this is how you could insure the population in this region. And by using Medicaid savings, restructuring Medicaid, and shifting DSH funds to an insurance product.

Mr. STUPAK. OK. This was region 1, these four parishes?

Dr. CERISE. That is correct.

Mr. STUPAK. And HHS did not accept that?

Dr. CERISE. In discussions after October 20th we were told they

would not do a region-specific demo——

Mr. STUPAK. But a statewide demo?

Dr. CERISE. It would be statewide. So we started working on a

statewide number.

110

Mr. STUPAK. We shouldn’t be worried about statewide situation

right now.

Ms. NORWALK. Actually there are a couple points I would like to

make to that. First in doing this—in fact it was Secretary Leavitt’s

initial proposal to do this on a region 1 specific basis or greater

New Orleans basis.

Mr. STUPAK. Answer me this. The Secretary can’t be happy with

the health care system being delivered in these four parishes.

Ms. NORWALK. Absolutely. That is correct.

Mr. STUPAK. So why would you reject the Collaborative and come

up with a statewide plan?

Ms. NORWALK. Actually we haven’t and in my opening statement——

Mr. STUPAK. All right. You haven’t rejected it, you haven’t approved it.

Ms. NORWALK. They haven’t submitted a waiver to us. They have

submitted a concept.

Mr. STUPAK. Have you told them they have to submit a waiver

with this Collaborative?

Ms. NORWALK. I think it is without question known that they

need to submit a formal waiver.

Mr. STUPAK. Have you told the State that?

Ms. NORWALK. Yes, absolutely.

Mr. STUPAK. OK. Today or earlier?

Ms. NORWALK. Oh, this has always been the issue since we have

been down there for a year-and-a-half that the State would need

to submit a waiver to us formally as they do for other waivers that

they have submitted to the Agency.

Mr. STUPAK. OK. Dr. Cerise did they tell you you have to submit

a waiver to get this Collaborative effort in?

Dr. CERISE. We are aware that to get a waiver that there is a

formal application process.

Mr. STUPAK. OK. Have you submitted that application?

Dr. CERISE. No, we haven’t.

Mr. STUPAK. Do you anticipate submitting that application?

Dr. CERISE. What we anticipated doing was getting to a level of

agreement so that we know when we would submit a waiver it

would be an acceptable waiver. There is a lot of work that goes into

that piece. And we were working with CMS to try to get to that

point. It became clear to us in that process that the dollars needed

to do what we were comfortable with, and that was insuring a significant portion of the population with existing funds, with no new

funds. We are going to be much more than we had in existing

funds. We were working through a number of assumptions with

CMS. In about mid-December, those discussions stopped until we

received essentially the set of spreadsheets that you referred to

earlier in January.

Mr. STUPAK. So you are getting into an actuarial battle then,

right, on cost, pennies, and things like this, right?

Dr. CERISE. That is correct.

Mr. STUPAK. That is what we don’t have time for, right?

Dr. CERISE. That is correct.

Mr. STUPAK. OK. Here is what I am going to do on this Collaborative. We are going to ask HHS to provide us all documents going

111

back and forth. The committee has been trying to get our hands on

it. So you can expect the document request from this committee on

that. And so we ask you to preserve the documents and statements

along those lines there.

Ms. NORWALK. If I can make just one comment, Mr. Chairman,

about the issue about the issue of region 1 only.

Mr. STUPAK. Sure.

Ms. NORWALK. While it makes a great amount of sense to start

in region 1, I want to note the disparities that would occur if that

were the case. In region 1, if you said let us do this proposal and

cover those who are 200 percent of the poverty level or below that

would mean a family of four could be earning $41,000.

Mr. STUPAK. That is fine.

Ms. NORWALK. It is great.

Mr. STUPAK. It is fine with me.

Ms. NORWALK. However, in region 5 that has been hit by Rita

and actually a number of other regions, that same family of four

could only earn $2,600 in order to qualify for Medicaid under the

same thing. That disparity is something that concerns us if it is

long term. So when working with a statewide, appreciate rolling it

out, region 1 is of what is critical importance to deal with New Orleans, there are issues that the State is going to need to consider

because you wouldn’t want an influx of people to New Orleans

when the system is not yet ready to handle that from an infrastructure perspective. Not that it wouldn’t be great medium term——

Mr. STUPAK. Well, my concern is region 5 has health care, region

1 does not. My concern is also there is a 115 waiver waiting, according to Dr. Wiltz, for 287 health care clinics that were before

Hurricane Katrina and they are still not approved, right?

Ms. NORWALK. I don’t now if that is a 115 waiver on——

Mr. STUPAK. Well, there is a waiver pending. I might have my

number wrong.

Ms. NORWALK. I can check with staff. There may be something

pending elsewhere.

Mr. STUPAK. Here is my concern. 9/11 hits New York, they have

their waiver pending, that is approved, no questions asked, no further documentation. New Orleans, we have been waiting 18

months, even more than that, and we still have waivers pending

before HHS not approved. When I was down in New Orleans a year

ago and we asked the question about waiver that they needed then,

I think it was for the GME, for graduated medical, and were told

they filled out the wrong form. But you never told the people that.

We are getting a little frustrated.

Ms. NORWALK. We actually did the GME in a rule so they

wouldn’t need a waiver for the future, and we have solved that

problem for the next 3 years. So from a GME perspective, we have

been verifying——

Mr. STUPAK. What can we do that is going to be unique? Why

can’t we demonstrate a project here? There is a great need here for

health care.

Ms. NORWALK. Absolutely.

Mr. STUPAK. Why can’t we get with HHS, get with the State, the

city, and provide the reimbursements they need, the nurses, the

clinics, and get this thing moving?

112

Ms. NORWALK. The other piece that I think is important to note

is——

Mr. STUPAK. No, how about answering my question.

Ms. NORWALK. In answer to that question I am more than happy

to sit down with you at any point in time.

Mr. STUPAK. I want you to sit down with the State, the city and

them. I don’t know about New Orleans.

Ms. NORWALK. We do that on a continual basis. We have been

working with the State for pretty much every day. We have people

embedded at the——

Mr. STUPAK. Very good. You want to make a statement there,

though?

Ms. NORWALK. Yes, I did actually want to point out that the $2

billion in DRA funding, the $164 billion went to cover the evacuees

and the State share as well as those who are impacted within Louisiana. Over the last month we have distributed $175 million

across the Gulf Coast region. $71.6 million went to address the

Medicare wage index’s disparity with hospitals——

Mr. STUPAK. You can spare us the stats because all the other

panelists told us there is not enough in the system. They are not

getting the money. And you could have released $2.8 billion but it

all didn’t go to health care, it went to many other places. Our concern is get health care up and running.

Ms. NORWALK. Just one other point is that there is some additional funds from the DRA. We anticipate about $170 million as we

collect that back from the other States that did not spend the DRA

funds on impacted individuals and evacuees. We do intend as we

can under the DRA to reallocate those funds, much like we did

with the initial $175 million so that we do hope to support a number of the concerns that they have in terms of short-term needs.

Mr. STUPAK. I am sure you saw the article. It has been referred

to repeatedly today in the Times-Picayune about hospitals running

out of space, they don’t have bed space. You have heard that all

over the place.

Ms. NORWALK. Absolutely.

Mr. STUPAK. So all those numbers are fine but they don’t solve

the problem. We need these things resolved. We need them now.

Ms. NORWALK. And if I might add to that, not only do the problems that we have to resolve that issue is far beyond the health

care fund. They need housing, they need education, they need to

be sure they are safe and secure.

Mr. STUPAK. Absolutely.

Ms. NORWALK. They have population shifts, difference with income, so this is more than just making sure that the health care

system dollars are there. It is actually far beyond that so that the

staff can come into New Orleans and help support that. And that

is really——

Mr. STUPAK. But we need cooperation from everyone, the Federal

Government, State, local.

Ms. NORWALK. Absolutely.

Mr. STUPAK. And next time I would appreciate your testimony

before 7:00 so our staffs have a chance to go through it.

Ms. NORWALK. No problem.

113

Mr. STUPAK. And with that, let me turn it over to ranking member, Mr. Whitfield.

Mr. WHITFIELD. Thank you, Mr. Chairman, and I want to thank

the panel for being here. Prior to your testimony, we heard the testimony of 13 health care professionals in the area; and every one

of them pointed out the many problems that they face, the shortage

of primary care providers, a shortage of specialty, a shortage of

hospital beds, a shortage of psychiatric help. All of those are problems, and it has been a year-and-a-half since Katrina hit. There

have been millions of dollars appropriated and sent to New Orleans

and when you hear reasons why we have not done a better job of

having an effective health care delivery system in place today, you

can—health care is so micromanaged you can always come up with,

well, this waiver wasn’t given or the poverty level was too high

here or poverty level too low here or whatever, whatever, whatever.

But Ms. Norwalk, you are very familiar with all these regulations,

and Mr. Cerise, you are familiar with all these regulations, so I

would just ask the two of you what could be done to expedite this?

I mean, I know that each one of you could go on and give 30 minutes of reasons why we haven’t done a better job of providing primary care when you consider the money given. But from your perspective, Ms. Norwalk, what is the problem? Why can’t we do a better job at this?

Ms. NORWALK. Well, there are a number of different issues. First

of all, I would note that particularly Medicare is not really set out

to help with disaster relief and recovery. So the first issue that we

have when we say, oh, what can we do to help? I think we have

done a fair amount to try and help where it is that we can, given

that this is a national program.

The second issue is Medicaid. Medicaid is a State-run program

where the State is in partnership with the Federal Government,

and the Federal Government provides matching funds. But the

State has the lead. And the fact of the matter is much as you reference in terms of micromanagement, the Federal Government

does not want to do micromanagement of what happens in Louisiana. It is not appropriate. It is their health care system. And that

was one of the key principles, and when we first sat down with the

State in September and October 2005, that is—not just the State

but the entire community, that was really the number one key. So

when working with the State and the Collaborative, I think that

we have a very good framework to move forward. And there is no

doubt that there will continue to be debate about the numbers internally. There always is between the States and CMS whenever

you are looking at Medicaid programs. But I think that those are

things that we can get beyond in order to make sure that people

in Louisiana have insurance or a medical home or stop going to

emergency departments to receive care, for example, which helps—

which exacerbates the emergency department overcrowding problem that we have. I think there are a lot of things that we can do

and are doing with our short-term needs and additional DRA funds

to help support getting back recruitment and retention. So getting

physicians back, helping with mental health, helping with longterm care, again to get people out of the hospital.

114

Mr. WHITFIELD. You know, my understanding the insurance is

not a problem, having the providers provide care is the problem.

Ms. NORWALK. Well, I think you got—well, that may be the case.

I think you may have—you have got a long-term issue. If you want

people to come back to New Orleans, physicians and other staff, direct service workers, to come back to New Orleans, they are going

to need to know that they have a large patient base and can actually earn a living; and to do that, I suspect that more of them

would be interested if they had a wider base, i.e. more insured.

Mr. WHITFIELD. Mr. Cerise, from your perspective, what is frustrating about this for you? What needs to be done?

Dr. CERISE. Well, we have a difference of opinion on how we

would attract providers back into the area.

Mr. WHITFIELD. Well, if you have a difference of opinion, who

makes the final decision?

Dr. CERISE. Well, we were engaged in a collaborative process.

The Collaborative put forth this concept that focused heavily on the

delivery system and said that we have lost a lot of capacity. We

would like to put the pieces together in a way that is a more coordinated system of care, and we brought that concept in September to CMS and made this case. We have got a lot of capacity

needs. If we could put some—a stake in the ground, put a significant capacity, primary care providers, organized in a particular

way so that whether they are seeing insured people, uninsured people, they are reimbursed not for episodes of care, not for episodes

of illness, but to manage the population, to attract people with

chronic disease, to be connected with electronic records, to make a

significant impact of a new system of care in a devastated area,

create a new model of care delivery. And what—the reaction that

we got from Dennis Smith at CMS was essentially go back and

bring us back an insurance model that moves DSH dollars to cover

people with—to insure the population.

We went back and worked on that. I can tell you, what you heard

earlier today was a cry to say can you support, with some certainty, some income for these clinic sites so that we can bring

enough capacity back into the region because I don’t think as the

initial step—we can—it is an interesting debate and we can talk

about whether swapping DSH funds for insurance is a smart thing

to do long term and cover for more people. But for the immediate

impact, I think that swap is not going to make the same impact

as funding some delivery sites throughout the city where you have

got a huge gap in capacity.

Mr. WHITFIELD. You know, you get the impression just listening

to this that there is so much emphasis being placed on the Collaborative and what the health care system in Louisiana is going to

look like in the future, that taking steps to get a primary health

care system, delivery system into place to take care of the needs

today was placed on the back burner. Would you disagree with

that?

Dr. CERISE. I think that that is a fair assessment. We have tried

to take the approach of while we have a broken system, put the

pieces back together in a way that is good for the future, that

makes sense for the future. But there is critical capacity that we

have to replace today, and I think we have——

115

Mr. WHITFIELD. It sounds like we need to focus more on just

meeting the needs today and then talk about the future later from

our perspective. One other question. Dr. Cerise, it is my understanding that nearly $250 million in DSH monies are currently not

being utilized and will expire at the end of the fiscal year if not

used. What can and needs to be done to use these funds today?

Dr. CERISE. Well, actually we have less than that available. The States got a DSH cap of a little bit over $1 billion, and we project

that we will spend about—a little bit more than $950 million or

somewhere in that range of DSH. And so the limiting factor on the

State drawing down DSH funds for now is State match, putting up

30 cents on the dollar and match to draw that down and having

the allowable costs to spend that on. In the prior years we were

not at our DSH cap but we are getting very close to our DSH cap

right now and certainly there is not $250 million unspent DSH

available this year.

Mr. WHITFIELD. OK. Mr. Chairman, I yield back the balance of

my time.

Mr. STUPAK. Ms. DeGette from Colorado for 10 minutes?

Ms. DEGETTE. Thank you, Mr. Chairman. Ms. Norwalk, I want

to explore the Secretary’s health insurance proposal a little further

because I am a little unclear about some of the ideas in the concept. From what I understand, is the general concept of this plan

is that you would take DSH monies and rather as happens now in

Louisiana where the DSH monies go directly through the charity

system, what would happen under this plan is that the DSH monies would be given out to the uninsured to—they would be used to

purchase private insurance for those individuals, is that correct?

Ms. NORWALK. That is part of the concept, that is correct.

Ms. DEGETTE. What is the rest of the concept?

Ms. NORWALK. The way that the proposal is structured really is

intended to focus on what the State needs are first, and there is

no question that the State has raised a concern that there be DSH

funds remaining so they continue to have a safety net. So part of

that is redirection of some DSH dollars.

Ms. DEGETTE. OK. Is there any sense through the Secretary

what percentage of the DSH dollars would be needed to purchase

this private insurance for the uninsured individuals and what

amount would be reserved for the other individuals?

Ms. NORWALK. It really is up to the State, but it depends on a

number of different options. And one of the things we have done

is provide the State with a tool to help figure out if you have dialed

up or down certain things such as the number of people you want

to cover, the poverty level that you cover, the benefit package that

is provided and the like.

Ms. DEGETTE. The reason Mr. Stupak was cutting you off and

the reason I am cutting you off, and I apologize, and you can certainly supplement your answers in writing is we only have 10 minutes to question the witnesses. So I guess the answer would be that

you don’t have a firm answer about percentages because it would

depend on a lot of variables.

Ms. NORWALK. Correct.

Ms. DEGETTE. Thanks. Now, is this plan similar to the Massachusetts connector plan?

116

Ms. NORWALK. Again, it is really up to the State in terms of what

they want to put together, but there are a number of things that

both Massachusetts, California, Indiana, Michigan—a number of

States have looked at this type of model. Each plan is different.

Ms. DEGETTE. In fact, Massachusetts plan covers everybody, not

just the uninsured.

Ms. NORWALK. Correct.

Ms. DEGETTE. It engages the employers and it engages the insurance company.

Ms. NORWALK. That is correct.

Ms. DEGETTE. So what you are saying is Louisiana could do

something like that but you are not giving them the details, you

just think—here is a pot of money for DSH. You guys could use it

to insure uninsured people.

Ms. NORWALK. One of the concerns they have is to have DSH dollars go to physicians and clinics, for example. Traditionally, DSH

does not go to physicians. Disproportionate share hospital payments go to hospitals.

Ms. DEGETTE. Yes, as I said before I am very familiar with DSH.

Ms. NORWALK. Right. I apologize. So appreciating that issue,

wanting to be sure if you were going to divert that money in some

other way that we can do much as Dr. Cerise has suggested is necessary, and much of the testimony here has been we need to have

funds, we need to provide care in an ambulatory setting outside of

the hospital. And so this allows the money to follow the person to

seek care wherever he or she needs it.

Ms. DEGETTE. Has anybody in HHS done modeling on what this

would look like? Have you talked to the insurance companies?

Ms. NORWALK. Yes.

Ms. DEGETTE. Do you have information you can supplement your

response? What was their response?

Ms. NORWALK. I think that in fact there are people here today

from insurance companies in Louisiana who were very interested

in this proposal.

Ms. DEGETTE. OK. So people said they would be interested?

Ms. NORWALK. Yes.

Ms. DEGETTE. And did you get some statistics from them how

much this would cost?

Ms. NORWALK. Again, it is going to depend a lot on the benefit

package and the poverty level and the like.

Ms. DEGETTE. And you think that should be established by the

State?

Ms. NORWALK. Yes, I think it is appropriate for the State.

Ms. DEGETTE. And they would have to then apply for waiver?

Ms. NORWALK. Correct.

Ms. DEGETTE. OK. And so really, the benefits package, the special needs that people had, chronic long-term needs, so something

like that, that would all be established in your view by the State

and they would come to you with a waiver?

Ms. NORWALK. Correct.

Ms. DEGETTE. And then would it be guaranteed coverage of

somebody was uninsured or how would that work?

Ms. NORWALK. Again, that is up to the State to determine whether or not they have guaranteed coverage as I noted earlier. They

117

may want to keep some DSH funds so that if people aren’t uninsured—so for example, I know one of the issues they have is a very

large migrant population that might not be covered under State

subsidies but may yet be required to be covered in hospital——

Ms. DEGETTE. So it is really for them to decide.

Ms. NORWALK. Correct.

Ms. DEGETTE. So I guess it would be fair to say that this idea

about covering the uninsured with DSH funds rather than in the

other ways we have discussed is from the Secretary’s view more a

concept than a plan? Because the plan would have to be developed

by the State and then submitted to the Department for waivers,

correct?

Ms. NORWALK. Yes, that is correct.

Ms. DEGETTE. OK. Now, Dr. Cerise, what do you think about all

that?

Dr. CERISE. The challenge of moving DSH for insurance which I

think everyone would love to have everyone in your population insured. If you look at health care spending in Louisiana, in 2004 we

spent $19.4 billion. The focus of much of this conversation is that

roughly $600 million of DSH that is in the public system today,

around 3 percent of the health care spending. We have got 18 percent or so uninsured in the State. It is not a simple move of DSH

funds to insurance, those DSH funds are buying services today,

and if we are going to move that to insurance, we have got to be

comfortable that we are insuring the critical mass of the population

because if you don’t have—when you move them, you are moving

them from your safety net, so you do not have those funds to support your safety net. And that is the challenge that we are presented with and in our discussions.

Ms. DEGETTE. And have you been given any information to indicate that you could insure those uninsured individuals with DSH

funds while—have you been given any modeling or anything by

that by HHS?

Dr. CERISE. We were given a model in January, the tool that Ms.

Norwalk referred to, that showed that we could insure 319,000 people using existing DSH funds that were dedicated to the hospitals

in the State.

Ms. DEGETTE. OK. And then how many uninsured do you have?

Dr. CERISE. We have somewhere around 700,000 uninsured in

the State. That is a number of debate but I think that is a safe

number.

Ms. DEGETTE. So you would be covering somewhat less than half

of the people?

Dr. CERISE. We feel like the 319,000 is an optimistic projection.

I feel comfortable that it would be less than half.

Ms. DEGETTE. And what would happen to the hospitals and

other facilities that that DSH money is going to? Would that be all

the DSH money?

Dr. CERISE. The remaining DSH funds that we pulled aside earlier in the discussion were for three groups, one, the rural hospitals. Here is about $85 million that funds care in rural hospitals,

the State psychiatric hospitals, which is about $100 million, and

then $80 million for GME, that actually funds GME. But the reVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00121 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
118

mainder of those care dollars would be moved, and so those would

not be available for those systems to take care——

Ms. DEGETTE. And the money that would stay, would that be

sufficient in the State’s view to preserve those programs, those

DSH programs?

Dr. CERISE. No.

Ms. DEGETTE. OK. And what would happen to the other 400,000

roughly who didn’t get covered with the DSH money?

Dr. CERISE. There would be no organized system of care funded

for the remaining uninsured. They could get a hospital-based services. They could show up in the emergency room and hospitals have

to take care of those people. They are not funded to take care of

them, but they would have to be seen but there would be no coordinated outpatient——

Ms. DEGETTE. There would be no funding for it. Now, what about

under that modeling that was given to you by HHS. What would

happen about a teaching hospital?

Dr. CERISE. Well, we did carve out the DSH funds for GME and

so there are funds that would be either supplanted, if those programs were moved to other hospitals and those costs would end up

covered through Medicare or some other mechanism. That is a

whole other discussion, but the hospital, for example, LSU Shreveport Hospital relies very heavily on those DSH funds, not only for

GME but for service delivery, and they would have real problems.

Ms. DEGETTE. That would be gone. So would it be fair to characterize the State’s position to the Secretary’s proposal as something

that you don’t think would be workable for Louisiana?

Dr. CERISE. That is correct. Without substantial additional funds,

that swap does not work for us.

Ms. DEGETTE. Do you have any ballpark figure how many additional funds?

Dr. CERISE. I think—we have done a lot of modeling. I would say

it is north of a billion dollars.

Ms. DEGETTE. A billion dollars?

Dr. CERISE. A billion for the whole State.

Ms. DEGETTE. That would be per year, right?

Dr. CERISE. Correct.

Ms. DEGETTE. Now, this is why we are having this hearing, so

we can bring everyone in.

Ms. NORWALK. The PriceWaterhouseCooper’s report says that 40

percent of the uninsured in Louisiana have over 200 percent of the

poverty level. So not all the 700,000 would have qualified in any

event under the report. Now, I haven’t seen the latest statistics

from the census bureau that looks at that, but that is the first

point I wanted to make. The second point is if you assume that you

don’t have a medical home system of care and instead are getting

treatment in an emergency department or a hospital outpatient department, it absolutely is more expensive.

Ms. DEGETTE. Well, let me just stop you real quick because this

200 percent of poverty level, we were talking to actually a lady

from my district last week under our S-CHIP hearings and the

problem we have is a lot of uninsured that Dr. Cerise is talking

about who will get treated anyway at the emergency rooms are as

you say people over 200 percent of poverty level. They are the

119

working poor, and they cannot afford to buy insurance. So I guess

what his point would be that, OK, sure you are going to insure people who are under 200 percent of poverty level through this proposal, but they are still going to be whole bunches of people who

don’t have insurance, who can’t buy insurance out of their pockets,

and they are going to be showing up at the doors of these emergency rooms. So where do we pay for that?

Ms. NORWALK. Well, there are a number of things that the State

could do, like a sliding scale for example of care. So if they wanted

to provide subsidies on a sliding scale, that is one way that they

could structure it. Moving care from the hospital outpatient department and the emergency department into a medical home system,

which is part of the Collaborative approach, also I think would save

a lot of money.

Finally, the concern is from an LSU system, there is at least $160 million on the table because LSU only has 10 percent of their

patients in Medicare, at least traditionally they did before preKatrina. There is a lot of Medicare DSH and Medicare GME dollars

that aren’t being spent because of the patient mix that was at the

LSU system pre-Katrina. If they built a new hospital for example,

I think their patient mix would change and the number of beds

they have for the uninsured in Medicaid would also change, consequently the entire system. Those funds I would imagine would

need to move around in any event because of the changing nature

of how the system prepares——

Ms. DEGETTE. Well, let me say my time has well expired. I appreciate the comity of the Chair. I think it is urgent that we continue these talks between the State and Federal Government, and

I think that the State needs to work on trying to put together some

kind of a system and submitting the waivers. But I also think, and

the chairman said, he is willing to bring the Secretary in here. I

think that the Department needs to look much more broadly because the State doesn’t think this is going to work, and I don’t

think the economies are real great.

So anyway, thank you, Mr. Chairman, for your comity.

Mr. STUPAK. I thank the gentle lady. Mrs. Blackburn, questions?

Mrs. BLACKBURN. Thank you, Mr. Chairman. Dr. Stephens, I

want to start with you. I have got this March 3 article from the

Times-Picayune which basically says the hold-up that Mr.

Smithburg talked about earlier is due to a problem between the

city council and the Mayor and getting the approval for these mobile clinics. And it is absolutely beyond me how you can have the

situation that you have. You are depending on as Mr. Smithburg

put it earlier, the kindness of his brethren at the table to help care

for those that are in need of health care and you cannot get this

approved.

Now, is the city willing to allow these mobile clinics—they have

been there for 7 or 8 months waiting to be used to relieve some of

the pressure that is there. Are you willing to see that through to

completion immediately?

Dr. STEPHENS. Yes. Thank you. A couple of things, one, the one

problem we had is that they were placed in a residential area. A

solution would have been to place it in an area that was zoned

commercial.

120

Mrs. BLACKBURN. That is not what I asked. Are you willing to

see it through to get a solution immediately? You need it to where

people can get to the health care and stubbornness is not going to

solve the problem, hesitation is not going to solve the problem. Action is going to solve the problem. Being an outsider looking in,

knowing that there is a tremendous amount of money and you

were sitting in the room when I listed the money that has been

sent, the money that has been spent. How can you not resolve this

issue when you have a solution sitting there for 7 or eight 8 and

you have chosen not to act on it?

Dr. STEPHENS. First thing, the city council did pass the ordinance

to give a waiver so that they can move forward with the project.

And No. 2 as I mentioned earlier is that the residential area was

a problem and not the commercial area. They had adjacent commercial areas that they could have placed them. And number three,

they could have restricted only to kids at the schools, and that

could have been open today if it was only to be used by the kids

on schools.

Mrs. BLACKBURN. Dr. Stephens, sounds like some excuse-making

and I think it would be helpful to see some action on that immediately and not just at some point in the coming months. I think

it would be difficult if they sat there for a full year without being

utilized and without being used.

Dr. Cerise, I would like to come to you with a couple of questions

if I may, please. I want to go back to Dr. Fontenot. I asked her

about the permitting and the licensing on these hospitals and what

we had found when we were there in New Orleans and some questions that came from that. With your generators and your emergency supplies, being in the basement we found out that there were

evacuation plans but there was no implementation plan for those

and just—it seemed to be a lot of blame going around and it was

Dr. Guidry who had given us that information. What is your association—how do you work with him?

Dr. CERISE. He is in my office. He is a State Health officer.

Mrs. BLACKBURN. OK. Great. Are you still permitting these hospitals—we just heard that switchgear is still in the basement but

there is some kind of system of walling them off. You want to—we

are coming up on hurricane season soon again. What are you doing

to say if we have a difficult situation, how do we get ourselves out

of this? So just a couple of seconds on that.

Dr. CERISE. Right. There are two pieces, one is how to mitigate

and the other one is with the planning, is to make—if we get in

a situation—we have worked very cooperatively with HHS and

they have provided a lot of assistance in going to individual facilities, hospitals, nursing facilities to look at who is able to evacuate,

how you would evacuate, what the capacity is, what Federal assistance we would need. And so we do have very detailed plans of

which each facility’s capacity would be.

Second, on the mitigation piece, we have a group that has recently completed its work, extensive surveying, of hospitals and

nursing homes to develop building code issues, and that will tie in

evacuation plans. If you have certain things in place in certain

areas, your plan would be to leave or you would shelter in place.

121

Mrs. BLACKBURN. Do you have an implementation strategy so

that you can move people? This time around, do you have that?

Last time around you did not.

Dr. CERISE. Yes, we do.

Mrs. BLACKBURN. You do?

Dr. CERISE. Yes, ma’am.

Mrs. BLACKBURN. Excellent. I want to go to the insurance issue

and the 1115 waiver because there is a lot of talk about that, and

you all have a State mandate for health care access to all

Louisianans, and my question to you on this 1115 waiver, are you

looking at Arizona and Tennessee and some of the other States

that have had an 1115 waiver and looking at the lessons learned?

Dr. CERISE. We are aware of things that other States have done

in order to cover more people, be able to reallocate funds, to not

only pick up the full freight but to share costs with employers and

individuals. I am not sure if that is what you are referring to.

Mrs. BLACKBURN. I am asking if you are looking at those States,

their program, their implementation, their delivery systems and

seeing the mistakes that are there and viewing those as lessons

learned and asking them for best practices.

Dr. CERISE. We are aware of some of the problems that Tennessee had with the large move to a coverage model from an access

model with DSH funds. It is one of the reasons that—honestly, we

are being very careful about the assumptions going into this, and

the reason we have been hesitant to accept, for instance, a per

member per month of $157 for childless adults as a way to insure

people because if those estimates are wrong, the State is going to

be on the line for providing that coverage with State funds if we

don’t get an amendment to the waiver from CMS.

Mrs. BLACKBURN. And you all are already spending just under 30

percent of your State budget on health care, is that not correct?

Dr. CERISE. That is probably about right.

Mrs. BLACKBURN. Are you looking at anything like refundable

tax credits or new insurance products or health reimbursement accounts, health savings accounts, thing of that nature to put that

into your mix?

Dr. CERISE. The short answer is for this particular initiative, we

have looked at the ability to provide an insurance product for people with existing funds. We have not gotten into the details of what

that would be.

Mrs. BLACKBURN. OK. And one more quick question. You have

gotten $15 million on the workforce recruitment money, but you

think it is going to take $120 million to rebuild your workforce, is

that correct?

Dr. CERISE. That is correct.

Mrs. BLACKBURN. All right. Thank you. I will yield back, Mr.

Chairman.

Mr. STUPAK. I thank the gentle lady from Tennessee. Mr.

Melancon for 10 minutes questions, please.

Mr. MELANCON. Thank you, Mr. Chairman. Ms. Norwalk, let me

ask—maybe this is the dumbest question I am going to ask, but we

are 18 months out since the storm’s occurrence. Why are we here

today? Isn’t the Department of Health and Hospitals able to work

with the States to try and provide health care to work through the

122

problems? Why does the Congress have to bring a Department here

and all these people from Louisiana here to try and solve what

should have been solved by the Agencies themselves.

Ms. NORWALK. We certainly have been working very diligently to

make sure that health care is being provided in the area. I think

the needs have—the short-term needs, we have continued to work

with them. They continue to be exacerbated as populations return,

as the populations change. For example, the number of migrant

workers that are coming into the area often do not have health insurance and may have workers’ comp issues.

Mr. MELANCON. And that is correct because we haven’t done a

thing. We haven’t taken any incremental steps forward. We are

worrying about the Charity Hospital and the big building that everybody doesn’t want. That is what we are worried about. We are

not worried about the teaching facilities for the State of Louisiana,

we are not worried about the hospitals in the public sector—private

sector going broke, we are not worried about people that we have

to give health care to, we are worried about the politics of some

building in south Louisiana. The State Collaborative. How many

weeks was it between the time—maybe Dr. Cerise—between the

time that you all submitted it to the Feds, then they started talking to you again. It was about a 6-week period or was it longer

than that?

Dr. CERISE. We submitted it October 20. We had regular discussions for—beginning early November until mid-December, and then

there was a 6-week gap before the proposal or the tool was presented to us by CMS.

Mr. MELANCON. Well, if I remember correctly, it was a concept

paper for a redesigned health care system for region 1 for a CMS

submittal. Prior to a statewide rollout, the State will assess the

benefits of the current rural safety net comprised by merely small

rural hospitals and the rural health clinics. One of the most important consideration, present implementing the new system of care,

its affect on rural communities. Local rural communities face many

unique challenges which have not often been addressed in the Collaborative process, as region 1 is primarily an urban area. These

challenges include significant shortages of health care professionals. The role of rural hospitals is critical safety-net providers

and limited financial resources.

Now, they brought you a rock and then 6 weeks later, after they

brought you the rock that you asked them to bring, you tell them

that is not the rock you want to take it back and start over again.

So where we are now at month 18 is they don’t want to continue

filling out application forms that you are going to tell them you are

not going to accept?

Ms. NORWALK. I actually would characterize it differently. I have

a log of all the contacts we had since November say through February, and there were significant conversations long even after

they submitted the proposal after October 20.

Mr. MELANCON. Why were you all silent for 6 weeks?

Ms. NORWALK. We weren’t silent for 6 weeks. That is my point.

We were silent the week of Christmas and for a few days after New

Year’s. That is true. I apologize. I am sure people were on vacation.

So other than that vacation schedule, I have—I can tell you calls

123

that were made, e-mails that were sent back and forth about financial modeling, about all sorts of issues that relate to this, and we

have been——

Mr. MELANCON. Thank you. Dr. Cerise.

Dr. CERISE. We had regular staff calls throughout the month of

November and until mid-December. We had no staff calls working

through budget neutrality, these technical pieces that we have to

work through. CMS cancelled the call the week after my visit to

your office, December 12. That next call was cancelled, and the

next information I would get on this would be from the Secretary’s

office, and that is true, I got that. But it was in January and it

was the night before a very public release of this tool.

Mr. MELANCON. Was that when we had the——

Dr. CERISE. It was not a discussion point at that point.

Mr. MELANCON. Is that when we had the Irish kilts playing

music with your announcement in New Orleans?

Dr. CERISE. No, that was the beginning of the process.

Mr. MELANCON. That was just another pie in the sky. We have

heard from the hospitals earlier that they had only gotten a portion

of their cost for uncompensated care from the State. What can you

tell me about that element of the Collaborative?

Dr. CERISE. The uncompensated care is one piece of the hospitals’

problems right now. It is an important piece. But as you have

heard, they have got a number of other issues. The DRA provided

funds for uncompensated care for a period immediately after the

hurricanes. There was about $134 million allocated for that, about

$100 million of that went to hospitals. For the remainder of that

fiscal year—and that was time-limited. It expired at the end of

January 2006. Between February and July 2006, the remainder of

the State fiscal year, the State appropriated $52 million in uncompensated care for hospitals in the region. This current fiscal year

of 2006, there was $120 million in uncompensated care appropriated to the hospitals that don’t normally get this appropriation

but it was in recognition of the fact that the care had shifted from

Charity Hospital. $120 million was a number that we and the Governor decided upon because our calculations thought it would be an

amount appropriate to cover the full costs of the uncompensated

care in the impacted region. It turns out through discussions with

the Hospital Association, they preferred to spread those dollars to

other parts of the State as well. There was less available for the

New Orleans region, and based on the formula that was put into

the Appropriations Act, we don’t expect to expend the entire $120

million. I have been in discussions with some of the hospitals with

the division of the administration, looking at how we might go back

to do that, but I want to be clear because there has been a lot of

discussion about these dollars not flowing. There have been uncompensated care dollars going to—it has been the State’s intention—

when we discussed this $120 million with the Hospital Association

during the appropriations process, it was our preference to concentrate those dollars in the New Orleans area and cover full what

we put forward was 90 percent first dollar uncompensated care

costs for all hospitals in the impacted region, which is a different

formula.

124

Nonetheless, when the existing formula that is in the appropriations bill, we expect there will be money left over and are committed to going and looking at how to do that. We just made the first

half-year payment on this, and the way this works is you have got

to show the cost to be able to get the reimbursement. And based

on that first half-year payment, we expect that the entire pool will

not be spent.

Mr. MELANCON. Thank you. Where I am right now, and Ms. Norwalk, I know this is just something you have got to do as part of

your job today, but I am living this down in south Louisiana. There

are other people down there. They are tired. They are frustrated.

And if we can’t get this government to work for them, then we need

to find some people that will. And I am not yelling at you, I am

yelling at your Department, please. You know, there has been so

much going back and forth, finger-pointing at each other, and nothing getting done. And it started the day after the storm when the

Governor of Louisiana was told she didn’t ask for the right things

from the Federal Government. And it has gone downhill ever since.

I didn’t think, and having worked previously in State government and worked with the Federal agencies—usually those people

that worked in those departments were there to help guide us and

give us assistance and tell us what I’s to dot and what T’s to cross

and how to make it work and not put a stone wall up and try and

make us climb over it every time or change the rules every time

we came.

So I would ask you to go back to Mr. Leavitt and tell him that

this committee is meeting because his agency has not performed

the duties and responsibilities they were charged with. And I am

going to ask the chairman, you have asked for the records. I would

like to have every detailed record, phone calls, e-mails, the whole

works. And if we got to spin them, we spin them. If the people of

Louisiana are wrong, then we are going to prove them wrong. If

the Heath Department is wrong, then we are going to prove them

wrong. But I am not going to continue having hearings at infinitum

when the people in the Gulf Coast of this country are suffering as

they are.

Now, I would like to ask one last question. During the issues

with the Collaborative, during the issues with the going back and

forth, during your testimony and the drafting of your testimony

today, was there any member of our delegation that may have had

input or made phone calls on a regular basis, his office or others,

about what was going on and what the Department——

Ms. NORWALK. In my testimony?

Mr. MELANCON. No, from your Department from someone in our

delegation?

Ms. NORWALK. No one influenced my testimony.

Mr. MELANCON. That is influenced. I asked you if you have had

any contacts with people within the Congress that are——

Ms. NORWALK. I personally have not. Whether or not—there may

have been contacts within the Department. I really have no idea.

But my own testimony was testimony that we wrote, and as far as

I know, no one influenced my written or oral testimony in any way,

shape, or form that was not within CMS.

125

Mr. MELANCON. Thank you. I would ask you if you would ask the

people that you work with in the Department. Thank you, Mr.

Chairman. I yield back.

Mr. STUPAK. Thank you, Mr. Melancon. Dr. Burgess, 10 minutes.

Mr. BURGESS. Thank you, Mr. Chairman. It has been a long day,

I have heard a lot of stuff. I will address Mr. Melancon’s soliloquy

when I get to the end of my questioning. But there are a few things

I still want to try to drill down on.

Ms. Norwalk, in HHS, there is a proposed rule CMS 2258-P. It

is my understanding the goal of this regulation would be to allow

the money to follow the patient. We have heard that several times

today that that is a goal that several people have said that they

share. And allow the money to be received by the health care provider without having to stop at the State capital. Can you tell us

what the status is of this proposal and when it might become effective?

Ms. NORWALK. Well, the rule you are referring to is the rule on

certified public expenditures and/or Medicaid. It is currently out of

proposed form. The comment period closes next Monday, March 19.

It will take us inevitably some time to go through these quite voluminous number of comments we have, particularly from public hospitals and States around the country and other providers that are

concerned about this. We will go through those. Once we put out

a finalized rule, it will effective 60 days after it is published. I don’t

know the timing because I would hate to guess——

Mr. BURGESS. OK, so this is not just for Louisiana then?

Ms. NORWALK. That is correct.

Mr. BURGESS. Was there any sort of special rule or special designation because of the Gulf Coast area being so harshly stricken?

Ms. NORWALK. No, we actually have been working with Louisiana on these related issues to DSH funds and certified public expenditures, making sure that the States have access—the public

hospitals have access to the funds that they should receive

through, say, DSH for example and other governmental transfers.

Mr. BURGESS. Well, Mr. Melancon’s concern—forgive me for interrupting but I am going to run out of time and we are going to

be kicked out of here. But Mr. Melancon is concerned about the

length of time that it takes for money that is generated here to get

to where it is needed, and I sympathize with that. I probably have

a different perspective than him. I do think that there is a hold up

and it may well be the State capital; and if that is the case, can

we eliminate that from the chain? Can we just remove that as an

obstacle, or is there legislative language that you need from us to

remove that obstacle going forward? We are 18 months into this.

Heaven help us if we are another 18 months into it and we are still

having these same arguments.

Ms. NORWALK. No, the overall issue is in fact a statutory issue,

so inasmuch as—because Medicaid is a State-Federal partnership,

those funds do flow through the State. I don’t believe there is a

way that we could change that without statutory change, but we

will have to ask our counsels.

Mr. BURGESS. And what about the DSH funds that we have

heard so much about today?

126

Ms. NORWALK. A lot of the DSH funds again flow through the

State.

Mr. BURGESS. Can we make that not happen?

Ms. NORWALK. No, I will have to go back to counsel’s office but

I don’t think that we could do that without a statutory change. Not

to say that we couldn’t change the allocation of how those funds

are—but even so, they would run through the State.

Mr. BURGESS. But we have heard from 13 or 14 fine individuals

here today who all have good ideas on how to spend the money,

and if the problem is that wherever the roadblock is, if we can

eliminate one stop to get the money to these fine individuals to get

them up and working and get them up and running, I think we

should do that.

Dr. Cerise, let me ask you about the suggestion that Louisiana

expand its capability for dealing with uncompensated care. So what

do you think can be done on the Federal level to expand the—make

those Federal dollars that we generate here, make them more

available to the practitioners on the ground?

Dr. CERISE. Well, for the DSH component, it is a State-Federal

partnership. There is a State share. The State has to put up its

share to draw down the Federal funds and——

Mr. BURGESS. Let me interrupt you then because we heard from

Mr. Smithburg. He said when he was in Texas, he could get a provider paid but under his current regime he can’t because those

DSH funds are prohibited from going to providers as opposed to institutions.

Dr. CERISE. I think what he was referring to was the fact that—

two things, one, those funds have to go through a hospital, a hospital that is eligible to receive disproportionate share funds. Those

funds then, they can fund clinic activity and—but they have to go

through the hospital first. And that hospital is not eligible to get

physician cost reimbursed with the——

Mr. BURGESS. All right. Well, what do you need to make that

happen? Dr. Quinlan was here and testified for us. What do you

need for us to be able to just write the check to Dr. Quinlan?

Dr. CERISE. I probably have a different answer than Leslie. We

think it is just interpretation of DSH statute. In fact, we have a—

there is a fifth circuit decision in Louisiana dealing with rural hospitals that says that those costs are allowable for physicians, but

the Department’s position has been that those costs are not allowable for the State.

Mr. BURGESS. Yes, well, we did hear that testimony, that the

hospital in the parish next to Jefferson Parish was a critical access

hospital and would fit that criteria. I would suggest—there probably is something you can do, either at the State level or at the

HHS level and for heaven’s sakes, let us get that done so we don’t

continue to be up here and have to beat each other over the head

about this stuff.

Now, Ms. Norwalk, did you have some staff members in Baton

Rouge to help with this process that we heard about, the Collaborative process?

Ms. NORWALK. We did have someone there through the end of

February and we have had people go down periodically. The Secretary has been down eight times, I have been down, I don’t know,

127

half-a-dozen times, a number of staff people go down a number of

times a month in order to help facilitate communications between

the State and the Federal Government, as well as dealing with

some of the issues that we have seen in other regions. We had

someone on the ground full time dealing with health care provider

issues. He has since gone back to the regional office of Texas, so

it really depends on the timing, but yes, we have had people in

Baton Rouge and New Orleans.

Mr. BURGESS. Well, has that full-time staffer, has that been helpful to have that person on the ground?

Ms. NORWALK. I heard many accolades from health care providers who found it very useful to make sure whatever certification

issues they might have or other problems they might have in dealing with the Department on a more regular basis could help make

sure that we could speed up the access to clinics that were brand

new, for example, or whatever—there is one in St. Bernard’s parish

I believe that we helped facilitate that getting paid as quickly as

possible, filling out the forms and any—walking those providers

through whatever processes were required so that people could get

the care they needed as quickly as possible.

Mr. BURGESS. So are you going to continue that, to keep that

staff available?

Ms. NORWALK. Well, they are absolutely available to go back to

the region as is necessary.

Mr. BURGESS. It sounds like it is necessary. Dr. Cerise, have you

found having a full-time HHS staff there has been helpful?

Dr. CERISE. There have certainly been some issues that they

have been able to facilitate, no question about it. The fundamental

issues I think here this committee is raising are not the kind, at

the level, that would be addressed by the people on the ground.

Mr. BURGESS. I don’t know. I would disagree. I would think any

help, any help at all, that you could get would be beneficial. Again,

we have heard from 13 or 14 wonderful American heroes today and

the difficulty they have jut doing the most basic parts of their job.

And that is troubling to me.

Dr. Stephens, before I get too wrapped up in this, let me just ask

you, because you made the statement that the New Orleans Health

Department will have to rebuild. Now, the responsibility for rebuilding the New Orleans Health Department, is that our responsibility at the Federal level, is that Ms. Norwalk’s responsibility,

Dr. Cerise’s responsibility, Mayor Nagin’s responsibility? Whose responsibility is that to rebuild the New Orleans Health Department?

Dr. STEPHENS. I think it is all the above.

Mr. BURGESS. Dr. Stephens, with that, I am running out of time.

With all due respect, as you know, if you got too many bosses, no

one is in charge. I would submit that you better take responsibility

for that. Tell us what you need from us, but please take the leadership on that and get that done. Mrs. Blackburn referenced the primary care trailers that were up and ready to go but required a city

ordinance to—that should not be hard. Let us do that. Mr.

Melancon waxed eloquently about the failures to the extent that

they rest with the Federal agency. I suspect the Federal agency is

willing to take responsibility for that. At the same time, they are

hardly the only persons involved in this; and my personal opinion,

128

although I do not have the facts to back it up, but my personal

opinion is there is a big logjam at the State level, and I would suggest to this committee that we do everything we can to get those

dollars to the hands of the people who are going to provide the care

and take care of the sick people in New Orleans, Louisiana, and

let that bypass Baton Rouge if it has to happen. I frankly do not

understand, yes, we should hold a Federal agency accountable and

we should hold DHH accountable, but for the life of me, not one

single elected official who has stood for re-election since this hurricane, has been turned out of office. And I find that frankly astounding. It just defies belief with the amount of problems that you

have had, yes, I think you need to hold some people accountable

and I think those people you need to hold accountable are your

elected officials. That is only way something is going to happen,

and I really make those comments to the 13 or 14 people who testified earlier because again, I just cannot tell you of the personal

pain it has caused me to be unable to get this situation any better

than what we find it today.

Thank you, Mr. Chairman. I will yield back.

Mr. STUPAK. Thank you, Mr. Burgess. OK. That just about concludes our hearing today. We have come up with several issues

that can—I think believe can be addressed between the State, Federal, and local governments, and I ask you all to go back in the

next couple of weeks and try to work on them.

This committee will follow up with each and every one of you to

insure that the commitments that are made are going to be kept.

As I said earlier, this will be the first of many hearings that we

are going to handle, and we want to get back to you for a progress

report, and I promise you, we are going to keep the subcommittee

moving forward.

Ms. Norwalk, I mentioned to you about the CMS and Dr. Wiltz’s

application. It is not CMS, it is HRSA.

Ms. NORWALK. Thank you.

Mr. STUPAK. So who is the person in HRSA?

Ms. NORWALK. Betty Duke is the administrator of HRSA.

Mr. STUPAK. Betty Duke?

Ms. NORWALK. I am more than happy to bring that back to her.

Mr. STUPAK. Please do because she will be getting an invite from

us to appear before the committee, along with Mr. Dennis Smith

on the Collaborative plan. And Dr. Lynch, we still want to hear

more about the VA and Big Charity’s goal there, so we may ask

you to come back. Unfortunately with the limited time and as you

can see we are being pushed out of here, so we are going to have

to clear here quite quickly. I want to thank each and every one of

you for coming.

Mr. Melancon, you had one more thing?

Mr. MELANCON. Ms. Norwalk, I need to apologize to you. I am

a little rough today. I don’t think it was your department that has

the problem with the delegation. Mr. Lynch, would you look into

what is going on with the VA LSU statements and let me know if

there is anybody that is in there manipulating the statements or

trying to manipulate the deal? It is my understanding that the VA

is saying now they are going to pull out of the deal with LSU, and

I think there is—that might be a basis for another good hearing.

129

Mr. BURGESS. Mr. Chairman, if I may, I would just say that I

would welcome some input from the Louisiana delegation into this

process. I think it is necessary.

Mr. MELANCON. Yes, I have been looking for them, too.

Mr. STUPAK. OK. The record is going to be open for 30 days. Mr.

Stephens, thank you for moving those trailers. Dr. Cerise, thank

you for looking at the nurses. Let us keep moving in a positive direction. We got two down and only 2,000 more to go. Thank you

all.

[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]

TESTIMONY OF BRYAN BERTUCCI, M.D.

My name is Dr. Bryan Bertucci. I am a Family Physician and Coroner of St. Bernard Parish. Medicine is not well in St. Bernard. 100 percent of our homes, offices

and buildings were destroyed and for the first time in history FEMA declared a parish or county 100 percent destroyed. 154 St. Bernard residents died in Hurricane

Katrina.

St. Bernard was flooded twice by Hurricanes Katrina and Rita, experienced an oil

spill, liquid mud, mold, snakes, flies, mosquitoes, piles of trash, mice and rats. St.

Bernard is a very difficult place to live and despite that our residents continue to

return.

Our biggest hindrance is the overwhelming lack of medical facilities. Our 194 bed

hospital is gone. Of 150 physicians only 6 remain. Only 10 registered nurses remain.

To see certain specialists residents are often required to travel 30–60 miles.

We encountered one financial roadblock after another as we attempted to rebuild.

Because Chalmette Medical Center was a fee for service hospital we received no

funds. We were penalized for being privatized. Because we were not on the parish

budget we received none of the Community Block Grant monies. We were penalized

for being independent. The Stafford Act prevented FEMA form assisting with physician and nurses salaries. The parish received $621 million of Community Block

Grant money for infrastructure repairs—medicine received none.

Perhaps our biggest problem is that Federal and often State officials do not realize that St. Bernard Parish is not part of Orleans. Funds given to Orleans Parish

stay in Orleans Parish.

Medicine has metamorphisized itself from DMAT teams, to Public Health, to our

present 22,000 sq. ft. temporary trailer. We see 100–120 patients a day. The severity of the illnesses in our patients is similar to those seen in a small ER or Urgent

care. We I&D abscesses, suture lacerations, stabilize MI and congestive heart failure

patients, and give IV fluids and antibiotics. Almost a quarter of these patients have

no insurance coverage and are ‘‘self pay’’ or ‘‘no pay’’.

A foundation is willing to donate 30 acres of land eight feet higher than the land

Chalmette Medical Center was located on. We would like to thank the Franciscan

Missionaries of Our Lady Health System, Mobile Oil Refinery, and Social Service

Block Grant have donated funds but this is not adequate

Mental Health is in crisis with 50–60 percent of adults and 20–30 percent of children depressed, drug overdoses on the rise, and the chronically ill psychotics and

schizophrenics are decompensating due to lack adequate counselors, psychiatrists,

and psych beds. Charity Hospital Crisis Intervention Unit destroyed.

St. Bernard lacking significant emergency room services has to ship patients 18–

35 miles for emergency care .Our parish is surrounded by water and our limited

number of ambulances has to cross bridges, railroad tracks, and circumnavigate

traffic jams depending on the time of day. An ambulance ride can vary from 15 minutes to an hour depending on delays encountered. A routine ER wait is 4–8 hours.

These patients are occasionally housed in ambulances making vehicles unavailable

for hours.

The logical solution for St Bernard Parish is a medical village consisting of a permanent physician office building, out patient surgery center, and out patient diagnostic center and eventual hospital.

This medical village will assure the resurrection of Primary Care Physicians and

subsequent return of our Specialists. It will decrease number of our residents needed to be transferred to hospital ER’s as we can treat them locally and free up our

Ambulances. It will allow our Elderly to return as Nursing Homes, Homes for Assisted Living are built. Some elderly will rebuild their Homes. It will supply Jobs

130

as the former hospital was one of the largest employers in the parish. Could provide

Psych Beds as our former hospital had 24 psych beds prior to Katrina. With a hospital and medical facilities we can begin work on Electronic Medical Records and

Medical Homes.

To make these dreams a reality we need three things.

1. Bridge Money—as soon as possible

A. Social Service Block Grant Money

• we need an extension on funds we were allocated due to expire July, 31–2007

• make more SSBG funds available to medicine in our area for infrastructure.

B. Community Block Grant Funds—since we have a non profit group now, we

need to make funds available to build permanent medical structures to replace our

present trailer.

C. Rural Designation for St. Bernard—for Medicaid and Medicare patients to help

offset costs of treating indigent patients for hospitals and physicians.

2. Medical Village—need money for brick and mortar. Once our out patients facilities are built it will allow access to quality medical care while our hospital is being

built.

3 Hospital—the ultimate cure. We have over 25,000 residents. As our elderly return and others receive the ever evasive ROAD Home money to rebuild we will approach the 35,000 we need to support a 40–60 bed hospital. Since it will take 18–

24 months to build a hospital we need to begin. Now.

If funds are available I ask that they be earmarked for St. Bernard Village and

Hospital Specifically and not to the State or local funding pools as we continue to

find them inaccessible.

I have refused to wear a white coat again until medicine in St. Bernard is whole

again. To wear a white coat would be like waving a white flag and surrendering

to the unacceptable situation that presently exists in medical care.

Thank you for allowing me to voice our Parish dilemma to such a knowledgeable,

distinguished, and concerned group. Thank you for listening.

TESTIMONY OF KAREN B. DESALVO, M.D.

Mr. Chairman and members of the subcommittee: Thank you for the opportunity

to speak today about post-Hurricane Katrina health care recovery in New Orleans.

I am Dr. Karen DeSalvo, the Executive Director of the Tulane University Community Health Center at Covenant House, a clinic formed in the aftermath of the storm

to meet the urgent needs of the population of city. Since September 2005, I have

been active in efforts to restore immediate health care services and in planning

groups focused on the longer term vision of a redesigned health system.

Before I begin my testimony, I want to thank all the members of the committee

for the opportunity to review the progress we have made. Health care is not a partisan topic and many have contributed to our progress, including the city, State and

Federal officials you will speak with later. All deserve recognition for working earnestly towards resolution of a uniquely difficult situation for our nation. Your assistance is needed now to help health care recovery efforts in New Orleans continue

to progress so that people who are currently uninsured, and without access to essential primary and preventive care receive the care they need.

Today I will share with you my perspective as a primary care physician trying

to care for the uninsured patients on our city. I hope to give you a snapshot of what

it is like to practice medicine in that environment, the challenges we face, what

would help improve access to care in the short run, and how we might go forward

to ensure that we provide support for the New Orleans safety-net primary care system while deciding the larger policy issues.

II. PRIMARY CARE RECOVERY: WHAT WE HAVE ACCOMPLISHED

We have come a long way towards restoring health care services in the 18 months

since the flood waters receded. Much has been made of the divisions in New Orleans, of our struggles in surviving the storm and its aftermath, and in beginning the

process of rebuilding from it. A much overlooked bright spot in those efforts has

been the progress we have made as a community in building a care network for our

most vulnerable citizens. The community has pulled together in unprecedented ways

to overcome overwhelming challenges to restore services and define a better health

system.

131

We described this Louisiana vision for our re-engineered health system through

the reports of several planning groups. Health and Human Services provided critical

support for much of this work beginning with the United States Public Health Service support of the ‘‘Framework for a Healthier New Orleans’’ and culminating in the

Louisiana Health Care Redesign Collaborative Concept Paper (Concept Paper).

While we have been planning the future, we have been living in the present, all the

while trying to keep within the vision of a distributed ambulatory care system that

can make primary care more accessible.

Historically, our safety-net system has been the Charity hospital and associated

clinics which were staffed by physicians from both Louisiana State University and

Tulane University. An estimated 250,000 people received care, including primary

care, through that system. Before the storms, smaller, community-based providers

were increasingly working in concert with the Charity system, but their share of

safety-net care provision was small.

The flooding caused by Hurricane Katrina destroyed much of the bricks and mortar of the safety-net system in New Orleans and the surrounding area. Affected institutions included the Charity system and all other safety-net providers. Even

though we had a successful evacuation of New Orleans, many of the sickest and

poorest patients remained behind and needed care. These people were those being

pulled out of flood homes where they had been for many days without access to their

medications or health care. First responders and others coming to reconstitute our

city were also in need of care.

In response to that need, Tulane University resident physicians came to New Orleans in the second week of September 2005 when the waters in most of the city

had receded and there were dry places to set up temporary care sites. These physicians-in-training partnered with the police to establish first aid stations and provide

general primary care at 6 makeshift sites around town. Most of these clinics were

started with meager provisions: a willing physician, a stethoscope, and a few donated, portable supplies. The providers generally worked without power, potable

water, or sanitary systems. Some of these health sites were on the sidewalk under

tents, some in hotel ballrooms, and others in police station dispatch rooms.

In addition to providing much needed care for patients, these makeshift operations stimulated a culture change in our primary care community. As academic

physicians working at Charity, we had provided a major portion of the safety net

care for the city through the Charity Hospital based clinics. For those patients who

could get an appointment with us, the quality was good. However, we also knew

that 12 month waiting periods for new patients to get in to see us, and the lack

of sufficient after hours access was preventing us from reaching many.

Creating primary health care from scratch in the post-Katrina environment, gave

us first hand experience with a new paradigm of care and an unexpected opportunity to rebuild a better system. Included in this health care culture change was

an understanding of the essential role of teams and partnerships, the synergistic

value of collaboration, and the benefits a multi-disciplinary approach to care. Also

included in this paradigm shift was attention to developing patient-centered models

of care. The makeshift clinics were established in response to where the patients

were. For example, we identified new sites of care based upon scouting the streets

of recently opened zip codes. We then set up our clinics as near to the patients as

we could. We worked side-by-side with volunteers from all disciplines. To access

care, patients only had to walk up to the card table and ask to be seen.

Over the course of the ensuing weeks, open tent structures were replaced by mobile vans and a few clinics landed space in available buildings such as empty store

fronts and dormitories. Eventually, the restoration of utilities moved us back in to

these more traditional venues which we generally welcomed. However, we wanted

to retain some of the elements of our new paradigm from our ‘‘street based’’ primary

care as we moved ahead.

From a care table to a neighborhood-based medical home: Tulane Community

Health Center at Covenant House

One of the early temporary care sites opened in early September 2005 when

Tulane trainees and faculty set up a card table as temporary care site on the sidewalk in front of the community center. At the height of need, we served 150 patients

a day. Desiring to maintain this new neighborhood health clinic, Tulane partnered

with Covenant House and Johnson & Johnson to develop a permanent neighborhood

clinic nested within a community center (www.tucovenanthealthcenter.org). We had,

by default, become a medical home for many in the city, particularly those in the

neighborhoods near us and were committed to continuing to that public service.

The Tulane Community Health Center at Covenant House started as a makeshift,

post-Katrina first aid station that developed into a permanent primary care clinic.

Since transitioning from a card table to a permanent primary care clinic, we have

132

become a source of primary care for hundreds of patients and have seen over 12,000

since opening our doors 18 months ago. This medical home is able to provide basic

primary care for adults including care through a multi-disciplinary health care

team. We have access to basic laboratory and diagnostic studies. We also serve as

a training site for house staff and medical students and other health professionals

so that the next generation of clinicians are exposed to a patient-centric model of

primary care. We have a sophisticated electronic health record that allows us to

manage our population of patients proactively and provide decision-support for clinicians to improve the quality and cost-effectiveness of care.

We developed a fragile patchwork of referral patterns for laboratory, diagnostic

and specialty services. We have a sophisticated electronic health record that allows

us to manage our population of patients proactively and provide decision-support for

clinicians to improve the cost effectiveness of care.

To support the ongoing delivery of primary care from clinic, we have been aggressively seeking funding so that we can expand our ability to provide health care to

this uninsured population. We have strung together our funding from an array of

entities including the government, corporations, individual donors, and foreign nations. Specifically, we are supported through the Social Services Block Grant, foundation support from the Avon Foundation, Americares, the American Refugee committee and a generous gift from the People of Qatar.

If we adhere to our budget and expectations, we could provide basic care to 4200

patients at a cost of $360 per year per person for the next 3 years. In the near future, we are implementing business processes to collect reimbursement from available sources and plan to secure a more stable funding stream. We may request the

subcommittee’s support as we move forward.

The Partnership for Access to Healthcare (PATH): A Collaborative Prototype for

Medical Home System of Care

Though we are focused on meeting the immediate health care needs of the population we serve, we are also working towards creating a neighborhood based-medical

home that can not only serve as a potentially replicable model but help to transform

the New Orleans health care system. The concept of a medical home has been well

described by national groups and our Louisiana Health Care Redesign Collaborative

Concept Paper. It emphasizes health promotion, preventive health and primary

care, supplemented by peer education and support. The health team is multi-disciplinary and includes social services and mental health support.

Our clinic is one in a newly developed, broader system of care that has emerged

since the storm to fill a void left when the traditional safety net was displaced by

the flooding. This network of safety net clinics represent service, called the Partnership for Access to Health Care (PATH) (www.pathla.org), represents a broad group

of clinics working cooperatively to provide access to care for the uninsured and

under-insured. These partnerships bring together public and private entities, academia, consumer groups and corporations into a common goal of filling the need.

In the aggregate, these clinics serve 900 patients a day, an estimated 50,000 covered

lives. An estimated 90 percent are uninsured and represent the rich racial, ethnic

and cultural diversity of post-Katrina New Orleans. Inclusion in the group is open

to providers willing to share in the core values of quality and cost-effectiveness. Current participating PATH clinical entities include:

Clinical Providers participating in the Partnership for Access to Healthcare

Algiers Community Health Clinic (New Orleans Health Department/EXCELth

Inc.)

Common Ground Health Clinic St. Cecilia Clinic (Daughters of Charity Services

of New Orleans/EXCELth, Inc.)

DCSNO at Causeway Clinic (Daughters of Charity Services of New Orleans)

Jefferson Community Health Centers, Inc Marrero (Jefferson Parish)

Jefferson Community Health Centers, Inc, Avondale (Jefferson Parish)

University Hospital (Medical Center of Louisiana at New Orleans)

Hutchinson Clinic (Medical Center of Louisiana at New Orleans)

Ida Hymel Health Clinic (New Orleans Health Department/EXCELth, Inc.)

Edna Pilsbury Health Clinic (New Orleans Health Department)

Healthcare for the Homeless (New Orleans Health Department)

McDonough 35 High (New Orleans Health Department)

St. Charles Community Health Center

St. Charles Community Health Center (Lulling)

St. Thomas Community Health CenterTulane Community Health Center at Covenant House

Tulane University Pediatric Clinic and Adolescent Drop in Center at Covenant

House

133

New Orleans Science & Math High (LSU HSC Adolescent School Health Initiative)

Eleanor McMain High (LSU HSC Adolescent School Health Initiative)

These providers have deliberately set out to create a distributed system of neighborhood based clinics that will provide more accessible care for the returning New

Orleans population.

These partners have worked collaboratively to identify and fill gaps in primary

care services, develop the model of the medical home, and find ways to link their

patients into specialty care and other services. With continued support and additional resources, PATH could serve as the core of a future model medical home system of care that could transform medical care in Louisiana. I88III. Primary Care

Delivery: The Challenges

The primary care community struggling to provide care for a growing number of

uninsured and underinsured individuals faces many challenges. The health system’s

‘‘short term’’ needs, which we presumed would be long behind us, continue to dominate our minds, conversations, and energies. The generous support of corporations,

foundations and citizens has been a critical bridge, but will be insufficient to rebuild

and sustain the primary care safety-net system.

For our part, the major limitations involved poor access to specialty care and diagnostic services. On a daily basis, this means my ability to provide evidence-based

care for a typical patient is limited. For example, we do not have access to colon

cancer screening and diabetes eye care. We also do not have access to urgent diagnostic studies such as brain imaging or endoscopy. As a result, we sometimes need

to rely on sending patients to emergency rooms for such tests. Worse, patients sometimes go without arriving at the hospital with significant or long term health consequences that prevent him from being a productive member of our community.

Like many other clinics in the city, we have an insufficient number of clinical providers at our site. For our part, if we could have more staff, we have the bricks and

mortar capacity to expand services and hours. However, as you might imagine, finding physicians and other clinical personnel willing to move to New Orleans is a challenge. There are concerns about long term job security and frustrations about trying

to maintain a high standard of practice in a broken environment. One of my physicians has been so frustrated with the difficulties of providing basic care for his patients that he has considered returning to Liberia to practice.

Complicating matters is the high burden of chronic disease for the uninsured, low

literacy and the rapidly expanding population of Spanish-speaking immigrants.

Adoption of best practices, the use of care management and health information technology will help with the care of those with chronic disease. A strong social services

infrastructure can help support those with extensive social service needs. The immigrant population poses its own unique set of challenges for us. The low income

workers in this group are likely to not be eligible for coverage if they are undocumented immigrants. We will eventually also need to leverage existing Federal programs to care for these populations.

Congress and the Administration can play a major role in expanding and sustaining access to primary care for our community. We are still in desperate need of additional assistance. Our short term problems are largely not those of bricks and mortar. Instead we are under-resourced and have a short time window until the existing

resources we do have will end.

IV. PRIMARY CARE: THE OPPORTUNITIES AND NEEDS

New Orleans and its surrounding region cannot recover without adequate health

care services. Sufficient infrastructure and accessibility are essential if we are to retain and attract business and industry, tourism, and have a productive workforce.

The most cost-effective means of rebuilding focuses resources on the primary care

infrastructure. A robust system of primary care is also critical to unclog an overwhelmed hospital system. If we build a highly functional and accessible system, people will need to use emergency rooms less. Good primary care prevents hospital admissions for illnesses such as asthma, heart failure and diabetes. Patients would be

better served prevention, proactive care management and empowering themselves.

We will continue to seek your help in our ongoing efforts to revive the primary

care services in the city and region. I understand that Congress faces many issues

related to Gulf Coast recovery, and that spending must be done wisely and with an

eye toward what will offer the greatest benefit to the most people. Preventing and

intervening early in the process of chronic disease saves money. Nothing is more

critical to the renewal of New Orleans than health care.

134

There are three ways that the subcommittee can help us provide immediate access to health care and prevent us from reverting back to relying on emergency

rooms for care.

1. Increase access to primary care in New Orleans for the uninsured through extending the SSBG deadline and providing further resources through the Deficit Reduction Act funding

We need to move forward with implementing core components a medical home

system of care model that will provide access to care immediately to the nearly

180,000 estimated low income uninsured in our area. The most cost-effective and

patient-centered means for doing this is to support and sustain existing primary

care resources and add new services to fill gaps until longer term policy decisions

can be made.

While our community debates the best way to expand health insurance coverage

for our uninsured population, we need to support the continued development of the

medical homes and a supportive delivery system of care. This is essential to ensure

continued progress rather than returning to a reliance on emergency rooms for care.

The PATH network has all the makings of a medical home system of care but it

is a fragile system that could dissipate without sufficient support to provide a bridge

to the future health system.

Most of these primary care clinics, now medical homes, have been sustained on

cobbled together funding from a variety of sources including public funds, such as

the Social Services Block Grant (SSBG) funds. On July 31, 2007, the SSBG funding

is scheduled to end. For a variety of reasons, there were delays in getting the SSBG

funds available to the providers. Fearing that their expenses wouldn’t qualify for reimbursement, many clinics have avoided using the SSBG funding instead relying on

other resources and on limiting services to their patients. We are now scrambling

to spend the money by the deadline for spending all the allocated money. If we do

not, the funding will be returned to the Federal Government. Providers in our community have repeatedly requested an extension of the deadline so that we can more

effectively use the Federal dollars we’ve been granted.

An additional option for transitional financial support would be to allocate the discretionary Deficit Reduction Act funds could be used for just such a purpose. It

could fund a pilot to assess the impact of a medical home system of care on improving patient health, care quality and lowering overall cost. If successful, we could

transfer these best practices to the rest of our State and potentially the nation.

2. Provide financial support for clinicians to help with retention and recruitment

The need for health care professionals and other staff is acute. Staff shortages

cause many clinics to turn away patients. Increasingly, recruitment is hampered by

care professionals’ rational concerns about the long term financial viability of the

health care system in New Orleans and the lack of mechanisms to reimburse them

for services. To recruit and retain health care professionals, resources are needed

that will pay qualified providers for services, support educational loan repayment

and defray malpractice costs. HHS and DHH have been working towards this goal,

but the allocated resources are not likely to be enough. Additionally, application

processes are complex and time consuming. The busy clinicians in this system need

streamlined and accessible mechanisms through which they can apply for the financial support. Payment for services rendered could be accomplished through expansion of coverage and though uncompensated care payments directed at physicians.

3. Assist us as we progress and hold us accountable for our commitments

The subcommittee would do this effort a great service by providing assistance and

guidance as we move ahead. This hearing has been quite a catalyst for us locally.—

We have had been better communication and coordination than in months.— All of

us have been forced to stop and clearly articulate what would improve access to care

immediately.— Such future hearings would help hold us accountable for our promises and allow us to inform the committee members of ongoing success and continuing needs.

VI. CONCLUDING REMARKS

While we work towards agreement on the long term financing structure of our

health care system, we need your help right now to ensure access to primary care

for our citizens. With the support of the American people and through our public

leaders such as those of you on this Sub-committee, we can restore, expand and sustain primary care services to our population—particularly those who are uninsured.

New Orleans survived the hurricanes and the subsequent flood. But survival,

alone, is not the goal of our citizens and is not a suitable objective for the nation.

To thrive, to be anything close to the city that it was, New Orleans needs a health

care system that all of its citizens can rely upon. The storm has given us a great

135

opportunity to demonstrate the health system of the future—one built around the

needs of patients, one readily accessible to all citizens and one that promotes health

rather than simply treating illness.

Thank you.

136

137

138

TESTIMONY OF DONALD T. ERWIN, M.D.

I. INTRODUCTION

I would like to thank the chairman and the members of the committee for their

interest in the health of our citizens, and for holding these hearings. Your commitment to understanding how we might all work to improve their care is appreciated.

ST. THOMAS COMMUNITY CLINIC PRE KATRINA

The St. Thomas Clinic was established in 1987 by a partnership between the residents of one of New Orleans’s largest public housing developments (St.Thomas

Housing Development), and concerned leaders in the medical and faith-based communities. The citizens of this neighborhood wanted accessible primary and preventive care within a reasonable distance of their home, with reasonable wait times,

and continuity of their care with the same doctor or group of providers. The elected

leadership of the predominately African American housing development also insisted that both the clinic board, and its providers, understand the dynamics of institutionalized racism and its impact on healthcare for people of color.

Over the last 20 years this clinic has provided low cost, efficient care to the uninsured and underinsured through public/private sources of funding. I was one of the

founders of the St. Thomas Clinic and served as president of the board for 16 years.

I was also Chairman of the Department of Medicine at Ochsner Clinic Foundation

much of that time. Ochsner leadership was very supportive of the relationship with

St. Thomas. Providing appropriate primary, preventive and basic specialty care to

outpatients helped minimize hospitalizations and emergency room visits. St.Thomas

Clinic has been an important site for the training of Medical Students, Internal

Medicine Residents, Family Practice Residents, Nurse Practitioners, and Doctor of

Pharmacy students from LSU, Ochsner, Xavier and Tulane. It has been an attractive training site because of its position in a vibrant community setting and its commitment to try to reduce health disparities. In addition to Ochsner, St.Thomas has

had innovative partnerships with private providers such as the EENT Foundation,

Touro Infirmary Hospital and the former Mercy Hospital in New Orleans. These private providers all recognized the value of the relationship with a community based

clinic trying to address the needs of a large uninsured population. We all learned

that the collaborations of these public and private entities provided high quality,

lower cost care to the community, while at the same time reducing emergency room

visits and hospitalization rates that burden the rest of the healthcare delivery system. While receiving grants from State, city and Federal programs, St.Thomas has

remained independent, not for profit, and is not under the governance of the State

or Federal healthcare clinic systems.

ST. THOMAS COMMUNITY HEALTH CENTER POST KATRINA

My physician wife, who had been medical director at St.Thomas for 12 years and

is now on faculty of the LSU School of Public Health, returned with me to New Orleans in mid-September after the Hurricane of August 2005. We attended some of

the initial planning meetings for the re-establishment of health services as the city

repopulated. I was soon approached by faculty and residents from LSU School of

Medicine who were concerned about patients they had treated pre-Katrina at the

Medical Center of Louisiana at New Orleans (MCLNO), and in many instances they

had continued to see while the patients were in emergency shelters around the

State. Many of these patients, who had evacuated to safer sites, were now returning

to New Orleans and had little access to medical care. Having begun and operated

St.Thomas Clinic before, we were able to relatively quickly re-open as the

St.Thomas Community Health Center and find supporters who were already familiar with the clinic and the community. Neighbors immediately appeared with

brooms and mops to help with the clean up. The Baldwin County Baptist Builders,

from Baldwin County, Alabama, were onsite within days to begin repairing the roof

and rebuilding the flooring of the clinic. Building supplies were extremely scarce,

so the AmeriCares Corporation loaded a tractor trailer with building supplies in

Connecticut and had them at St.Thomas when the Baptists Builders arrived. For

clinical services, it was necessary to begin anew. Along with clinics such as Covenant House, we were one of the first primary care clinics to open in the city. We

are, and always have been, open to all patients regardless of ability to pay.

We have found that the patient population at St.Thomas has changed since

Katrina. The clinic’s current patients include those patients living in a cycle of poverty that St.Thomas has traditionally cared for, but the clinic now has a large population of patients who, prior to Katrina, had health insurance, but lost it when their

139

employer’s business failed. A third population of patients is those now coming to

St.Thomas because they have lost their local physician. At least 50 percent of the

physicians practicing in New Orleans pre-Katrina have not returned. This group of

patients who lost their physicians includes some who have insurance and/or the

ability to pay all, or part of, their bill, calculated on a sliding scale which is based

on Federal poverty guidelines. We now find that 25 percent of St.Thomas patients

can pay for some or all of their care. Even for those with health insurance in our

community, there are simply not enough physicians to take care of the patients.

While the presence of insured patients helps St.Thomas be somewhat self sufficient,

it also strains our resources. But the message is clear that the health issues in New

Orleans are not just about the indigent or the uninsured.

Partly because of our history in the community, and partly because of the dire

straits of the city, St.Thomas has received very generous support from agencies and

partners who have joined with us. Since Katrina, we have received over $1.4 million

in grants and contributions, having come from more than 30 separate sources since

the storm. Contributions have ranged from $200 to $500,000. Due to the chaos in

our environment, we do not know precisely how many patients we saw in the first

2–3 months that we were open, but we do know that in the last 15 months we have

had approximately 23,000 patient visits. We average 70–80 patients per day in primary care, with another 30 patients seen who come for breast and pelvic exams including mammography, and another 20 patients seen for eye exams and treatment

in Optometry. Thus, in the relatively limited space of 5500 square feet, we are providing care for approximately 120 patients per day.

Any provider working in New Orleans can attest to the fact that there are few

‘‘brief’’ patient visits. The patients have virtually all sustained losses, in many cases

almost unimaginable, and providing adequate care involves understanding how the

patient can manage their medical condition within their current life circumstances.

It is impossible not to be impressed with the resiliency of the people and their

determination to put their lives back together. Most of the patients deal with their

stress by themselves. However, many simply cannot, and we hope to provide help

in other ways, specifically through opening a community mental health program in

space we have just leased.

The list of donors to St.Thomas since Katrina is impressive. But more important,

to us, was the way we were able to leverage their donations by having donors collaborate with other donors to help us. We found donors interested in common issues

and were able to combine donations in a complementary fashion for greater effect.

Some of these are described below.

Like other safety net providers left standing after Katrina, we at St.Thomas realized we were now being called on to fill huge gaps in the delivery of service. These

were daunting problems, but we often found support from unexpected sources. The

clinic’s earliest support came from faith based institutions, but we also had significant support from public, private, State and Federal sources that we could not have

anticipated.

While the media frequently reports of what is wrong in New Orleans, there have

been some remarkable collaborations and partnerships that helped us continue serving our community . The clinic has been blessed with resources and has tried to be

a good steward of them. Many of our collaborative efforts did not exist before

Katrina. These safety net partnerships and collaborative efforts provided such positive results, that we feel they should be maintained the future health care design.

The following are some brief descriptions of a few of the ways that donations of

time and support have been leveraged by complementary collaborations between

St.Thomas and its donor partners.

(1) REPAIRING STORM DAMAGE TO THE BUILDING

Immediately after the storm, neither construction workers nor building supplies

were available locally. We asked friends from the Baldwin County Alabama Baptist

Builders to plan with the AmeriCares Corporation in Connecticut, and the result

was the timely arrival of both building supplies and construction crews within days

of our asking for their help. They were able to make the necessary repairs so the

clinic could re-open. The cost for these repairs, if we could have found someone to

do them, would have been in excess of $100,000. It is just one example of the selfsufficiency that St.Thomas and our sister clinics showed in getting into service

quickly.

(2) RESUMPTION OF CLINIC MEDICAL OPERATIONS

The National Episcopal Church and the Louisiana Diocese of the Episcopal

Church soon after Katrina declared themselves to be partners with St.Thomas. The

140

church repeatedly worked with us over the last 18 months to arrange to hire providers and persuade other donors to partner with us. The church provided St.Thomas

the initial funds to pay LSU School of Medicine for our initial medical staff and resident trainees. As we set about to hire permanent staff, the church provided bridge

financing to assure the salaries of 3 full time physicians who are also jointly on the

faculty of LSU Medical School. When St.Thomas was offered the unique opportunity

to provide cardiology specialty consultations in the clinic, the Diocese agreed to underwrite the necessary renovations of the space for cardiology as we sought other

grants. Most recently, the clinic has been able to lease space to begin a community

mental health center. Once again, the Episcopal Diocese of Louisiana recruited benefactors from out of State to agree to underwrite the building renovations and hiring

of staff.

In great part due to the promise of secure funding by the church, St.Thomas now

has three full time adult primary care providers, all of whom are jointly on the faculty of the LSU School of Medicine and /or the LSU School of Public Health. We

have a full time pediatrician who joined us from the community. We have 5 part

time specialty care providers. Specialty services St.Thomas offers now include cardiology (see below), gynecology (by a community gynecologist), pulmonology and

rheumatology (from their respective departments at LSU School of Medicine), optometry, (funded by the EENT foundation), and nephrology (from a volunteer working at another State medical facility). Each of the rheumatology, pulmonology and

nephrology specialty providers, while very beneficial in reducing emergency room

visits and avoiding hospitalization of our patients, costs St.Thomas approximately

$25,000 annually and visit the clinic one half day per week.

3) Breast and Cervical Disease Prevention and Management:

The LSU School of Public Health recognized that St.Thomas could provide the site

for them to maintain operations of their Louisiana Breast and Cervical Health program, which is sponsored by the Centers for Disease Control and Prevention. Recognizing this possibility, the School of Public Health helped St.Thomas develop a

consortium of funders that includes the Avon Corporation, Komen Foundation, and

the United Way. This collaboration provided over $530,000 to St.Thomas. The medical outcome of this collaboration is that St.Thomas Community Health Center is the

only site in the city where uninsured women can receive breast cancer screening

complete with both screening and diagnostic mammography, breast biopsies, and

follow up care arranged with providers who will care for our breast cancer patients

for the Medicaid rate we can provide.

(4) SPECIALIZED CARDIOLOGY CONSULTATIONS AND CARE

One of the most remarkable and unexpected collaborations has resulted in

St.Thomas being able to offer cardiac consultative tests and specialized patient management. At the suggestion of Dr Keith C Ferdinand, a nationally recognized New

Orleans cardiologist, The Association of Black Cardiologists (ABC) approached the

Morehouse School of Medicine on behalf of St.Thomas to provide cardiac care to the

community. The ABC knew of St.Thomas from the clinic’s previous work dealing

with health care disparities. Cardiac care was an urgent issue for our uninsured

community, as patients requiring elective cardiac evaluations and diagnostic testing

had to travel either 60 or 80 miles away to one of the open Charity Hospitals.

Spearheading the effort, the ABC and the Morehouse School of Medicine helped develop a group of providers, manufacturers and professional organizations who all

agreed to help St.Thomas meet the need for cardiac care in the uninsured community. This collaboration now includes not only ABC and Morehouse, but also professional groups including the National Board of the American College of Cardiology,

the Louisiana Chapter of the American College of Cardiology, the Ochsner Clinic

Foundation Department of Cardiology, the New Orleans Medical Foundation, and

corporations such as Astra Zeneca, Cardiac Science, and the Toshiba Corporation.

Providing direct care to St.Thomas, a community cardiologist (Dr Gary Sander), and

Ochsner Clinic Foundation Cardiologists come to St.Thomas 2 half-days a week to

see our patients and supervise testing. This diagnostic testing now includes standard EKGs, echocardiograms, 24 hour Holter monitoring and interpretation, and

most recently, stress echocardiography. We are currently negotiating for hospital

support when Invasive catheterization and surgery is necessary. Our physicians are

certain that having these diagnostic and management services available in the clinic, especially having cardiologists help with the management of complex patients,

has resulted in a reduction of both hospitalizations, and visits to the emergency

room for our patients with heart disease.

The volume of patients who are seen in cardiology or any of the other specialty

areas at St.Thomas, are not just from St Thomas Clinic alone. We have invited all

141

of our sister clinics, i.e. Daughters of Charity, Common Ground, St Charles CHC,

and Covenant House, to use these any of these specialty consultations.

We are very pleased that the Medical Center of Louisiana at University Hospital

is now open and also providing cardiac specialty care. This is a great step forward

for our community. We hope to continue to partner with, and augment State and

local efforts, and the community is hopeful additional beds will soon open for interventional cardiac care for the uninsured.

(5) ENHANCED SYSTEMS DEVELOPMENT

The Partners for Access to Health Care, (PATH) a subsidiary of the Louisiana

Public Health Institute has provided hardware, software and licensing support for

an Electronic Medical Record for the St.Thomas clinic. Once this became available,

both public and a private support came to St.Thomas to maximize our systems of

registration, billing, coding and collection. Blue Cross Blue Shield Foundation of

Louisiana is able to provide sophisticated business support and personnel, and they

are joining with one of our sister clinics, the Saint Charles Community Health Center to assist in applying this expertise to the every day operations at St.Thomas.

As we become more efficient with our different systems, we feel we can increase the

number of patients seen significantly, thus not only increasing the number of patients seen, but also reducing the cost of care per patient borne by St. Thomas .

(6) Another partnership that has been made available to us is an alliance with

the Eye Ear Nose and Throat Foundation. This foundation provides support for

St.Thomas patients with Eye or Ear Nose and Throat disease. These patients can

be seen in the private sector once they have been screened by St.Thomas. This has

been crucial to protect the vision of our diabetic patients at risk for serious diabetic

eye diseases. Several local hospitals, and private Eye, Ear, Nose and Throat physicians, have agreed to see our patients for the Medicare rate fees the EENT Foundation provides. This has been especially important since the public hospital ENT programs are still located in Baton Rouge and will be for the foreseeable future.

(7) Another very important ally has been the Bush Clinton Katrina Fund, which

gave us our largest donation to date, $500,000. While critically important, like so

many of our grants, this is a one time only grant, and must be spent within one

year of receipt.

(8) The last source of support to highlight is the Social Service Block Grant, which

was made available by the Federal Government to safety net clinics. As these funds

were being negotiated and the grant programs developed, the Louisiana State Department of Health and Hospitals, led by Dr Fred Cerise and Ms Kristi Nichols, aggressively fought for funds for safety net providers like St.Thomas and sped up the

negotiations necessary to get the funds to these providers. St.Thomas received an

SSBG grant of $755,000 in the second year of our post Katrina operations. The estimated operating deficit of the clinic for that year was $800,000, demonstrating how

critical the timely distribution of those funds was for St.Thomas. Like the Bush

Clinton Katrina Relief Fund, our gratitude for this funding is great. Nonetheless,

one time grants highlight our need to identify and secure stable funding to sustain

operations.

In addition to the above contributions, we have received generous support from

other charitable and relief organizations, including the National Association of Free

Clinics, Robert Wood Johnson Foundation, Operation USA, Direct Relief International, individual Presbyterian churches and Episcopal parishes, the Acadiana

Foundation, the Area Health Education Foundation, and individual, sometimes

anonymous, donors.

One of the important reasons for the collaborations among these clinics is that

enhanced primary care is clearly the best way to provide convenient, high quality

care with provider continuity. This is important to patients, but it is also the most

effective way to reduce emergency room visits and hospitalizations. The community

clinics that make up the PATH organization all want to continue to have linkage

to the academic specialty services at Medical Center of New Orleans, and we are

pleased to see how effectively Dr. Dwayne Thomas, Dr. Cathi Fontenot and other

members of the management of University Hospital at the Medical Center of Louisiana have been at getting the hospital open and specialty services brought back. But

in spite of their effectiveness, there are still limited beds in the University Hospital

that are just not yet resolved.

There exists within the PATH organization a sub group of 5 clinics that are similar in that they are all independent, not-for-profit, clinics. None are part of the City

of New Orleans Clinics, or the Medical Center of Louisiana at New Orleans. The

critical services provided by these clinics have become more important since

Katrina, but they have no guaranteed recurrent funding. They include St.Thomas

142

Community Health Center, St. Charles Community Health Center, Common Ground

Clinic, Covenant House Clinic, and Daughters of Charity Health Center. We share

common goals, and try to support each other, and have learned the value of sharing

resources, even if limited. Thus, St.Thomas Clinic shares all the specialty services

we have listed above with each of these five clinics, and each of them, in turn, has

provided varied useful resources to St.Thomas. We are currently seeking shared

support based on the premise that funders might well be more receptive to helping

us in order to support the development of a network to improve our efficiency and

effectiveness as we maximize our community support services.

CONCLUSION

The funding for St. Thomas Community Health Center has been substantial but

it is a patchwork of organizations that have been generous to us. It has taken resourcefulness, prayer, and extensive community relationships to develop support

from more than 30 partners who help St. Thomas provide the level of service it provides. Many of the grants to the clinic have been related to Katrina, and are one

time only events. While appreciative of the generosity of our partners, the quest for

ongoing funding is constant.

As we consider funding the future of St. Thomas, a major issue is timing. Most

experts agree that even if, as we hope, the Medical Center of Louisiana at New Orleans can be rebuilt in a way that adequately addresses the need for primary care,

prevention, specialty care and hospitalization for the uninsured, at the earliest, the

process will take years. The St. Thomas Clinic was begun by citizens asking for

community based, accessible and patient centered care. The clinic provided that over

the years and now, thanks to generous funding, is doing it on a larger scale and

is also meeting some of the specialty care needs that is currently limited or non existent at the State hospital. It is likely that the services we provide will be needed

for the foreseeable future as the health care system is being rebuilt. The St. Thomas

Community Health Center, and others like it, arose from a need before and after

Katrina to address issues of healthcare for the uninsured in New Orleans. We would

ask that Congress consider assisting these clinics to continue to provide these services with gap funding, and to provide consultative support to help us structure a

sustainable clinic network.

Whether they be called medical homes or community based clinics, we feel that

clinics like St. Thomas and our sister clinics in PATH organization provide important resources for health care in the future. We provide not only compassionate,

skilled, and readily available care, but we have also learned how to develop our collaborative efforts to leverage the care that any and all of us are able to provide independently. What we need is on site assistance in formal network development, and

strategic suggestions on building sustainable funding.

There is considerable debate at present about the specific health care program

that should be developed for the future of the State of Louisiana. I would not want

anyone to construe my testimony before you, to be an endorsement of one group over

the other, private versus public. I can honestly say that after 30 years in on part

or another of the health system in New Orleans, I have been very heartened at the

energy and determination of my colleagues at Charity Hospital (MCLNO), the commitment and sincerity of the leaders of the State Department of Health and Hospitals, and also physicians in the private sector, all of whom are trying to address

this overwhelming challenge of providing basic healthcare to the uninsured and

underinsured members of our community. We appreciate the importance of the patient having choice in any health care system. We also appreciate the quality and

care benefits that come from a medical home in which one can find both primary

care and access to specialty services and hospitalization when necessary. We want

to continue to develop efficiencies and the other components of a true medical home.

We feel this is the best way to provide comprehensive primary care to the community.

Our experience at St. Thomas is that this community desires respectful and readily accessible access to care. They want, and deserve, timely evaluation and treatment for diseases found in the primary care setting. All our citizens deserve to have

the opportunity to prevent chronic diseases and to detect problems such as coronary

heart disease and cancer before they cause lifelong disability or death. We know

that timely, appropriate specialty care in the outpatient setting is an integral part

of comprehensive care. Management of patients by the collaboration of primary care

providers, and specialists when appropriate, provides the most cost effective, highest

quality care while it simultaneously lowers emergency room visits and hospitalizations.

143

What we have done over the years at St. Thomas, and particularly since Hurricane Katrina, has been to try, on a small scale, to provide both primary and preventive care, with specialty consultations as possible. The opportunities, collaboration,

and generosity of the American people following Katrina has allowed St. Thomas

to do more than ever before.

The St. Thomas Community Health Center, and our group of health clinics that

have shouldered the majority of care for the last 18 months, now seek the help of

this committee to be able to continue these services while fully supporting the restoration of services at MCLNO. We also urge that clinics with proven track records

in the community such as ours be considered to be integral parts of whatever plans

are ultimately developed for the long term.

Our current mission:

(1) To continue to provide primary care to all patients, regardless of their ability

to pay.

(2) To provide services to those who, in spite of their ability to pay, cannot find

a physician.

(3) To continue to develop outpatient specialty consultative services and to make

them available to other primary care providers, to improve outcomes and reduce reliance on the emergency rooms and hospitals.

(4) To develop and provide a community based mental health center, focusing on

youth, and families, who are dealing with the continuing stress related to the loss

of their community caused by Katrina.

(5) And most important, to develop the appropriate networking infrastructure and

efficiencies to enhance and sustain the services we deliver.

Our most pressing needs for the immediate future include:

(1) Stable, dependable, gap funding until the new self-sustaining health care

model is in place.

(2) Available specialty consultations for complicated patients, (for the management of cancer, gastro-intestinal diseases and other complex conditions, and surgical

specialty care such as urology, and orthopedics).

(3) Mental health providers, including inpatient mental health beds and ongoing

outpatient mental health services.

(4) Improving our systems support to maximize the numbers of patients we can

effectively and appropriately see.

I would once again thank the chairman and the members of the committee for

the opportunity to participate in this hearing.

[Dr. Erwin’s answers to submitted questions from Mr. Whitfield

follow:]

144

145

146

147

148

TESTIMONY OF FREDERICK P. CERISE, M.D., M.P.H.

Mr. Chairman and members of the committee thank you for the opportunity to

testify today on the continuing concerns and immediate health care needs in the

New Orleans region. I am Dr. Fred Cerise, Secretary of the Louisiana Department

of Health and Hospitals, the leading State agency for health care in Louisiana.

Background: Louisiana struggles with the same health care delivery system issues

affecting the rest of the country. Our fragmented system that operates largely in

a fee for service environment results in a health care system characterized by uneven quality of care, rising costs and inequitable access to care. In 2004, Louisiana

spent $19.4 billion on health care services in Louisiana1 and from 2000–06 health

care premiums for Louisiana families grew nearly 5 times faster than earnings.2

In many areas, capacity and utilization in Louisiana are well above the national

average. A snapshot of the status in Louisiana prior to Hurricanes Katrina and Rita

shows the following:

• Overall Medicare spending per capita3 K—1st • Hospital beds per capita—9th

• Medicare hospital days—2d

• Overall hospital admissions—4th

• Overall emergency department visits—4th

• Medicare home health, number served per capita—1st

• Medicare home health, number of visits per person served4

• Overall prescriptions filled for children and elderly—3d

• Overall Medicare quality ranking5—50th

Louisiana is further characterized by a high uninsured rate, a high level of poverty, and poor health status. The uninsured consume far less care than those with

insurance,6 they are not the driving force behind the above statistics.

The largest provider of care for the uninsured is Louisiana’s State operated system run by the Louisiana State University (LSU) Health Care Services Division

(HCSD) and Health Sciences Center (HSC). This system is comprised of 10 hospitals

and over 250 outpatient clinics statewide. LSU-HCSD, which includes New Orleans,

had nearly 900,000 outpatient visits, including 626,000 clinic visits during the

2005–06 fiscal year.7

Reimbursement for these services is primarily funded by utilizing disproportionate share hospital (DSH) funds. The DSH program was created to provide funding

to hospitals that served a ‘‘disproportionate share’’ of Medicaid and uninsured patients and is a component of the Medicaid program. Subsequently, it is jointly funded by the State and Federal Governments. Louisiana’s ‘‘State match rate’’ is approximately 30 percent—so for every 30 cents the State puts forward, the Federal

Government matches it with 70 cents. Additionally, each State has a DSH cap. The

total DSH available for Louisiana in fiscal year 2007 is $1.05 billion.

DSH funds in Louisiana are primarily allocated to the LSU system and community hospitals. Although DSH funds are a key source of funding for the uninsured

in Louisiana, there are some limitations to the program. For example, only hospitals

can be reimbursed with DSH funds. This means that only hospital-based clinics can

receive reimbursement through the DSH program. This is less of an issue for the

LSU system, since it is an integrated system with both hospitals and clinics. However, the DSH program inadvertently supports high-cost emergency department care

when primary care through a clinic might be more appropriate. Furthermore, DSH

funds are used for reimbursing health care services—but cannot be used to reimburse a physician or other health care professionals that provide care to the uninsured.

Louisiana is not unique in the existence of this type of safety net; we are unique

in that it is organized as a statewide system. Through this system, people who are

unable to afford health care can access services, including primary, preventive and

specialty care as well as hospital services. While variable across the State, access

to many services is constrained by available funding.

Considering the high utilization, rising costs, uneven quality, and lack of equitable access to health care in Louisiana, the State’s approach to health care reform,

both pre- and post-Katrina has been aimed at making systemic changes.

Louisiana Health Care Redesign Collaborative: After Hurricane Katrina, the Louisiana Health Care Redesign Collaborative was created through a legislative resolution to respond to the health care issues in the New Orleans region (Jefferson, Orleans, Plaquemines, and St. Bernard parishes). The Collaborative was a forty member

group charged with creating recommendations for a health care system for New Orleans driven by quality and incorporating evidence-based practices and accepted

standards of care. The Collaborative adopted the following vision: Health care in

149

Louisiana will be patient-centered, quality-driven, sustainable and accessible to all

citizens. The backbone of a redesigned system of care put forward by the Collaborative is the ‘‘medical home.’’

The proposed medical home system is consistent with recommendations made by

a number of professional societies such as the American Academy of Pediatrics, the

American Academy of Family Physicians, and the American College of Physicians.

It also has qualities and expectations consistent with those of a high performing

health system as described by the Commonwealth Fund and of a redesigned system

as characterized by the Institute of Medicine.

This new system will provide health promotion, disease prevention, health maintenance, behavioral health services, patient education, and diagnosis and treatment

of acute and chronic illnesses. The medical home is the base from which other needed services are managed and coordinated in order to provide the most effective and

efficient care. This includes specialty care, inpatient care, community preventive

services and medical home extension services for complex care needs. The center of

the medical home is a primary care provider who partners with the patient to coordinate and facilitate care. The medical home does not restrict patient access to

services—rather it helps ensure that the patient receives the right services.

Ensuring the coordination and comprehensive approach of the medical home

model over time will improve the efficiency and effectiveness of the health care system and ultimately improve health outcomes.

The other three main components of the redesign concept are:

• Health Information Technology (HIT)—HIT is the key to creating ‘‘system-ness’’

and can allow the seamless sharing of electronic information to improve efficiency

and patient safety. Additionally, HIT can be used to inform clinical practices and

facilitate data reporting which are key components of a quality agenda.

• Louisiana Health Care Quality Forum (LHCQF) ‘‘The LHCQF will function as

a ‘‘learning system’’ that will monitor population health measures across providers

and payer systems and actively engage with health care organizations to implement

quality improvements, increase cost-effectiveness, and achieve better outcomes

statewide. It will improve the quality of health and health care throughout Louisiana in a cost effective and transparent manner in a safe, peer protected environment.

• Coverage for Services - Another major concept is the creation of a mechanism

(the Connector) which would match individuals needing health insurance to affordable insurance options, thus offering affordable health insurance coverage to an expanded number of uninsured individuals in the State.

In response to the Collaborative’s concept, the Federal Department of Health and

Human Services put forward a proposal that is consistent with the President’s Affordable Choices Grants proposal that was announced in the 2007 State of the

Union address. HHS proposed a statewide coverage expansion that would insure

319,000 uninsured through private insurance. This proposal would be financed by

savings from better managing Louisiana’s Medicaid program and by redirecting

$770 million in disproportionate share hospital (DSH) funds currently spent in the

safety net system.

While appreciative of the effort to insure more individuals, the State recognizes

serious gaps in the proposal. Through our analysis, the HHS proposal would leave

300,000 to 400,000 citizens without insurance coverage. Additionally, current funding ($770 million) for the safety net would be eliminated if the State were to implement the CMS proposal. The use of incorrect cost projections, the omission of highcost populations, and the use of unrealistic managed care discounts in the HHS proposal suggests that coverage would be expanded to fewer than the projected

319,000.

Louisiana has learned from those that have traveled this road before. Massachusetts, which is breaking ground with its mandate for health insurance coverage,

spent many years working towards this goal. If Louisiana were to cover half of its

uninsured as optimistically described above, we would end where Massachusetts

began just prior to its 2006 reform legislation—about 10 percent uninsured but

without a safety net system of care. As a State with nearly 18 percent uninsured

and 45 percent of its population at 200 percent of the Federal Poverty Level or

below,8 we understand that we must lay the groundwork before we can make such

great leaps. The groundwork includes efforts aimed at both insuring more people,

and also, very importantly, improving our safety net and the delivery system in general.

John Wennberg, Director of the Center for the Evaluative Clinical Services at

Dartmouth Medical School, and others have demonstrated that in healthcare, capacity is a strong driver for demand. As a result of Katrina, the New Orleans region

150

lost a large amount of capacity. However, capacity is tied to other important pieces

of the utilization equation, such as how care delivery is coordinated and how it is

reimbursed.

Those system design changes have not occurred; therefore we should not expect

a smooth transition to a lower capacity system. Further, in most areas, capacity is

now well below national norms. The lower capacity and specifically, the lack of

ready access to coordinated primary care or post-acute care, has resulted in the

stressed medical environment we are experiencing today in New Orleans.

So our challenge is twofold. We must first meet immediate needs while ensuring

that, in the process, we support the rebirth of a better overall system of care. The

vision for a system to replace the lost capacity is one that adheres to the aims set

forth by the Institute of Medicine: safe, effective, patient-centered, timely, efficient,

and equitable. It is a patient-centered system predicated on access to primary care

that provides evidence-based preventive services and tracks those with chronic disease to ensure appropriate management. It provides ready access to appropriate

services and information when necessary and is convenient for patients, coordinated

among providers along the continuum of care, and supported by a system of electronic medical records to improve safety, quality and efficiency.

The current gaps in the delivery system have provided the opportunity for systems change. We will continue to move forward with health care reform for Louisiana—but we must also ensure the New Orleans region can recover to meet our citizen’s health care needs today. My testimony today will focus on the immediate and

short-term health care needs for the New Orleans region of Louisiana.

Post-Katrina Health Care in the New Orleans Region: Hurricane Katrina caused

a significant disruption in the health care delivery system in New Orleans. Prior

to Katrina, care for the uninsured in the New Orleans region was delivered primarily in the public hospital system and clinics and to a lesser extent, federally

qualified health centers (FQHCs). Uncompensated care for the community hospitals

in the region was less than 4 percent. According to the PricewaterhouseCoopers Report on Louisiana HealthCare Delivery and Financing System, the region had an

oversupply of short-term acute care hospital beds and an undersupply of long-term

care beds.

Immediately after the storm, only 7 of 21 acute care hospitals were open with

staffed beds at less than half of the pre-Katrina total. The nursing home capacity

was reduced from 4,954 to 2,735 beds. The largest health care system for the uninsured, the LSU-HCSD system, was not operational.9 The closure of the LSU-HCSD

hospital in New Orleans also eliminated their Level I trauma center, which was one

of only two in the State. In addition to the impact on the infrastructure, the evacuation of people from the area led to the largest efflux of health care providers in

U.S. history.

The University of North Carolina at Chapel Hill estimated that almost 6,000 active, patient-care physicians along the Gulf Coast were dislocated by the storm.

Over two-thirds—4,486—of those were in the three central New Orleans area parishes that were evacuated. The study also estimates that over 35 percent of these

dislocated physicians were primary care physicians. The loss of medical manpower

in hurricane-affected areas created a critical shortage of physicians all across south

Louisiana. Similar shortages have occurred with nurses and other licensed and

trained health care providers.

There have been a number of efforts over the past year and a half to ameliorate

the situation in the New Orleans region. The Federal Deficit Reduction Act appropriated $2 billion to States affected by Hurricane Katrina. As a result, the State implemented a Katrina 1115 waiver to provide coverage to our citizens that evacuated

to other States and to provide payment to providers within the State for uncompensated care (UCC). This provided $132,091,048 in much needed relief to providers for

uncompensated care between August 2005 and January 2006.

Additionally, the State was able to use approximately $680,569,383 to supplement

State funding for its Medicaid program. The Medicaid funding relief came at a critical juncture in early 2006 as State revenues had sharply declined, all State agencies

were implementing budget reductions, and the State had issued an emergency rule

reducing Medicaid reimbursement rates to providers by roughly 10 percent.

Hospitals: Recognizing that the usual source of inpatient care for the uninsured

in the Orleans region was not operational and that the Katrina UCC pool was time

limited, the State created a mechanism to pay community hospitals for UCC rendered for the remainder of the State fiscal year, between February and June 2006.

A total of $52,494,904 was reimbursed to community hospitals. Currently, physician

costs are not considered an allowable cost and cannot receive reimbursement

through the DSH program. A request to receive Federal match to pay physician

UCC during this period was requested but not approved.

151

Two payment increases were subsequently approved by the 2006 Louisiana Legislature. First, Medicaid payments for hospitals were increased by $38 million. Second, a Community Hospital DSH Pool was established, allocating $120 million for

UCC for community hospitals from July 2006 through June 2007. Although a proposal was put forward by the State to reimburse hospitals in the Katrina and Rita

affected parishes at 90 percent of uncompensated care costs, the hospital association

preferred an approach that provided less funding to the Katrina and Rita affected

regions and spread the UCC funds more thinly across the State to potentially include all hospitals in the State, including those not in the affected regions and not

significantly impacted by evacuees.

To date, $37,995,972 has been paid to the community hospitals; it is likely that

the full $120 million will not be expended according to the formula adopted in the

State appropriations bill.

Primary Care and Behavioral Health: Access to primary care and behavioral

health has been limited post-Katrina. This is particularly true for those without insurance. Approximately $16.5 million of the Social Services Block Grant (SSBG)

funding was dedicated to restoring primary care in the New Orleans region after

Hurricane Katrina to restoring critical primary and preventive health care services.

This funding expires August 2007. In addition to utilizing this funding for direct

service delivery, SSBG funding also has been used to enable these clinics to prepare

to become future medical homes delivery sites. The State targeted a portion of SSBG

funding to the implementation of electronic medical records, quality improvement

initiatives and the development of networking capabilities across clinic sites to

achieve interoperability and system-wide patient education and outreach.

SSBG funds are also being used to restore and expand mental health services,

substance abuse treatment and prevention, and developmental disability services for

children, adolescents and adults in need of care in these areas. Through this funding, efforts are also being targeted at the creation of more appropriate community

based treatment options to prevent unnecessary or inappropriate institutional care.

Federal Emergency Management Agency (FEMA) and Substance Abuse and Mental Health Services Administration (SAMHSA) funds have been used to:

• provide psychological debriefing and stress management interventions to the

public sector workforce;

• expand the number of addiction counselors in the State; and

• develop and implement the ‘‘Louisiana Spirit—Immediate Crisis Services Program, which is designed to deliver crisis and mobile counseling to persons impacted

by the hurricanes.

The State has also provided funding to open 45 beds for behavioral health for

adults and children.

Health Care Workforce: The Redesign Collaborative identified a number of shortterm issues and made requests to HHS for assistance, including one to establish the

Greater New Orleans Health Services Corps (GNOHSC). A major challenge remains

the inability to retain a medical workforce. HHS awarded Louisiana with a workforce grant of $15 million in February 2007.

The grant, through the GHNOHS, will provide salary, relocation costs, bonuses,

and premium payments for medical malpractice for providers that commit to practice in the region for the next three years. Eligible providers include physicians,

dentists, physician assistants, nurse practitioners, nurse midwives, dental hygienists, psychologists, counselors, social workers and pharmacists.

New workforce competition, as a result of Katrina, has highlighted traditionally

low salaries of direct care professionals for the elderly and people with disabilities.

The average salary for direct support professionals in Louisiana is $6.68, which is

below the national average. The State is increasing the wages for these workers by

$2/hours to help retain these critically needed workers. The annual cost to Medicaid

will be $110 million.

Another short-term request from the Collaborative to HHS was for an adjustment

to the Medicare wage index to reflect current costs. The wage index typically lags

three years. Hospitals estimated the cost to be $67.7 million a year for three years.

A $71 million grant to hospitals and skilled nursing facilities was received from

HHS.

Health Information Technology: Louisiana received a $3.7 million contract from

the Office of the National Coordinator for Health Information Technology (ONCHIT)

to develop a prototype for health information exchange, which has since been successfully demonstrated. This contract is part of the Gulf Coast Digital Recovery Effort. The State assisted in the establishment of the Gulf Coast Health Information

Technology Task Force that the Southern Governor’s Association convened. Other

152

HIT efforts include the launch of KatrinaHealth.org which allowed providers to access prescription drug information for evacuees.

Current Status of the System: Combined, these efforts have significantly improved

health care in the New Orleans region. However, issues remain. Over time, the impacted area has seen slight increases in bed capacity, but there remains a shortage

of acute care beds compared to national standards. The current plan in the LSUHCSD hospitals is to phase-in an additional 75 beds by July 2007. The staffing and

reimbursement for hospitals continue to pose problems.

Today, there are 26 safety net primary health care sites that are providing services in the New Orleans region. These sites include federally qualified health centers, Tulane outpatient clinics, LSU-HCSD outpatient clinics, mobile clinics, city

and parish health service sites, hospital outpatient clinics, rural health clinics and

non-profit community-based practices. However, based on the current population,

there remains a shortage of primary care providers. Increased demand for primary

care providers will likely occur as the region continues to repopulate.

The region also suffers from a significant shortage of specialists. While LSUHCSD has been able to resume a number of specialty services as space and staff

have become available, there remains the lack of some essential specialty services

to support the primary care sites serving Medicaid and the uninsured. The area is

still below national norms for nursing facility beds.

Immediate Health Care Needs for the New Orleans Region: The health care system is still challenged today. The actions taken over the past year and a half have

helped to improve access to care, workforce issues and infrastructure—but problems

remain. Access to care, particularly for the uninsured, is difficult. Rising costs, due

to contract labor and higher property and casualty insurance costs are impacting

providers. The average length of stay in hospitals is above pre-Katrina averages.

These are among the immediate needs to be addressed in the New Orleans region.

Broadly, the immediate continuing needs fall into one of three categories: access

to care, workforce recruitment and retention, and infrastructure requirements. The

specific needs are outlined below:

Primary Care Capacity: Currently, there is a shortage of primary care providers

in the New Orleans region that is affecting all other components of the system.

Based on HRSA standards, we have a shortage of 49 primary care providers who

are available and willing to serve the Medicaid and uninsured populations. Hospitals across the region report seeing a population with more advanced disease than

pre- Katrina, more patients without a regular source of care, and even more limited

options for discharge and follow-up care in the communities.

Solution: Establish sufficient primary care capacity in a manner consistent with

the redesigned system of care envisioned by the Collaborative by sustaining operational support provided by SSBG funds to safety net clinics and by funding ten

new medical homes. Medical Homes of sufficient size and scope to meet the needs

of the uninsured population will be established in a fashion consistent with the principles outlined by the Collaborative. The medical home criteria would include not

only quality expectations but also care coordination and access expectations to ensure timely care is available outside of emergency departments through after hours

clinics.

The above approach will have the effect of providing assurances of income necessary to attract and retain providers, while relieving the burdens of fixed costs.

This will foster the growth of what is designed to be a high performance delivery

system.

Workforce Recruitment and Retention: Louisiana facilities now have to employ increasing amounts of contract labor to sustain staffing needs. The added complexity

of inadequate and short supply of desirable housing for health care professionals

continues to result in a lack of physician staff, mental health professionals, dentists,

nurses, and others willing to remain in or locate in the greater New Orleans area.

The ability to expand capacity to meet the health care needs in the region is hindered by the lack of available workforce.

Solution: Fully implement the Greater New Orleans Health Services Corps Program. Initially, Louisiana requested $120 million to support health care workforce

recruitment and retention. Fifteen million dollars have been granted to the State—

which will allow the State to institute the program. However, we continue to estimate that it will cost $120 million to fully implement the program. This will provide

for incentives for physicians, dentists, nurses, and other professional staff. In exchange for the financial support, providers must commit to serve in the region for

three years.

Behavioral Health: Lack of access to necessary community based services and

housing supports for individuals with mental illness and other behavioral health

needs shifts care to more acute services. The shortage of community services for this

153

population, a situation only exacerbated after Hurricane Katrina, results in the reliance for services on the hospital emergency departments, an area already strained

due to the lack of adequate primary care in the area. In addition, the loss of psychiatric care beds in the area from 274 to 180 post-Katrina and the slow return of

the community based mental health services only furthers the lack of access to care.

Solution: Develop, implement, and fund a five year redevelopment and mitigation/

prevention plan for behavioral health services; and expand Medicaid coverage to

people with severe mental illness. The State requests a partnership with FEMA and

other governmental entities in the development and implementation of a point by

point plan along with secure funding for a five years. This plan allows for the reestablishment of a competent mental health system in the greater New Orleans region

and other contiguous parishes. This five year plan, estimated at $170,000,000 would include crisis counseling

under the existing FEMA Disaster Relief, as well as direct treatment dollars for

services including psychiatric hospitalization, crisis intervention, suicide prevention,

substance abuse treatment and long-term ambulatory treatment of psychiatric conditions. This funding and support from FEMA will stabilize the behavioral health

system for the Orleans region.

Further, the concept paper the State put forward to HHS included a request to

include individuals with serious mental illness as a Medicaid eligible population.

This would allow the State to provide broader access to services for these individuals.

Medicare Wage Index: The short supply of health care providers is resulting in

increased competition among providers for professional and non-professional staff.

The effect is a significant rise in labor costs. Compounding the problem is the increase in the length of stay that hospitals are reporting. This rise in costs is not

reflected in the prices established by the Medicare fixed payment system.

Solution: Provide funding for costs related to the Medicare wage index. HHS awarded Louisiana a $71 million grant for hospitals and skilled nursing facilities

to address the increased costs providers are experiencing as a result of the rising

labor costs. While very helpful, this one time grant does not address the entire three

year lag in the Medicare wage index calculation. The fiscal estimate for 2 years is

$67 million/year for hospitals and $6.9 million/year for skilled nursing facilities.

DSH Flexibility: Two significant roadblocks to increasing health care capacity and

access to health services in the New Orleans region are (1) the inability to use DSH

funding for non-institutional care and (2) the inability to use DSH to reimburse for

physician services. In order to receive DSH funds today, health care services must

be funded by a hospital. While the State has created great capacity in a clinic system associated with public hospitals, this limits flexibility in development of outpatient capacity. Further, while physician costs are an essential component of delivering health care, they are not reimbursable through DSH.

Solution: Allow the redirection of DSH funds to support non-institutional care;

and allow DSH funds for physician services. The DSH redirection will provide great

relief by creating a funding mechanism to reimburse physicians for treating the uninsured and by supporting clinics that provide primary and preventive care. The

State also proposes to redirect DSH funds in the New Orleans region for a pilot to

reduce the cost of private insurance for small employers and their low-income employees. Ultimately, redirecting the DSH funds will allow the groundwork for creating an integrated system of care for the New Orleans region. This solution does not

require additional funding.

Health Information Technology (HIT): Hurricane Katrina highlighted the importance of interoperable HIT. After the storm, providers had difficulty communicating

with each other across the State and the vast majority patients who were displaced

as well as the providers caring for them did not have access to patient records.

While HIT is an important component of hurricane preparedness, it creates value

everyday by improving patient safety and health system efficiency. As physician

practices recover, and as we support providers in settings to care for the uninsured,

it makes sense to implement a modern system of health information exchange into

the process. The devastation in the New Orleans region provides an unprecedented

opportunity to make a significant imprint of HIT in a large metropolitan area.

Solution: Support electronic medical record (EMR) adoption and continue to support the Louisiana Health Information Exchange (LaHIE) project. The Office of the

National Coordinator for Health Information Technology contracted with Louisiana

immediately after Hurricane Katrina to develop a health information exchange, as

part of the Gulf Coast Digital Recovery effort. This $3.7 contract will expire at the

end of this month. Continued support of LaHIE will cost approximately $1 million

per year. The other essential component is the adoption of EMRs by providers. The

State estimates that it will cost $17.7 million over a five year period for the New

154

Orleans region primary care providers to fully adopt EMRs. The State is would like

to continue and expand this successful partnership with the Federal Government.

Developmental Disabilities: The ongoing need for community-integrated housing

that can support those with significant disabilities is critical for the recovery and

for the healthcare delivery system in south Louisiana. Prior to Hurricanes Katrina

and Rita, people with disabilities were disproportionately represented among the

homeless and faced extraordinary barriers in accessing and maintaining access to

affordable housing. As a result of the disaster, many more have been rendered

homeless or have been unable to move from what should have been temporary shelter in institutions and other restrictive settings because of a lack of affordable housing coordinated with supportive services. This also affects the ability of healthcare

providers to discharge individuals from acute care settings, and housing instability

often leads to a revolving door of reentry into emergency and acute care services.

Solution: Provide, through the U.S. Department of Housing and Urban Development, an equal number of Section 8 project-based Housing Choice Vouchers to be

used in conjunction with the 3,000 units of Permanent Supportive Housing (PSH).

Louisiana has made a commitment to develop 3,000 units of Permanent Supportive

Housing as part of the recovery effort. The State has worked closely with local and

national advocates who are strongly in favor of this commitment to PSH. These

vouchers will ensure that the housing designated for PHS will, in fact, be affordable

to individuals with disabilities, many of whom live on SSI and have incomes at and

below 20 percent of Area Median Income. In order for this recovery to be accessible

to all Louisianans, the Federal Government’s provision of 3,000 section 8 projectbased Housing Choice Vouchers specifically for use in providing PHS as defined in

the Louisiana Road Home Plan is essential.

PSH integrates affordable, mainstream rental housing with the supportive services needed to help people with disabilities access and maintain stable housing in

the community. This model is a nationally recognized, cost-effective model for preventing and ending homelessness and unnecessary institutionalization among lowincome people with serious, long-term disabilities including mental illness, developmental disabilities, physical disabilities, substance use disorders, chronic health conditions like HIV/Aids, and chronic conditions and frailty associated with aging.

Thank you for the opportunity to testify today.

1 PricewaterhouseCoopers, ‘‘Report on Louisiana Healthcare Delivery and Financing System,’’ 2006. 2 Families USA, ‘‘Premiums Versus Paychecks: A Growing Burden for Louisiana’s

Workers,’’ December 2006. 3 S.F. Jencks, et al, ‘‘Change in the Quality of Care Delivered to Medicare Beneficiaries,’’ JAMA, 2003. 4 Kaiser Family Foundation, State Health Facts—Louisiana, available at:

www.statehealthfacts.org (accessed March 9, 2007). 5 Jencks 6 J.R. Graham, ‘‘Don’t blame the uninsured,’’ Chicago Tribune, March 2007. 7 LSU-HCSD, ‘‘LSU-HCSD Fiscal Year 2005–2006 Utilization Report,’’ May 2006. 8 Kaiser Family Foundation, State Health Facts—Louisiana, available at:

www.statehealthfacts.org (accessed March 9, 2007). 9 PricewaterhouseCoopers, ‘‘Report on Louisiana Healthcare Delivery and Financing System,’’ 2006.

TESTIMONY OF CATHI FONTENOT, M.D.

I would first like to thank members of the subcommittee, including Chairman Stupak and Ranking Member Whitfield, who have taken time out of your busy schedules to travel to New Orleans to witness first hand the destruction wrought by Hurricane Katrina. Thank you for your attention and for this opportunity to share our

current state of affairs and plans for the future to support the health care infrastructure in New Orleans.

I am medical director of the Medical Center of Louisiana at New Orleans

(MCLNO), which is comprised of both Charity and University Hospitals. MCLNO

is part of a State-wide system of public hospitals and clinics with a principal mission to provide access to care for the uninsured. MCLNO and LSU’s other hospitals

also play an integral role in health care education in Louisiana, housing the vast

majority of residency training slots in the State. The strong linkage of graduate

medical education and care for the uninsured has been a signal feature of

Lousiana’s health policy for many years.

155

Prior to August 29, 2005, MCLNO provided approximately 270,000 outpatient

clinic visits which spanned primary care to specialties, such as nerve surgery and

cardiothoracic surgery. It housed one of the largest HIV outpatient clinics in the

country and provided 130,000 outpatient emergency room visits. It was one of only

two Level 1 Trauma Centers in the State of Louisiana, the other being in the northern part of the State in Shreveport, and served as a primary training site for both

LSU and Tulane Schools of Medicine. In addition to future physicians, the Medical

Center was responsible for training multiple other health care providers, including

nurses and allied health providers such as physical therapists, occupational therapists and respiratory therapists. The Medical Center had a capacity of about 550

beds, including almost 100 psychiatric beds, with occupancy that hovered between

90 percent to 100 percent. You will rarely see such a full census in any hospital,

except in urban public hospitals.

The storm effectively destroyed both MCLNO facilities. The loss of Charity and

University Hospitals has been devastating to the community. The current status of

health care infrastructure in New Orleans is tenuous and critically ill. Although we

were able to temporarily re-open a portion of University Hospital, restoring approximately 180 inpatient beds, the total number of beds in New Orleans is less than

half of pre-Katrina numbers. The population loss, while high within New Orleans

city limits, is actually close to pre-Katrina levels in the metropolitan area overall.

Many have simply relocated to higher ground but remain in the market. Sicker patients, who in many cases have lost their health care providers, present to our emergency rooms with uncontrolled disease processes due to lack of primary care and access to medications. Because of the loss of clinic space and cancer providers, patients

who present to our hospital with cancer and no health insurance have no choice but

to travel 60 miles to a rural LSU hospital for their chemotherapy or radiation treatments and back 60 miles home while weak and miserable (and that’s assuming they

have transportation).

The status of behavioral health is even more dismal with limited outpatient and

inpatient services in the greater New Orleans area. Emergency rooms across the

city are bearing the brunt of this shortage with anywhere from 10 to 20 psychiatric

patients occupying acute emergency beds on any given day. In our emergency room

alone there are days when half of our available Emergency Department beds are

occupied by psychiatric patients because there are no inpatient beds available for

them. This situation is unsafe and certainly not in the best interest of the patients

or our employees. It also results in a major obstacle to Emergency Department

through-put for acute care. Local emergency rooms are already overwhelmed with

patients who seek primary care inappropriately through the Emergency Department

because of loss of health care providers in the area, and the addition of behavioral

health patients to this mix is simply not good medicine.

Solutions to the health care crisis in New Orleans are being developed but are

constrained by availability of space and health care providers (both primary care

and specialty providers). A critical component of the effort to restore health care

services involves establishing and strengthening a network of neighborhood clinics.

MCLNO has continued our collaborative coalition with the group of primary care

clinics known as PATH, Partners for Access to Healthcare for the Uninsured, where

we serve as the major hospital partner and provide hospital services as well as specialty access. It is this sort of collaborative effort that can be a real opportunity to

accomplish health care reform as we go forward. Additionally, the plan for the Medical Center includes establishment of community primary care clinics in temporary

facilities so that primary care can be delivered in communities where the basic principles of prevention and disease management are best delivered. One of the major

challenges for health care providers in the New Orleans region is the lack of access

to specialty care. We anticipate that at least to some degree, we can maximize the

use of the limited specialty care available by utilizing telemedicine technology and

becoming more efficient at directing patients to the right place at the right time for

the right reason. Additionally, a shared electronic record is critical to such a network of providers in order to share information and eliminate costly duplication of

effort.

We look forward to continuing our work with other safety net providers because

such a coalition is crucial to real health care reform and necessary for institution

of a new model of health care in the region.

Thank you for the opportunity to share our information with you today.

156

TESTIMONY OF THOMAS KOEHL

Chairman Stupak and distinguished members of Congress and guests. Thank you

for the opportunity to speak to you today.

My name is Thomas Koehl and I work for Operation Blessing, a humanitarian

relief organization that responds to both domestic and international disasters.

Among other activities, Operation Blessing provides a free medical and dental clinic

as well as a pharmacy in New Orleans. We presently see 75 to 100 patients a day

with a staff of volunteer doctors, nurse practitioners, and physicians assistants. In

the past 11 months we have provided healthcare to over 15,000 patients and dispensed 25,000 free prescriptions to the residents of this stricken city.

They were pulled from roof tops, they waded in water, and spent days sweltering

in the heat on highway overpasses and in the superdome. They are a never before

seen American, over 100,000 newly made poor, hopeless, homeless and

marginalized. Our task—yours and mine—is to relieve their suffering.

When Katrina struck, it washed away people’s homes, jobs and health insurance,

but not their high blood pressure, diabetes, and other chronic illnesses.

The need for healthcare is so great that our patients begin standing in line at

three and four o’clock in the morning every week day in order to see a healthcare

provider. Grandmothers, single mothers with sick children, entire families sleeping

in the cold to wait to see a doctor. They are uninsured, working for employers that

do not provide benefits, and not old enough to qualify for Medicare or not accepted

by the States’ Medicaid program.

Operation Blessing recently partnered with Remote Area Medical, International

Medical Alliance, the New Orleans Health Department and the LA Department of

Health and Hospitals to host Medical Recovery Week for the greater New Orleans

Area.

On the first morning of this event I met Mike in our triage area. He made his

way though a maze of tents, concentrating on staying warm and keeping his place

in line. He was one of hundreds who had arrived in the frigid pre dawn hours in

the hopes of seeing a doctor. Mike had been in line since 10 pm the night before.

I asked Mike why he was there and he said, ‘‘I need insulin, I have been out for

months and haven’t found anyone that could help.’’

Like thousands of returning hurricane evacuees, Mike had returned to a city

where health care was limited and the majority of residents are now uninsured.

‘‘This was a new reality check for me,’’ Mike said. ‘‘My insurance is gone, my job

is gone, and my home is gone.’’

On this day, however, he along with nearly 600 other patients received free medical care during Operation Blessing’s Medical Recovery Week.

More than 400 doctors, dentists and nurses flew in from across the country to volunteer for the event, providing more than 9,000 medical services to more then 3,000

patients by the week’s end. Services included dental work; eye exams and glasses;

primary healthcare; OBGYN services, diabetic care, pediatrics and cardiology.

To accommodate the influx of patients, we set up 20,000 square feet of tent space

to serve as additional exam rooms outside the Operation Blessing medical and dental clinics—which have been providing free medical care to more than 15,000

Katrina victims since April 3, 2006.

This was simply a larger version of what we do everyday in New Orleans. For

Mike, help was as simple as receiving a new meter to test his blood sugar and several vials of insulin.

It’s not uncommon day-after-day to hear people sit and cry and say, I worked

across the street at the hospital 24 years. I had insurance, I had retirement, and

its gone. The population that we are serving is not just those who were poor before

Katrina, but tens of thousands of newly-made poor . . . people who had jobs, cars,

homes, and health insurance.

Our patients still, 18 months after Katrina, get in line before daylight every weekday to receive healthcare. Over 50 percent of these patients have High Blood Pressure and a third of those are in crisis when they arrive at our door. 26 percent of

our patients have diabetes and many blood sugars are so high when they walk

through our door that they cannot be measured. We still see two to three patients

a week that have not had their insulin since Katrina and have just heard about our

clinic.

These citizens are not what you would classically think of when you think of indigent patients. These citizens just 18 months ago owned their own homes, worked

fulltime, went to the children’s band performances and volunteered in their community. They were people just like your neighbors. People you would have invited to

your home for dinner.

157

Would you feel comfortable if your neighbors had to stand in line all night in the

cold to be seen by a doctor? Or be sent to a hospital and have to wait in an ambulance for 4 hours before they can be seen in the emergency room. The question then

is who is our neighbor. Is it just the family whose grass meets ours or should we

be concerned about those Americans that we have not yet met.

This population is our modern day Job. They have lost loved ones, their homes,

their cars, their jobs, and their insurance. We have 127,000 uninsured residents in

the city of New Orleans. They see others profiting from a disaster in which they

lost everything, including their faith in a system which had promised them health

insurance, a pension and, most importantly, protection.

Today the mortality rate in New Orleans is 48 percent higher per capita then it

was before Katrina. I am not talking about traumatic injury but death caused by

heart attack, diabetes, and stroke. The infant mortality rate in New Orleans is five

times higher than it was before the storm. The level of depression is present at rates

never before seen in the United States of America. The depression and stress act

to worsen and exacerbate individual healthcare issues and disease processes.

We are here to discuss what needs to be done going forward.

Build a system where it is easier for non-profit agencies to operate in disaster

stricken areas. Operation Blessing can provide its own infrastructure, but not all

non-profits are able to provide buildings and appropriate utilities so they can care

for the victims of disaster.

Build a system that encourages for profit providers to return to the region, where

‘‘the dollars follow the patient,’’ where the uninsured have choices and can seek care

in private health care facilities and those doctor’s offices and hospitals are reimbursed for that care. The charity hospitals would have to compete with private hospitals to survive and would raise the overall level of patient care in the region.

Among the recommendations being considered to improve primary and preventive

care are technology initiatives to track a person’s medical history and to create community clinics, health centers and other neighborhood facilities to coordinate care

for those who depend on the State for services. The community clinics would refer

patients to specialists, manage disease care and provide a consistent system for

tracking care.

Please remember that everything that is needed by the city of New Orleans is also

needed by the healthcare system that you seek to rebuild. Infrastructure such as

housing, schools for the doctors and nurses children, utilities, and people with the

economic ability to pay for the service that is being offered. All of these are necessary for a sustainable healthcare system.

Since April 3, 2006, Operation Blessing has provided free medical and dental services to more than 15,000 residents devastated by Hurricane Katrina and filled over

25,000 prescriptions free-of-charge. We can only do this by partnering with other

agencies and with the financial support of our donors. I would like to thank all who

have made it possible for Operation Blessing to care for the residents of New Orleans. We are truly grateful for the opportunity to serve.

STATEMENT OF ROBERT E. LYNCH, M.D.

Mr. Chairman and members of the committee, I want to start by thanking you

for the universal support the United States Congress has given to the Department

of Veterans Affairs (VA) in its rebuilding and recovery efforts not only in southeastern Louisiana but also the entire Gulf Coast region. Through that support, our veterans and the VA employees living along the Gulf Coast continue to make great

strides along the road to recovery.

Hurricanes Katrina and Rita challenged our country with two of its greatest natural disasters. While Hurricane Rita did little permanent damage to VA’s infrastructure, Hurricane Katrina, on the other hand, produced unprecedented damage to its

medical center in New Orleans. Our medical center, the community we serve, and

the homes of veterans and employees sustained destruction on an monumental

scale. Today I will describe our ongoing and planned health care restoration efforts

in New Orleans.

I will speak first to VA health care recovery activities and its future plans in New

Orleans. Next, I will address the Memorandum of Understanding that was signed

between VA and the Louisiana State University (LSU) System and actions associated with it. Finally, I will discuss VA’s relationship with LSU as the State of Louisiana progresses in its analysis of State health care reform.

158

NEW ORLEANS RECOVERY ACTIVITIES AND FUTURE PLANS

Forty-eight hours following Hurricane Katrina’s landfall, as quickly as weather

conditions permitted, a VA damage assessment team was dispatched to the Gulf Region to survey VA facilities at New Orleans, LA; Biloxi, MS; and Gulfport, MS. At

New Orleans, the team found that the VA facility initially weathered the storm with

minimal damage. However, following the hurricane, water from the breached levees

flooded the entire medical district and the medical center. Flooding of the basement

and sub-basement in the main building of the VA Medical Center (VAMC) rendered

it inoperable as these areas housed the facility’s major electrical, mechanical, and

dietetics equipment. The medical center’s long standing academic partner, the Louisiana State University Health Care Services Division at Charity and University

Hospital, sustained similar types of damage. While University Hospital has reopened, Charity Hospital is permanently closed.

In the immediate aftermath of Hurricane Katrina, VA’s commitment to the Gulf

Coast Region veterans remained steadfast. VA deployed a system of 12 ‘‘mobile clinics,’’ in coordination with local authorities, to provide urgent and emergent care to

include first aid, immunizations, and prescriptions. Specifically in Louisiana, mobile

clinics provided care at Baton Rouge, Hammond, Jennings, Kinder, Lafayette, Lake

Charles, LaPlace, and Slidell. VA mobile clinics treated 5,000 veterans and 11,000

non-veterans in the aftermath of Hurricanes Katrina and Rita.

To address the health care of veterans in the greater New Orleans area, VA expanded the capacity of its existing Community Based Outpatient Clinic (CBOC) in

Baton Rouge. We converted the ninth and tenth floors of the medical center, formerly the nursing home in New Orleans into exam rooms and began offering primary care services there in December 2005. Three months later in March 2006 limited specialty care clinic services were added to those units. Temporary facilities in

LaPlace (St. John’s Parish), and Slidell were leased as alternate care sites. Tents

were erected in Hammond to provide basic services.

With the support of Congress, VA was authorized to accelerate the activation of

CBOCs proposed under CARES and opened a permanent clinic in Hammond in August 2006. We remain in leased space in Slidell and plan to construct a permanent

clinic there in three to five years. The St. John CBOC is anticipated to open in October 2007.

Basic outpatient mental health services are provided at each of the clinic locations. Currently, inpatient mental health care is coordinated with the Alexandria

(LA) VA Medical Center. Dental clinic services were re-established in April 2006 by

leasing space in Mandeville, Louisiana. In Baton Rouge, we leased the old CBOC

building in 2006 and are using that facility to house the medical center’s clinical

laboratory, as well as select administrative support functions.

As a result of these actions, the Southeast Louisiana Veterans Health Care System (SLVHCS), formerly known as the New Orleans VA Medical Center, served over

29,000 veterans in fiscal year 2006. This is 72 percent of the previous year’s workload. Fiscal year 2007 workload to date is growing at an annualized rate of ten percent over last year and is expected to increase as housing is restocked in the area.

To help our staff and support the community, VA worked with its academic affiliates, The Tulane University School of Medicine and the LSU School of Medicine,

to place VA faculty, medical staff/residents, and student trainees at VAMCs

throughout our VISN 16 Network.

With the VA’s inpatient units shut down, 102 medical center employees that included nurses, health technicians, medical support assistants, operating room technicians, certified registered nurse anesthetists, and radiology technologists were

temporarily deployed in July 2006 under a Federal Emergency Management Agency

(FEMA) task order to provide critically needed staff support to local health care institutions.

In terms of future VA services in New Orleans, we continue to explore our longterm options for re-establishing surgical capabilities and inpatient services in New

Orleans. In the interim, these services are coordinated through sister VA medical

centers in Louisiana, Mississippi, and Texas, as well as through selective referrals

to community hospitals in the New Orleans area at VA expense. We are actively

pursuing options for expanding outpatient mental health services to meet current

and future veteran’s needs.

Projects for the re-establishment of radiology and outpatient pharmacy services on

the grounds of the old medical center campus are underway and expected to be completed later this calendar year.

In preparation for the construction of a replacement medical center, VA has initiated its space planning process. Interviews of architecture and engineering firms to

design the new facility are complete. A selection is expected this spring. The reVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00162 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
159

placement medical center is expected to provide acute medical, surgical, mental

health and tertiary care services, as well as long-term care.

MEMORANDUM OF UNDERSTANDING BETWEEN VA AND LSU

As required in Public Law 109–148, VA compiled and presented its long-term

plans for the construction of a replacement hospital in New Orleans in its February

2006, ‘‘Report to Congress on Plans for Re-establishing a VA Medical Center in New

Orleans.’ In that report, VA identified its principal objectives regarding the New Orleans area as being not only to restore services to veterans in the most cost effective

manner, but also to assist in the restoration of health care and medical education

in New Orleans. Recognizing the successful history for sharing and collaboration between VA and the LSU Health Care Services Division, as well as the potential for

future efficiencies, the report concluded that construction of facilities on a single

campus with support services shared with LSU was the preferred option.

As a result of the ‘‘Report to Congress,’’ VA and LSU leadership signed a Memorandum of Understanding (MOU) agreeing to jointly study state-of-the-art health

care delivery options in New Orleans. This MOU established the foundation for developing a collaborative approach to operating a replacement facility. From that a

group of experts from both organizations, called the Collaborative Opportunities

Study Group (COSG) was charged with determining if any mutually beneficial sharing could occur between the two organizations. In the group’s June 2006 report delivered to the former VA’s Under Secretary for Health, it concluded that both organizations could leverage their strengths, provide significant operating efficiencies,

and allow us to better serve our beneficiaries. Congress subsequently authorized VA

to pursue the project to replace the New Orleans facility as a collaborative effort

consistent with the COSG report.

In September 2006, the Collaborative Opportunities Planning Group (COPG) was

established to develop an operational plan for sharing between the two organizations based on the foundation work of the COSG. The COPG is co-led by VA and

LSU representatives. Representatives of the Tulane University School of Medicine

and the State of Louisiana Division of Administration are also part of this group

and its planning discussions.

A critical component of the charge of the COPG is to determine if the proposed

sharing options identified in the original COSG report are viable and if they are,

to begin the work of developing timelines and formulating the framework for space

planning and design for a joint replacement facility. To date the COPG has made

significant progress by reviewing literally dozens of clinical and administrative functions to determine if the function would best be provided via a sharing arrangement

between VA and LSU or independently owned and operated by both entities. The

COPG’s final report is to be presented by September 30, 2007.

VA’S FUTURE RELATIONSHIP WITH LSU

The VA remains excited about its MOU with LSU in the context of health care

redesign in Louisiana. We support all of the principles behind it. At the same time,

health care redesign seems to face some obstacles and delays in Louisiana. Because

of this, we are committed to exercising due diligence to our veteran beneficiaries

and to the tax payers, and are concurrently exploring other options for initiating reconstruction of the Southeast Louisiana Veterans Health Care System’s medical

center within Southeast Louisiana. In furtherance of this, we plan to begin a site

search to identify alternative locations in the near future while we continue to work

with LSU on our collaborative plans.

Mr. Chairman, we consider the committee and the Louisiana delegation to be

partners with VA in seeing that southeast Louisiana veterans continue to receive

the high quality health care that they have come to expect and deserve.

Congress appropriated to VA $1.2 billion in supplemental funding for recovery

and rebuilding efforts. This includes $625 million to replace the New Orleans Medical Center. These efforts have enabled VA to provide timely access to care in New

Orleans’ surrounding communities through strategies such as leasing medical office

space and establishing three new CBOCs.

The commitment to uncompromised excellence in health care and service to the

community has resulted in bodies such as the Collaborative Opportunities Planning

Group rethinking previously established relationships and identifying new strategies to improve operational efficiency and quality of care in areas such as academic

medicine, use of electronic medical records, subspecialty care, and joint emergency

preparedness planning. VA’s construction of its new medical center will be an important part of improving healthcare services for veterans in New Orleans.

160

Thank you for the opportunity to be here today. I will be pleased to answer any

questions you may have.

161

162

163

164

TESTIMONY OF ALAN M. MILLER, PH.D, M.D.

Mr. Chairman and members of the committee: Thank you for the opportunity to

speak to you all about the state of health care in the New Orleans region eighteen

months after Katrina and about Tulane University’s role in the recovery. Since Hurricane Katrina devastated our city—and our healthcare system—in August 2005,

we’ve seen enormous progress in some areas despite almost overwhelming challenges. In other, critical areas, we have seen shockingly little progress resulting in

a situation that now appears to pit the Federal Government against the State of

Louisiana. Such an impasse will only make reform more difficult and the ensuing

delays in the decision making process could threaten the very existence of our medical training programs. As you can see, we still have a long way to go before health

care for the citizens of our region approaches anything near what we used to deem

‘‘normal.’’

First, I want to thank members of the committee for your support for the region

over the last eighteen months. Many of you have been to New Orleans and have

seen firsthand both the devastation and the progress. For those of you who have

who have not yet been to the region, I urge you to come at your earliest opportunity.

Through efforts such as this hearing and the spotlight it continues to shine on the

challenges of our region, it is my hope we can move toward a system that provides

equal access to quality care for all our citizens while also training a qualified and

committed physician workforce that will assure the future of care in our State and

region. At the end of the day, this is all about access to care for all our citizens,

now and in the future.

My institution is somewhat different from those of my colleagues on this panel.

I represent an institution of higher education whose mission includes not only providing healthcare to the citizens of the region but also training future physicians.

Today, I’d like to focus my comments on four key areas:

• Tulane University’s efforts in the immediate aftermath of the storm;

• Our continuing efforts to train the future physicians and provide clinical care;

• The immediate needs for retention of a qualified workforce; and,

• Long-term needs associated with maintaining and growing an adequate physician workforce to meet patient needs.

TULANE UNIVERSITY: AFTER THE STORM

The past year and a half has been extremely challenging for everyone in New Orleans, but especially for those of us trying to assess healthcare needs, rebuild a broken healthcare system, continue to provide care for all New Orleanians who need

it, and continue to train young physicians. The Tulane University Health Sciences

Center suffered losses of greater than $200 million in property damage, lost research assets and lost revenue. Through the storm and since, despite seemingly

overwhelming challenges Tulane—the largest employer in Orleans Parish—has continued to do exactly what it has done since its creation in 1834: providing health

care, educating physicians, and advancing medical knowledge through research and

discovery in New Orleans and Louisiana. Over the next few minutes I would like

to update you on Tulane’s current activities, our place in the recovery of health care

in the New Orleans area, and our concerns for the future.

When Hurricane Katrina struck in August 2005 it left our 620 medical students,

520 residents and most of our faculty and staff scattered across the country. Our

IT system was inoperable, all communications systems had failed and our student

and personnel records were trapped in flooded buildings in New Orleans. At that

point Tulane University consisted of 30 people working out of a Houston hotel suite.

What was accomplished in the weeks after Katrina is nothing short of remarkable. Faced with a self-imposed target date of September 26 to resume classes and

training for our medical students and residents, in three short weeks of long workdays we set up a medical school at the Baylor College of Medicine with our displaced students using Tulane’s curriculum and taught by Tulane faculty. We received critical life support from, and will always be indebted to, four Texas institutions that formed the South Texas Alliance of Academic Health Centers: Baylor College of Medicine, The University of Texas Medical School at Houston, Texas A&M

University System Health Science Center College of Medicine and the University of

Texas Medical Branch at Galveston.

At the same time, back in New Orleans, a small but determined group of physicians and residents remained steadfast in their mission to provide care to those who

remained in our devastated city—both citizens and first-responders. Tulane University provided care at six sites, 7 days a week in Orleans Parish, seeing approxiVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00168 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
165

mately 500 patients per day and becoming the largest ambulatory care provider in

the parish. In October 2005, Tulane faculty and residents began to concentrate activities at Covenant House on Rampart Street. Since that time, more than 8,000

adult patients have been seen and currently 45 patients a day are being cared for.

A separate pediatric drop-in clinic at the same site has seen close to 1,500 babies,

children and young adults. At the drop-in center annex, mental health services have

been provided to more than 141 clients for 536 visits since July.

In addition, Tulane Pediatrics, in partnership with the Children’s Health Fund,

has operated a Mobile Medical Unit treating patients at a variety of locations in

New Orleans and in St. Bernard Parish. Since January, 850 adults and 1,000 children have received primary care services from Tulane Pediatric and Med/Peds faculty and residents in the mobile unit.

TRAINING OUR FUTURE PHYSICIANS

Well-educated and trained physicians are essential elements in assuring access to

quality healthcare services not only in New Orleans but throughout our country.

Tulane’s healthcare mission and medical education mission are intimately intertwined. Teaching faculty, supervising medical residents, provide a large portion of

the care for most there. Today, a total of 327 Tulane residents and fellows are being

trained in 40 programs, approximately 63 percent of the number being trained pre

Katrina. Each year that Tulane and the other major medical school in New Orleans,

LSU, train a reduced numbers of residents, will have long-term implications for the

supply of physicians in Louisiana.

In the 2005–06 academic year Tulane and LSU required special waivers from the

Centers for Medicare & Medicaid services (CMS) in order to allow their residents

to continue their training in multiple hospitals throughout Louisiana as well as outside of the State. In order for this to occur, protracted negotiations between the

medical schools, the hospitals and CMS occurred. In the event of another major disaster where major teaching hospitals may be forced to close, a better solution is

needed to deal with the disruption in medical training. Despite the waivers granted

by CMS, Tulane still absorbed unreimbursed costs of approximately $3 million related to graduate medical education (GME) for the 2005–06 academic year. Even with

reduced numbers of residents and redistribution of residents to new locations, we

anticipate an additional loss of $2 million for the current year. It is not a financial

burden we are able to carry much longer.

In addition to GME costs, with the city’s public hospitals down, the burden of care

for the uninsured has been assumed by the city’s private hospitals and private physicians. The State’s Medicaid Disproportionate Share (DSH) payment system has

historically been directed to the State’s safety net hospital system. With the closure

of the largest components of that system there was a major gap in funding the care

of those patients. The Federal Government has taken steps to assist hospitals in the

care of this patient population. In March 2006, CMS allocated $384 million for the

uncompensated care pool to help hospitals that were caring for the uninsured. While

appreciated, these funds have not been sufficient to compensate hospitals, and none

of these funds were allocated directly to physicians and other healthcare providers.

Tulane faculty physicians will have provided $6.8 million in uncompensated patient

care between September 2005 and June 2007. Tulane University has been able to

retain the majority of its physician faculty by guaranteeing salary through the end

of June 2007—in effect, a private nonprofit educational institution has been using

its dramatically impaired and limited financial resources to help underwrite

healthcare in the State and help preserve the healthcare workforce. Having suffered

losses of approximately $500 million in Katrina—$300 million in addition to the

losses at the Health Sciences Center—Tulane cannot continue to do this and survive.

If we are to preserve the physician workforce both at our teaching institutions and

in the general medical community, there needs to be immediate funding for providing care to our citizens. If this does not occur, New Orleans physicians will continue

to abandon their practices and leave the community, and we will not be able to recruit replacements. Those that suffer will be the patients who cannot find adequate

care. It has been calculated that approximately $30 million per year is needed to

provide basic reimbursement to physicians for uncompensated care. A mechanism

to providing funding directly to providers must be considered in order to reimburse

physicians for care provided in the past 18 months and for ongoing support of care.

Another important component of both the patient care and graduate medical education missions of our medical schools has been the New Orleans Veteran’s Affairs

Hospital (VA). Pre-Katrina, Tulane faculty physicians provided approximately 70

percent of the patient care at the VA and 100 resident physicians were on rotation

166

at that facility. Since Katrina the hospital has remained closed, with inpatients

being sent to other VA facilities, predominantly out of State. Outpatient clinics have

reopened and visits are up to 75 percent of the pre-storm numbers. Currently, the

VA is supporting 26 Tulane residents who are involved in the outpatient care. In

order to provide optimal care to Louisiana’s veteran population, keep them close to

home and to return another important piece to the medical education pie it is essential to re-establish a VA hospital in downtown New Orleans. It is critical for Veterans that this facility be easily accessible from main transportation arteries and to

the Tulane and LSU training programs. The VA must also be proximal to the medical schools so that the highly skilled faculty of those schools are available to provide

state-of-the-art care, and foster the training of the physician workforce that is so

important to the long-term future of health care in the region. It is also important

for the economic development of downtown New Orleans that the VA be part of the

growth of the Biomedical District. Tulane has been an integral partner with the

New Orleans VA and desires to remain such in the facility’s re-establishment.

IMMEDIATE NEEDS: A STABLE PHYSICIAN WORKFORCE

According to the Louisiana Department of Health and Hospitals there were 617

primary-care physicians in New Orleans prior to Katrina. By April 2006, that number had dropped to 140, a decrease of 77 percent. In July 2006, Blue Cross Blue

Shield of Louisiana reported a 51 percent reduction in the total number of physicians filing claims in Region I. nearly all of this reduction—96 percent—was from

Orleans Parish. The loss of additional clinical faculty at Tulane as well as LSU will

not only decreases the available current physician workforce, but reduces the clinical teaching faculty needed to teach the next generation of physicians for the region

and the State.

In addition to laying the groundwork for the future, there must be an immediate

focus on the future of our Graduate Medical Education programs. According to a report prepared by the healthcare redesign collaborative, ‘‘The medical workforce situation has quantifiably deteriorated, but it could get worse before it gets better unless the State’s internal engine of physician supply is rebuilt and modified for the

new demands of a redesigned healthcare system. That engine is graduate medical

education (GME), a rich source of newly minted physicians in any State but particularly in Louisiana. Among the States, Louisiana ranked No. 2 in the number of its

doctors having trained within the State, and No. 17 in retention of residents.’’

In a sense, this is a long-term issue, but it requires immediate attention. I would

request that Congress consider a time-limited grant program that would provide incentives to encourage clinical faculty candidates to come to one of the teaching institutions in the Gulf Region. Recently, $15 million was made available for recruitment

and retention of primary-care physicians. The Louisiana Department of Health and

Hospitals is currently working on the details of how those funds will be distributed.

But those funds do not apply to highly trained specialists needed to staff academic

medical centers and training programs and provide care and educate the future physician work force. We would request that additional funding be made available for

recruitment of qualified clinical faculty to the region’s institutions, including loan

forgiveness, relocation and bridge funding to allow adequate time for physicians to

establish a practice.

LONG-TERM NEEDS: RETHINKING GRADUATE MEDICAL EDUCATION & ESTABLISHING A

STABLE HEALTHCARE SYSTEM

As stated earlier, the gridlock in which we now find ourselves is destructive in

the short and long term for systems, hospitals, medical schools and most importantly the public we serve. The time has come for all parties to set aside their differences, share vital information and data and have an objective party lead constructive negotiations. As a partner in MCLNO and as a member of the administrative board with legislatively madated fiduciary responsibility, Tulane would welcome

direct involvement in the current business plan development process for the proposed new facility. To this point, we have not yet been asked to participate nor have

we been privy to any information beyond what was presented in November, 2006.

The experience of Katrina revealed a major flaw in the way we fund Graduate

Medical Education in this country, at least under the circumstances of a major disaster that results in the closure of teaching hospitals. The slots in which residents

train are allocated to hospitals by CMS, and the reimbursement for the educational

efforts of those residents is paid by CMS to those hospitals. In many cases, like

those of Tulane and LSU, the responsibility for training those residents is held by

major medical schools. To provide the optimal educational experience these medical

schools will rotate residents through a variety of hospitals. In order to provide the

167

residents with a stable pay source the medical schools function as a common paymaster, paying the residents directly and receiving reimbursement from the hospitals.

When Katrina hit and MCLNO and other training hospitals closed, the medical

schools were left with the responsibility of guaranteeing the resident training and

payment of salaries, but it left us unable to seek reimbursement from closed hospitals. Other hospitals came to the fore and provided training opportunities, but in

most cases were unable to provide payment to the medical schools, which continued

to pay the salaries of all the residents. Temporary waivers were finally received

from CMS that allowed the residents to continue their training, but these did not

go far enough to protect the medical schools, and created a complex system of documentation on the already strained systems of the medical schools and the closed

hospitals. To simply comply with the burdensome paperwork required, Tulane was

forced to hire outside counsel to navigate the process and complete the documentation. Some look at residents as movable parts that can be rearranged to maximize

CMS reimbursement. This is far from the truth, issues of program interrelationship,

critical mass and quality of educational experience must be considered or accreditation will be at risk.

This system must be reviewed and revised before another disaster hits one of our

nation’s training institutions, be it flood, fire, earthquake or an act of terrorism. In

Louisiana, medical schools must have greater flexibility and control over slots not

being used by the parent hospitals due to full or partial closure. Current arrangements for the redistribution of closed or partially closed hospitals—unused slots require the hospital to enter into affiliation agreements annually with the ‘‘receiving’’

hospital, and then for the medical schools to reach financial agreements with those

receiving hospitals to repay the resident costs of the school. This arrangement puts

the resident, the medical school and the receiving hospital at risk if the ‘‘home’’ hospital changes those arrangements or fails to execute affiliation agreements. For the

protection of all, but most critically that of the trainee, medical schools must have

greater control over both training and funding when a disaster results in total or

near total closure of a teaching hospital. We now face a system that is uncertain

and the instability created by the absence of our traditional training sites requires

that we reconsider how these slots are distributed and by whom.

Tulane University and all the groups represented here today have many challenges still to overcome. But with the support of the American people and through

our public leaders such as those of you on this committee, we will recover. And

through our recovery we will provide our citizens with the best possible health care

and a highly trained and committed workforce that will be a cornerstone to the

long-term revitalization of the city of New Orleans.

Specifically, we ask your consideration in taking the following actions:

We request this committee consider convening a hearing to specifically deal with

the issues surrounding Graduate Medical Education and possible solutions to preserve the quality of our training programs in the State. In addition, Tulane would

like to host a panel that would include representatives from the committee, area

medical schools and hospitals, as well as CMS and the AAMC to re-evaluate how

resident training, and payment is dealt with in a disaster or other circumstances

when the home hospital is either completely or partially closed, disrupting the training of those residents.

Provide funding for reimbursement of physicians for providing care to the unin- sured. It is estimated that $30 million per year is needed.

Create funding to assist medical teaching institutions in the Gulf Coast region recruit qualified specialty teaching faculty to train the future physician workforce.

Support the re-establishment of the New Orleans VA Hospital in downtown New

Orleans, in proximity to the medical schools to allow for optimal patient care, medical training, and economic development of the New Orleans Biomedical District.

While it is our job to create a healthcare system that will provide the citizens of

New Orleans and the State of Louisiana with highest quality care, I would ask that

you strongly encourage all of the parties to consider an objective party to lead us

to consensus and that we mutually agree upon a deadline for making the broader

decisions regarding moving forward. Once again, I thank you for allowing me to

speak to members of this committee today. With your help, we will continue to bring

health care in our city and region not just back to where it was, but into an even

better future.

TESTIMONY OF GARY MULLER

Mr. Chairman and members of the committee:

168

Thank you for inviting me to testify on behalf of West Jefferson Medical Center.

I am grateful that the committee has expressed a continued interest in the worsening state of the healthcare system in the New Orleans region. I also would like to

take this opportunity to thank Co-Chair, Congressman Melancon, for your dedication and hard work on behalf of the people of Louisiana.

West Jefferson Medical Center, located 10 miles from downtown New Orleans, is

a 451 bed community hospital and health system with programs and services across

a complete continuum of care. West Jefferson was one of three hospitals that did

not close after Hurricane Katrina and is now one of the eight safety net facilities

serving all patients. Pre-Katrina we were projecting an $8 million profit for 2005.

When I testified before this committee last year we had incurred operating losses

of $30 million I come to you this time with a heavier burden of $48 million in operating losses. To put it in health care terms, prior to the storm we were a healthy

patient. Now we are critically ill.

Financial survival has become the top priority for WJMC and we have focused efforts to explore every regulatory or legislative mechanism that might assist us. The

Post Katrina story is complex as we embrace challenges continually. Providers of

all types are experiencing significant financial losses as we struggle to retain health

care workers and deliver care.

Recruiting nurses and physicians has become a near impossibility and the supply

and demand of the entire healthcare workforce has reached a crisis. Prior to Hurricane Katrina we spent a total of $2 million annually on agency nurses. Currently,

we are forced to spend $1.1 million each month, which was $13 million in 2006. It

is extremely difficult to simply have a physician visit our city for the possibility of

working here.

The region’s labor and operating expenses have inflated dramatically without corresponding payment increases. Hospitals have also experienced a dramatic rise in

uncompensated care. I would like the opportunity to discuss both of these issues

with the committee.

Certain financial adjustments are necessary to maintain hospital operations in our area. The 2007 wage index update that was effective as of October 2006 was based on

wage data from Medicare cost reports that began during Federal fiscal year 2003.

Thus, there is almost a three-year lag between the data being used to develop the

wage index and the actual implementation of the wage index that incorporates the

data. Under the CMS methodology for incorporating changes to the wage index, our

wage index will not begin to reflect the changes that we have experienced in labor

costs until October 2008. We just can’t wait that long. I am requesting that you consider a special wage-index adjustment for hospitals in the affected area to help offset some of the losses attributable to the added cost of operating in the post Katrina

environment.

WJMC is a public service district hospital and we are supportive of the CMS Medicaid Proposed Rule on Intergovernmental Transfers (IGTs) and Certified Public Expenditures (CPEs) issued on January 12, 2007. As we understand the proposed rule,

CMS will require States to direct Federal funds back to governmentally operated

healthcare providers. This certainly seems aligned with how the Federal Government intended these funds to be used in the first place. For WJMC, we believe this

will result in equitable distribution of funds to our hospital.

West Jefferson Medical Center has worked closely with our Congressional Delegation to identify existing Federal legislation that could provide us financial relief. We

worked diligently to offer language to the Stafford Act that would qualify hospitals

as eligible recipients of the Community Disaster Loan Program. With the hard work

of our entire delegation we were successful in securing that funding. That funding

from CDL was vital for our hospital in the few months following the storm when

we incurred substantial financial losses. Both the House and Senate appear to be

on the verge of Floor action to permit the Forgiveness of CDL loans, which has been

the practice pre-Katrina. I strongly ask for your support to forgive these loans our

hospital is currently obligated to pay back.

Please be reassured that we have taken all steps possible to become more costeffective and efficient in our day-to day operations. We have implemented an Operations Improvement Action Plan (OIAP) whereby approximately $8 million of savings or revenue enhancements have been identified. Most of the cost savings center

on reducing agency nurse costs which included only two agency nurses pre-Katrina

and grew to 92 agency nurses presently. We have also improved efficiencies (per

length of stay and discharges) so that the emergency room can flow better with the

increase in patient volumes. WJMC also supports two federally Qualified Health

Centers (FQHC) in our service area to support the medical home model of delivering

primary care in clinics rather than in our emergency room.

169

Let me take this opportunity to provide you with a snapshot of our ED situation.

One day last week we were overwhelmed with 32 admissions waiting in our emergency department. Simply put, every available bed in our hospital was occupied and

we had 32 admitted patients waiting on stretchers in the hallway of the emergency

department. Our ambulances and paramedics routinely wait with these patients

which takes them off of the streets to serve other patients in need. Unfortunately,

this is quickly becoming the norm as there are simply not enough staffed beds in

the New Orleans region to care for the volume of patients. We put a phone call into

the Department of Health and Hospitals expressing this concern. The next day the

secretary of the department, Dr. Fred Cerise, was at our hospital offering assistance

and potential solutions. He has also been helpful with his support of the Uncompensated Care Cost pool that was developed at the State level to offset some of our

growing indigent care costs. Nonetheless, the shortage of beds, particularly psychiatric and acute care beds, is at a critical point.

I remain optimistic that, as discouraging as our problems may seem, our issues

will eventually be resolved by both private and public hospitals, community clinic

providers, payors and government officials presenting a united solution in a new

model that will improve care for all citizens of Louisiana. I have great faith that

our Federal leaders will not abandon us. Together, we can make a difference. Thank

you for your time and interest.

TESTIMONY OF EVANGELINE FRANKLIN, M.D.

I am Dr. Evangeline Franklin, Director of Clinical Services and Employee Health

for the New Orleans Health Department. To Chairman and Congressman Bart Stupak, Ranking Member and Congressman Ed Whitfield and distinguished members

and guests of the Subcommittee on Oversight and Investigations of the United

States House of Representatives Committee on Energy and Commerce: Thank you

for the opportunity to speak with you today about two health clinics that the New

Orleans Department of Health recently held in the City of New Orleans. Mayor C.

Ray Nagin and members of his administration have sought creative means of addressing our citizens critical healthcare needs as we work to recover from the tragedy of Hurricane Katrina and the subsequent flooding.

Today I would like to describe to you a city, indeed a region, which continues in

health crisis despite the valiant efforts of our organizations. This crisis results from

a combination of factors. The people of New Orleans face many challenges, such as

the difficulty of returning to rebuild homes and businesses, the tendency to ignore

chronic illness that these stressful distractions have caused or exacerbated, and the

complexity of the processes to claim insurance proceeds or funds from the Louisiana

Road Home Program, the state initiative to compensate homeowners for their losses

in Hurricanes Katrina and Rita. All of these are complicated by a healthcare system

that itself is damaged and under stress, further limiting the access to healthcare

that even before Katrina was not ideal.

In the aftermath of Hurricane Katrina, the population of the uninsured in New

Orleans has expanded from traditionally uninsured groups to include many who

have experienced sudden loss of benefits. This includes individuals who were laid

off from jobs due to the destruction of their place of employment or the loss of market or tax base. Many of these people returned New Orleans following the floods

because of personal or business financial commitments or because they simply wanted to come home. The composition of our uninsured also includes persons who cannot speak English and those who cannot secure health insurance because of their

migrant worker status or lack of the proper immigration documentation. Many of

our uninsured are part of the working poor, who toil daily in their jobs but are not

offered or cannot afford health insurance.

Hurricane Katrina and the subsequent flooding were responsible for the loss of

much of the health care infrastructure, including hospitals, doctors, medical records

and pharmacies. It also meant that many people lost their medications, dentures

and eyeglasses. This, when coupled with the physical and psychological hazards of

the devastation, has put patients who were previously stabilized at great risk.

In the past year, was assigned to coordinate two large scale healthcare events designed to provide medical, dental and optical services, and to assist in organizing

follow-up. By helping patients regain some control of health problems, the

healthcare community could better manage medical resources such as emergency

room use and admission to hospitals.

Both of these 7-day events were highly successful. Thousands of patients were

able to leave each outdoor event with a 30-day supply of needed prescriptions, as

well as eyeglasses, dentures, immunizations, PAP tests and information about

170

where to obtain follow-up medical care. Unfortunately, this occurred only after they

endured long lines, sometimes waiting all night in cold and rainy weather to be

treated on a first-come, first served basis by volunteers from throughout the country

and local professionals. Typically, capacity for each day was reached within an hour

of opening the registration. As a result, many who needed care were unable to receive it and had to be turned away to be seen on another day or at other locations.

The first of these events was held in February 2006 at the Audubon Zoo, a location considered by the planning committee to be an oasis in the middle of destruction. Audubon Zoo made a significant contribution by allowing us access to their

grounds to set up the clinic locations, by housing volunteers and by having their

employees contribute their time for the seven-day event.

This event was an immediate success, in large part because of its location and

accessibility to the many patients who did not have cars. Many came by bus or

walked to the event. The zoo is located in an area of the City which was among

the first to repopulate because of the lower level of damage.

Because of the magnitude of the catastrophe, very few safety net clinics and pharmacies were available to residents so soon after the storm. Many weary patients reported that they were unable to locate their doctors and did not know where to go

to have their prescriptions filled. Others offered poignant stories about their inability to obtain needed care, medications and immunizations.Of 5,212 persons who received care at the Audubon event, 27 were transferred to local hospitals for emergency care. One of those was a revived cardiac arrest. This woman was having her

cholesterol level tested during her visit to the Reach 2010 at the Heart of New Orleans facility when she had what later was determined to be a heart attack. While

she was unable to obtain primary care, she could be cared for after having a life

threatening event. She is currently doing well.

Others were not so fortunate. One gentleman was given a diagnosis of metastatic

cancer. He had been told at one of the local private hospitals that he had to pay

for his diagnostic tests before he could receive treatment. He did not have the required money and was refused treatment. Because Charity Hospital had not yet reopened, there was no public facility in the city that could provide cancer care. Further complicating his situation, this man could not speak English and had no transportation. Despite these difficulties, we arranged for this gentleman to go to another

facility to receive care.

Many of the volunteers during the week remarked that they had never seen so

many people who were so very sick. In all, 1,313 volunteers treated 5,212 patients

during this seven-day event. In addition, prescriptions were filled at no charge and

social services, including mental health, were made available for interested patients.

Volunteers traveled to New Orleans at their own expense.

The second event was held a year later in conjunction with Operation Blessing,

a faith-based organization supported by the Christian Broadcasting Network. Operation Blessing operates a clinic with medical, dental and pharmaceutical services in

eastern New Orleans. The weeklong Health Recovery Week II was took place in

tents. The New Orleans East location of Operation Blessing was accessible by car

and bus and had become an anchor by providing free care even before Health Recovery Week II.

This was an ideal location for the second event because the neighboring communities have shown signs of return and rebuilding. FEMA trailers placed in front of

houses and the sale and purchase of property for renovation herald the return of

significant resources of the professional and business community. In addition, citizens from eastern New Orleans were part of the regular patient population at Operation Blessing. Because the medical director is fluent in Spanish and Vietnamese,

non-English speaking residents are drawn to this facility. In addition, this location

does not interfere with the function of clinics and services in the part of New Orleans where the population has stabilized.

For this event, Operation Blessing invested nearly $500,000 for the cost of supplies, lab work, pharmacy services, infrastructure improvement, marketing, and food

and lodging for volunteers at their Slidell, Louisiana Command Center.

Even though more medical facilities and safety net clinics had opened in the intervening year, the story was exactly the same as before. Fewer patients were treated

but only because there were fewer volunteers who could see them. Again, patients

waited in the cold and the rain and were willing to be seen in tents for their medical, dental and optical care. And again, citizens frequently stated that they could

not find their doctors and did not know where to get their medications.

The vast majority of patients seen during the health intervention week had never

been to Operation Blessing. Many had been referred to obtain services that they

could not receive in their regular clinics. Of the 3,800 patients seen at this sevenday event, 21 were transferred to local hospitals. As in the first Health Recovery

171

Week, hundreds were turned away after the capacity of the event filled within an

hour of its opening. Among those transferred to the hospital, one patient was experiencing cardiac arrest and, like deja vu, a man with a terminal cancer told the story

of being unable to obtain care. Many diabetics did not have their medications and

many people were diagnosed for the first time with hypertension and diabetes.

Women who needed preventive care, such as Pap tests, also were identified. The

medical, dental and optical services provided were valued at $1.1 million.

Again there were many non-English speaking patients who told of their fear of

receiving health care because they might be identified for deportation.

These events highlight the urgency of our healthcare crisis in New Orleans and

demonstrate that we need assistance to expand our capacity. When the Governors

Emergency Order permitting health professional volunteers from out of state to

practice in our city is lifted in the next few months, we will no longer be able to

accommodate the medical, dental and optical volunteers who want to help and

whose help we will still need.

Thank you for your consideration of what I have shared with you. These events

and their large numbers indicate that the current solutions are insufficient to meet

the needs of returning citizens and the new workforce. Our situation is urgent and

we look forward to working with you.

TESTIMONY OF PATRICK J. QUINLAN, M.D.

Mr. Chairman, members of the subcommittee, thank you for this opportunity to

appear before the Subcommittee to update you on the impact of Hurricane Katrina

and its aftermath on the Ochsner Health System. First, I would like to thank the

many Members of Congress, including members of this subcommittee, who have

traveled to the Gulf Coast over the past 19 months to see for themselves the overwhelming devastation wrought on our City and our State as a result of the disasters

associated with Hurricanes Katrina and Rita. Your personal presence and concerns

are certainly appreciated by our citizens.

Ochsner Health System is an independent non-profit organization made up of

seven hospitals and thirty-two clinics employing over 8,400 people. Ochsner is the

largest private employer in Louisiana. Ochsner Medical Center was one of only

three hospitals to keep its doors open despite the ongoing interruption of its business, during and after Katrina to care for all patients. We made this decision despite the fact that physical damage to our facilities caused us to suffer a significant

interruption of our business both during and after the storm. Since Hurricane

Katrina, Ochsner’s professionals have quietly gone about their work of providing

high quality healthcare to everyone—regardless of their ability to pay. We experienced significant physical damage to our facilities as a result of Hurricane Katrina.

Ochsner has exercised due diligence to rebuild its property and mitigate the damage

done to its business because of Hurricane Katrina. Nevertheless, we experienced significant additional costs and lost revenues as a result of this damage and the consequent interruption of business. The hospital also had to provide food and shelter

for staff, as well as pay them for long hours at increased compensation. Ochsner’s

extensive disaster preparations played a major role in the ability to mitigate its

damages, and to provide services for patients in the entire region under emergency

conditions. That preparedness ultimately allowed citizens that evacuated to return

home with the assurance that their healthcare needs could be met.

Hurricane Katrina caused property damage losses of approximately $23 million to Ochsner facilities, but with the application of deductibles; only about $11 million is

covered by insurance. FEMA has paid a minimal amount to date. In addition, business interruption losses caused by Hurricane Katrina and its property damage have

been over $57 million. Our business interruption deductible, however, is approximately $11 million. We continue to have issues with our primary insurer with resolving our claim. Total payments from insurance to date have been only about $23

million.

Currently Ochsner employs over 600 physicians and more than 120 licensed midlevel health providers who receive no payment for the care of the uninsured. This

acts as a significant drain for our Health System because of lack of funding for both

hospital and Ochsner physicians.

We are one of the largest private non-university based academic institutions in

the country with over 350 residents and fellows, proven research including bench

research, translational research and clinical trails. In addition, we provide training

for approximately 400 allied health students and over 700 medical students from

LSU and Tulane with little funding to support this mission. The importance of

Ochsner’s graduate medical education program has increased greatly since Katrina

172

because we are the only fully functional academic center in the greater New Orleans

area. We know that a significant number of physicians locate to practice where they

train, so we are training the next generation of medical doctors for the area.

The sad reality is that we are bleeding red ink as a result of holding this fragile

healthcare system and medical education system together and are caught in the

middle of excessive bureaucracy in both the public and private sectors. Simply put,

well-intended money to help us as providers is not reaching us on a timely basis.

And when that money does reach us it is insufficient to meet our needs.

Despite our efforts at retention we lost over 2000 employees and more than 100

physicians during and after the storm who decided to leave the area. As a result

we are currently experiencing a shortage of highly-trained physicians, nurses and

support staff. Recruitment and retention continue to be a major issue. We are

spending over $20M annually in employment agency fees to staff critical areas

throughout our hospitals. Wages have increased 10.65 percent as a result. While

Health System wage costs increased almost 11 percent, the Medicare Wage Index

decreased almost 4 percent. To attract the talent we need to continue to operate,

the pressure to increase wages continues. A permanent fix to the Medicare Wage

Index would be most helpful in addressing this issue as well as financial support

to help in recruiting and retaining key personnel especially physicians and nurses.

In October 2006 Ochsner Clinic was forced to increase physician salaries by $6M

or 5 percent above pre-Katrina levels to retain and recruit physicians to the New

Orleans market. In addition, we are often forced to pay significant recruitment bonuses to attract the necessary staff. Ochsner Health System also faces $4.8 million in outstanding unemployment

claims, which arose in conjunction with Executive Orders issued by the Governor

that granted benefits to individuals unemployed as a result of the storm and suspended many of the normal requirements for obtaining unemployment benefits.

While the Federal Government provided $400 million in assistance to help pay for

these claims, the Louisiana Department of Labor allocated all of the Federal relief

funds to for-profit employers, leaving most non-profit and governmental employers

that are self-insured to pay an enormous and potentially damaging amount of

claims. In response, the Louisiana State Legislature enacted legislation that defers

the payment of these claims until July 1, 2007 in an effort to identify solutions to

the problem which could include an amendment to this Disaster Unemployment Assistance (DUA) Fund or an appropriation to the Louisiana Unemployment Trust

Fund for the benefit of governmental and non-profit institutions from the Federal

Unemployment Trust Fund.

Funding for uncompensated care is an issue for us. Ochsner has done more than

its fair share of caring for the uninsured in the region. We have seen 24,731 uninsured patients since Hurricane Katrina at a cost of $25.5M and we have been reimbursed only $12.1M; that’s less than 50 cents on the dollar for our costs. Please note

that I am referring to our costs not charges and these refer to hospital services only

and do not address our clinic load. With over one million clinic visits per year, the

effects on the Institution are simply not understood by the traditional approaches

of government at all levels. Our uninsured and Medicaid patient volumes have increased 50 percent from pre-Katrina levels. The time between providing care to the

uninsured and receiving reimbursement has become excessive. We recommend that

money for reimbursement for the care of the uninsured follow the patient directly

and not go through multiple third parties to expedite funds reaching providers on

a timely basis. Predictable funding is absolutely essential to predictable access for

patients. And access is at the core of good medical care.

As part of its ongoing contributions to the recovery of the greater New Orleans

region, Ochsner purchased three community hospitals in Orleans and Jefferson Parishes in October 2006 from Tenet Healthcare Corporation that were temporarily

closed and significantly disabled in the aftermath of Katrina. These hospitals, as

well as Ochsner Medical Center, require extensive disaster related infrastructure

improvements at a cost of $17.5M to retrofit and harden facilities in preparation for

future storms. These essential preparations include raising transformers, relocating

transfer switches, buying emergency generators, drilling additional wells and replacing flooded equipment.

We experienced significant additional costs and lost revenues. Extraordinary costs

are included in all emergency situations as adjustments are made for the circumstances that develop. Volumes and related revenue are down but expenses are

up significantly. There is precedent for the Federal Government to help in similar

disasters. After the September 11, 2001 attacks on New York and Washington, aid

was provided to hospitals for similar reasons. We ask for the same consideration

today. We stepped up without reservation—we bet the company and ask for your

help today.

173

Finally, more flexibility in the Health Resources and Services Administration

grant process would be helpful in addressing some of the issues I have just described to you. Anything you can do to streamline the process as well as providing

significant funds to address the shortfalls we have experienced would be most helpful.

We need your help if we are to survive long term as the largest healthcare provider in the State of Louisiana and to give us the ability to respond to future disasters successfully.

TESTIMONY OF KEVIN U. STEPHENS, SR., M.D., J.D.

I am Dr. Kevin U. Stephens, Director of the City of New Orleans Health Department. To Chairman Bart Stupak, Ranking Member Ed Whitfield, and distinguished

members and guests of the Subcommittee on Oversight and Investigations of the

U.S. House of Representatives’ Committee on Energy and Commerce: Thank you for

inviting me here today to speak on the state of healthcare in New Orleans. Mayor

C. Ray Nagin and his administration welcome dialogue and are hopeful that this

hearing will spur positive change as we work to not only rebuild our city’s infrastructure and neighborhoods, but also to develop a state-of-the-art, modern

healthcare system.

I would like to acknowledge and thank Secretary Michael Leavitt, represented on

the panel by Leslie Norwalk, for all the support the Department of Health and

Human Services has given to the City of New Orleans Health Department. Secretary Leavitt and I first met on August 24, 2005, less than one week before Hurricane Katrina, when we both visited the Ponchratrain Senior Center and talked with

community leaders and senior citizens about Medicare. We developed a professional

relationship which has continued in the aftermath of Hurricane Katrina. Additionally, I would like to thank Dr. Fred Cerise, Director of the Louisiana Department

of Health and Hospitals, for his support to our city. Finally, I would like to acknowledge Dr. Robert Lynch of South Central Veterans Affairs Health Care. New Orleans

has had a long relationship with the local Veteran’s Affairs hospital, and we look

forward to strengthening our partnership with it.

OUR HEALTH CHALLENGES

Louisiana has historically ranked among the country’s lowest in health outcomes.

For more than 10 years, Louisiana has been either 49th or 50th in state health

rankings according to the United Health Foundation’s America’s Health: State

Health Rankings.The report uses nine risk factors to support the rankings, such as

the percentage of smokers in the State, and eight health outcomes, such as cancer

deaths per 100,000 residents. In addition to the high risk factors in the state, citizens without the means to purchase private health care have suffered from a lack

of medical resources and facilities, contributing to significant health problems. This

highlights the necessity for a stronger, proactive local healthcare delivery system.

Charity Hospital has long been the primary source of healthcare for the indigent

and uninsured in New Orleans. In 1992, Charity and University Hospitals merged

to form the Medical Center of Louisiana at New Orleans (MCLNO). The complex

developed a reputation as one of the best Level I Trauma Centers in the country—

the only one along the Gulf Coast—and as an excellent training facility for health

professionals. Many without private health insurance relied on its clinics as their

main source for primary healthcare.

Recent severe budget cuts forced the MCLNO to close walk-in clinic, some operating rooms and some hospital beds. These cuts translated into decreased access to

primary and preventive healthcare services for those who had few alternatives.

The City’s 13 health clinics as well as other state and non-profit clinics also provided services to our citizens. However they lacked the capacity to meet the community’s entire need for healthcare.

PROBLEMS EXACERBATED BY HURRICANE KATRINA

While the situation was dire, it was soon to reach crisis level. Hurricane Katrina,

which struck on August 29, 2005, was the largest and most costly natural disaster

in American history. More than 1,400 Louisiana residents lost their lives. Katrina

also produced the first mandatory evacuation in New Orleans history, and the largest displacement of American citizens in U.S. history—1.3 million people. More than

200,000 New Orleanians remain displaced.

174

It is estimated that New Orleans sustained 57 percent of all the damage in Louisiana. Pre-Katrina, there were 215,000 housing units, 188,251 of which were occupied. More than 70 percent of the occupied units—134,344 units—sustained reportable damage, and 105,155 were severely damaged. Residential damage in New Orleans was $14 billion. In addition, every hospital and medical facility in Orleans Parish was closed.

Since the storm and floods, only four of the eight hospitals in the parish have reopened, all at decreased capacity. The City’s Health Department, which employed

more than 200 health professionals, lost more than 60 percent of its staff and closed

eight of its 13 clinics. Yet, as traumatic as this devastation was, it has given us a

unique opportunity to redesign and rebuild a model healthcare delivery system that

corrects the gaps and failures of the past.

New Orleans’ population, which was more than 450,000 before Hurricane Katrina,

is now estimated to be between 230,000 and 250,000 citizens. Even with the temporarily reduced population, approximately 20 percent of our citizens, more than

38,000 people, are uninsured. The City also has a rapidly increasing indigent worker

population. Providing healthcare services to these uninsured citizens has placed a

tremendous burden on the healthcare providers of the surrounding parishes and

those in New Orleans that have reopened since the storm.

Another challenge has been the significant decrease in the number of healthcare

providers in the parish. According to a 2006 Blue Cross/Blue Shield report, Orleans

Parish had 2,038 physicians Pre-Katrina; only 510 physicians are on their network

now. This 72 percent decrease highlights the relative loss of medical professionals

in Orleans Parish.Other evidence can be found in a study conducted by the Louisiana Department of Health and Hospitals. Of 202 primary care physicians who responded to the survey, only 154 were still practicing and just 73 accepted patients

dependent on Medicaid as their source of payment. Clearly, more providers are

needed in Orleans Parish, particularly those who care for the uninsured and underinsured.

There is a similar story as it pertains to the capacity of Orleans Parish hospitals.

According to a 2006 report from PriceWaterhouseCooper, New Orleans had 2,258

hospital beds before Katrina. According to a March 2007 report from the Metropolitan Hospital Association, Orleans Parish now has 625 staffed beds, a reduction of

75 percent.

Fortunately, neighboring Jefferson Parish lost far less of its capacity, with its

number of hospital beds decreasing from 1,922 to 1,636. Jefferson Parish hospitals

have been responsive in absorbing patients from Orleans Parish. But this does not

negate the critical need for more hospital beds to open in Orleans Parish to meet

the needs of our ever-increasing population.

It should be noted that many parts of this region which had the greatest impact

from Katrina have no access to significant healthcare facilities. These areas include

the Lower Ninth Ward and New Orleans East in Orleans Parish, as well as

Chalmette and other parts of St. Bernard Parish.

The difficulty in obtaining services was highlighted by the number of citizens who

attended Health Recovery Week II. Along with Operation Blessing, Remote Area

Medical, the Mayo Clinic and International Medical Alliance, the City hosted the

outdoor clinic providing medical, dental and optical services during the last week

of January. In seven days, we provided free medical services to more than 3,800 citizens, but given the need, we could have served far more people.We opened at 6 a.m.

daily and by 7 a.m., we were filled to capacity for the day. Many who received

health care services had serious illnesses that were not being controlled and were

life-threatening.

POST-KATRINA: CITY OF NEW ORLEANS HEALTH DEPARTMENT ROLE

The City of New Orleans Health Department must play a significant role in improving the health of the residents of our City. We need to fully staff our clinics

and expand their offerings to include all preventative and primary care services.

Since health outcomes are largely controlled by personal lifestyle choices, public

health professionals must play a critical role in educating the public about health

risks and behavior modification. These professionals also must ensure that we conduct the ongoing research necessary to understand our shifting healthcare climate.

EFFORTS TO REPAIR AND RENEW THE HEALTHCARE SYSTEM

Following Hurricane Katrina, the Bring New Orleans Back Commission, a group

of City leaders convened by Mayor Nagin to design a comprehensive plan for the

city’s recovery, met to debate and decide on the future of the city’s delivery of essential services to citizens. Commission members proposed policy recommendations for

175

the rebuilding of the city’s healthcare system. Mayor Nagin approved the following

recommendations:

Create an area-wide healthcare and human services collaborative that would develop a system of care for all segments of the population, provide primary care centers linked to hospitals and shift the focus of healthcare delivery away from institutional care toward ambulatory care and preventative medicine;

Develop comprehensive emergency preparedness plans for hospitals and collect

the necessary resources to implement those plans;

Maintain a university teaching facility in New Orleans;

Empower all New Orleans citizens to play an active role in their access to

healthcare services, i.e. promoting the usage of electronic medical records.

Once the commission made its recommendation, the city’s needs became clear but

we lacked the resources to implement them. In the spring of 2006, the One New

Orleans Committee convened to discuss how we could effectively implement the recommendations of the Bring Back New Orleans Commission. The Healthcare subcommittee cited the need to lobby for state funds to assist private hospitals in the

care of indigent and uninsured patients.

The subcommittee also identified the need to amend state policy to include reimbursements for uninsured patients permitting the healthcare dollars to follow the

patient and not the institutions.

During the summer of 2006, the state led the Louisiana Health Redesign Collaborative (LHRDC), which was comprised of local and state stakeholders. Its key recommendations were:

• Develop a medical home model system of care

• Develop a health insurance connector

• Establish a Louisiana Healthcare Quality Forum

• Provide premium subsidy for uninsured children

• Expand coverage to pregnant women

• Give choice of coverage models, including private insurance

• Provide coverage for individuals with mental illness and addictive disorders

MENTAL HEALTH

The provision of mental health services poses a particular challenge in a region

that has experienced severe loss, death and destruction. According the 2006 Quality

of Life Survey submitted by the University of New Orleans Survey Research Center,

20 percent or more of residents in both Orleans and Jefferson parishes are experiencing severe levels of stress and depression. This is not surprising given the obstacles our residents face in reestablishing their lives in a changed environment.

Despite this increased need, the city has fewer than 50 hospital beds for inpatient

psychiatric care—about 17 percent of pre Katrina capacity. We estimate that only

20 of the 200 psychiatrists who were working in New Orleans before the storm have

returned to continue their practices. The city has diligently collaborated with the

LSU Health and Sciences Center Department of Psychiatry and the Metropolitan

Human Services District to identify more mental health resources. New Orleans has

an urgent need for more inpatient psychiatric beds, as well as new community mental health centers.

MORTALITY RATES

As a doctor and healthcare provider, I began to note a dramatic increase in the

number of death notices in the newspaper since Hurricane Katrina. This observation was supported further by the deaths of two staff people in my own department

within a short time and anecdotal accounts of families going to more funerals than

ever. Due to the lack of current state data concerning this problem, the City’s

Health Department engaged in a study to count the death notices posted in the

Times-Picayune newspaper and compared it to a parallel period before Hurricane

Katrina.

In order to validate our methodology, we compared the number of death notices

printed in the newspaper in 2002 and 2003 to the published state data from death

certificates. In both cases, the difference between the two was not statistically significant. In 2003, we averaged 924 deaths per month according to death notices. In

contrast, for the first six months in 2006, New Orleans averaged 1,317 death notices

per month. This means that approximately 7,902 citizens expired in the first six

months of 2006, as compared to approximately 5,544 in the first 6 months in

2003.These observations, as well as the severity of health problems treated during

our Health Recovery Week, strongly suggest that our citizens are becoming sick and

dying at a more accelerated rate than prior to Hurricane Katrina.

176

We believe these findings are significant, but the city has reached the limits of

its ability to research this important issue. It is critical that state and federal agencies immediately study these trends as well as the causes of death. This information

can then be used to develop appropriate interventions.We would also recommend

that the federal government establish an electronic National Death Registry system

to track mortality rates after any disaster that involves massive evacuation and mobilization of people across state lines. In the case of Hurricane Katrina, New Orleans residents were required to evacuate to more than 40 states.

Clearly, the healthcare system in New Orleans is far from normal, but we are

working diligently to make improvements. The City of New Orleans Health Department has three proposals to comprehensively and systematically rebuild our

healthcare system.

1. All citizens should have immediate access to primary, preventative and mental

health care services. People are suffering now and we must respond.

2. New Orleans needs more hospital beds.The shortage of beds has reached crisis

proportions, and on some days ambulances have to wait for hours on emergency

room ramps to offload patients.

3. We must receive the resources to rebuild our city Health Department.Our

Health Department is a necessary partner in the repair and reconstruction of the

City’s healthcare system.

Our healthcare system had serious inadequacies and gaps before Hurricane

Katrina, but the storm ruptured it to a point that many more of our citizens are

have lost access to healthcare services. Thank you for your attention to New Orleans. We look forward to working with you to solve these problems.

TESTIMONY OF DONALD R. SMITHBURG

Chairman Stupak, Ranking Member Whitfield, members of the subcommittee, I

represent the LSU Health Care Services Division, which comprises most of the state

public hospitals and clinics that have traditionally served as the public-teaching system in Louisiana. I must begin by expressing my sincere gratitude for the time and

attention that you and your colleagues have devoted to understanding our plight in

New Orleans and extending your support and assistance. Many members of this

subcommittee, as well as a delegation led by Rep. Clyburn, took time out of their

hectic schedules to travel to New Orleans to survey the suffering and devastation.

These were fact-finding missions. They also were gestures of goodwill. But to those

of us on the front lines of providing health care to the city’s residents, these visits

were much more. They reassured us that we will not have to go it alone and reinforced Congress’ commitment to helping us stabilize and strengthen the health care

delivery system. Today’s hearing is one manifestation of that commitment. We are

grateful for this opportunity and pledge to partner with you and with others testifying today to meet our obligations.

My testimony will briefly outline steps we have taken since Katrina to stand up

some semblance of a health care delivery system. I then will add to the chorus of

voices describing the current status of health care in New Orleans. In most respects,

words are insufficient, but I will attempt to provide some clarity by concentrating

on five key issues. I will offer suggestions for addressing the challenges we face in

the short term. Some solutions require Federal action. Others simply require dialogue and partnership at the state and local levels. With oversight, guidance, and

support from Congress, steps we take in the short term can provide a solid foundation for successful efforts well into the future.

INTERIM STEPS

Immediately after Katrina, LSU Health Care Services Division established limited

clinic and urgent care services in tent hospitals created in partnership with the U.S.

military and the U.S. Public Health Service. We operated a ‘‘Spirit of Charity’’ clinic

in the vacated Lord and Taylor department store next to the SuperDome. In November 2006, we reopened part of University Hospital as the ‘‘LSU Interim Hospital.’’

FEMA provided $64 million in Federal funds for this renovation provided the facility would be operated on a temporary basis. The Interim Hospital offers all of the

services that were available at Charity and University Hospitals before the storm,

with the exception of psychiatry and inpatient rehabilitation. It has approximately

180 beds today ‘‘ about 31 percent of its pre-storm capacity.

The Interim Hospital now operates 20 clinics in three buildings, which is in stark

contrast to the 160 clinics that existed before Katrina. LSU plans to open seven

177

neighborhood clinics in the New Orleans area as soon as zoning variances are in

place and the necessary permits are finally granted by the city.

With the destruction and closure of Charity, the region lost its only level I trauma

center. For months, trauma patients had to be transported hundreds of miles away

to Shreveport and Houston. LSU leased space at the suburban Elmwood facility and

began providing trauma services there in April 2006. Those services were moved to

the Interim Hospital in February 2007.

LSU has entered into a collaboration with the Department of Veterans Affairs for

construction of joint facility to replace the neighboring LSU and VA hospitals that

were destroyed. While this innovative and cost-saving project will not be realized

for as long as five years, the partnership and the promise of a new, state-of-theart academic health center does have a positive impact on helping us resolve some

of our short-term challenges, such as attracting and retaining faculty and researchers.

FIVE KEY AREAS OF CONCERN

1. Medical education. Pre-Katrina statistics indicate that nearly 70 percent of

practicing medical professionals in Louisiana completed all or part of their residency

requirements at LSU and Tulane University. Prior to Katrina, the Medical Center

of Louisiana at New Orleans (MCLNO) housed the anchor inpatient facilities for

graduate medical education in Louisiana, hosting residency programs for both LSU

and Tulane. LSU has temporarily repositioned its residency programs in other facilities throughout the state; however, this situation is inconsistent with the standards

of ACGME and unattractive to academically superior medical students seeking residency slots in top-quality teaching hospitals. Thus, it is, at best, a temporary solution and is not sustainable in the long term.

Many of our training programs already are in jeopardy. LSU lost its radiology program, and this impacts other programs that require direct interaction with radiology

for purposes of proper diagnosis and treatment. We are operating with a drastically

reduced number of orthopedic surgeons. We have no trainees in oncology or

rheumatology. LSU’s urology and ENT programs are still relocated out of town.

General surgeons are under increased strain because of the manpower shortages

and the enormous trauma demands. Because the entities that accredit residency

programs have certain volume and case complexity requirements which cannot be

achieved when residents are dispersed among a multitude of smaller, private institutions, nearly all programs are in some degree of trouble.

Possible solutions to this crisis include:

• Commitment to a new academic health center which will restore a core facility

requirement for both LSU and Tulane medical training programs;

• Authority to hire and obtain reimbursement for private physicians to alleviate

the shortage of in-house academic medical faculty;

• Funding for recruitment and retention of students, residents, and faculty;

• A summit of all stakeholders in the medical education field in order to devise

longer-term solutions.

2. REIMBURSEMENT

LSU safety net hospitals rely heavily on the Medicaid Disproportionate Share program. This source of revenues is critical to the system, but at the same time, CMS

limitations on the use of funds for physician services and state-imposed disparities

in the payment methodology for public and private providers diminishes our ability

to fulfill our mission to provide care to the uninsured.

Unallowable Costs. CMS considers costs associated with payment of physicians

and CRNAs to be ‘‘unallowable’’ under DSH. They are not regarded as ‘‘hospital’’

costs, and yet, like safety net systems across the nation, physician services in clinics

are a critical component of service to the uninsured. This CMS policy is especially

deleterious to the capacity to expand primary care and ultimately is more costly in

terms of resulting inpatient utilization.

As a safety net system, especially one heavily involved in graduate medical education, LSU must support a massive base of physicians to provide care in the hospitals and clinics. The unreimburseable status of these major costs represents an

exceedingly significant issue for any safety net health care system. For the LSU system of hospitals, which depends on the uncompensated care program for the uninsured or on direct state funding for nearly 60 percent of its revenues, the lack of

a funding stream for physicians and CRNAs has created a gaping hole that must

be filled by diverting revenues from reinvestment in infrastructure or by tapping

short-term or one-time internal funding sources. The necessity of employing such

178

1 For fiscal year 2005 the appropriated amounts of state funds for public and private hospital

categories for services to Medicaid recipients were approximately $192.9 million and $1.02 billion respectively.

2 While the appropriation bill does not identify the maximum Medicaid revenues for individual LSU facilities, that detail is specified in effectively binding documentation associated with

it and communicated by DHH, which manages the Medicaid budget.

3 In practice in some years, budget adjustments have been made through the year-end BA–

7 process to increase Medicaid spending authority when the hospitals were generating Medicaid

volume above the appropriated level. If this course of action were routinely followed, it would

solve the problems described above, but it would also demonstrate that the cap was unnecessary

in the first place. A BA–7 is optional, however. It cannot be presumed that matching funds will

be available or that the legislature will agree to a budget change, and the hospitals must proceed to implement service reductions when faced with a projected Medicaid revenue shortfall.

4 The reduction in care available to the uninsured occurs as both a direct and indirect result

of curtailing Medicaid revenues and services. The direct effect is through the general reductions

in service to all patients, as indicated. In addition, however, an indirect effect on the uninsured

results from the lost opportunity to spread overhead costs more broadly over a larger group of

Medicaid patients. When such a payer class as Medicaid (and also Medicare and private insurance) is enlarged, there is less overhead that must be covered by the UCC payments for the

uninsured. Consequently, a larger share of the total cost of services to these uninsured patients

consists of payments for direct patient services. The implication of this is that to the extent that

the state public hospitals can increase its mix of patients with third party payers, it can deliver

more care to the uninsured with no additional cost to the state.

5 If the State were to face a mid-year budget problem necessitating cuts in Medicaid payments

to private hospitals, it is possible to adjust the rates paid for services.

strategies has done significant long-term damage to our facilities and has diminished their capacity to perform their health care and medical education missions.

Disparity of Payment Methodologies. The Legislature limits the authorized Medicaid revenues of the LSU hospitals but does not limit the Medicaid revenues of any

other individual public or private facilities.

State funds appropriated in the DHH Budget for state match for Medicaid hospital services are divided between the categories of ‘‘public’’ (10 state public hospitals) and ‘‘private’’ (approximately 120 nonstate hospitals).1

Since the LSU hospitals are the only acute care facilities in the ‘‘public’’ group,

they are effectively ‘‘capped’’ with respect to the amount of Medicaid revenues they

can earn, and hence the amount of costs they can incur in delivering services to

Medicaid patients.2

At the same time, individual community hospitals are not limited with respect to

payments for any services they provide to Medicaid patients. While there is a fixed

amount of state funding in the Department of Health and Hospitals budget for Medicaid match for the broad category of ‘‘private’’ hospitals, no maximum dollar

amount of Medicaid revenues is communicated to nonstate facilities as it is to the

LSU hospitals.

These differences have significant consequences as they play out in the operation

of state and nonstate hospitals:

State Public Hospitals. The LSU hospitals in recent years have experienced a demand for services by Medicaid eligible patients at a level that has exceeded their

appropriated Medicaid revenue limits. In this situation, if a hospital were to serve

all the Medicaid patients projected to utilize it, the facility would incur costs that

Medicaid would not reimburse once the cap were reached. Unlike community hospitals, the LSU hospitals do not have a sufficient base of patients with third party

payers to whom they can shift unreimbursed costs, even if desired, and strategies

are required to avoid incurring these costs at all.

Specifically, with an appropriated Medicaid revenue limit below the level of actual

demand, administrators have faced the necessity of implementing early-in-the-year

steps to reduce services to Medicaid eligibles. 3

Control of the volume of Medicaid services, however, requires control of the volume of all services. Since it is not possible to target Medicaid patients only, such

general steps as closing beds and curtailing clinic and Emergency Department hours

are required. These actions do reduce Medicaid volume, but they also reduce the

number of patients in all other payer categories as well. The result is (1) loss of revenues from other sources, (2) reduction of care to the uninsured, and (3) the reduction of service volumes upon which training programs depend. 4

Nonstate Hospitals. Since the total appropriation to private facilities does not

function as a cap on individual facilities, community hospital administrators are not

faced with the same service adjustment decisions required of their LSU counterparts. Community hospital administrators can and do treat Medicaid as a payer

source like private insurance that can be depended upon to pay the agreed upon

rate for whatever volume of patients is encountered. 5

179

The practice of legislating separate limits on Medicaid payments to public and private hospitals—and especially requiring only the state hospitals to remain below an

arbitrary cap—serves no good purpose for the State. It adds no assurance beyond

the total appropriation of state funds for match to DHH that Medicaid program expenditures will be constrained within the appropriated level. In fact, since Medicaid

is an entitlement program and a recipient unable to access the state public hospitals

is free to utilize other providers, the public cap could increase per recipient costs

as those with a Medicaid entitlement are driven away from the LSU hospitals and

into higher cost systems for services.

Another Medicaid financing issue that could adversely impact our ability to fulfill

our safety net mission is CMS’ proposed Medicaid cost limit regulation. On January

18, 2007, CMS issued a proposed rule that would: 1) cap Medicaid reimbursement

to public providers at the provider’s cost of delivering Medicaid-covered services to

eligible recipients; 2) greatly restrict the sources of state match funding through

intergovernmental transfers (IGTs) and certified public expenditures (CPEs) obtain

through public providers; and 3) require public providers to receive and retain the

full amount of Medicaid payments earned. The rule adopts a more restrictive definition of ‘‘public provider’’ than what exists in current law. While the Administration

contends that the rule would cut $3.87 billion from the Medicaid program over five

years, survey information from public hospitals across the country indicates that the

initial impact will be far greater.

The fact that many nonstate hospitals that currently make IGTs would no longer

be permitted to do so under the rule will leave a gaping hole in the State’s Medicaid

budget. This will lead to lower reimbursements and reductions in services.

As important as what the proposed rule specifies is what it leaves open-ended.

The rule does not define ‘‘costs.’’ There is a real threat that graduate medical education costs will not be included or allowed. This could mean a loss of more than

$50 million per year to LSU alone.

Possible solutions to these reimbursement problems include:

• Require CMS to allow public hospitals to claim physician and CRNA costs as

allowable costs under DSH; • Ask the administration to withdraw the proposed Medicaid regulation;

• Organize a ‘‘summit’’ on hospital reimbursement in Louisiana to develop equitable and realistic solutions that ensure proper reimbursement to all providers without destabilizing the safety net.

3. MENTAL HEALTH

There has been a significant loss of capacity in the mental health system as a

result of Katrina. It is a system that already was under stress before the storm,

and inpatients from the region, especially those without funding, were being transferred across the state to any available facility.

Post-Katrina, the city lost over 400 mental health beds—100 at our Charity Hospital facility and only about 40 of these have been restored in New Orleans. The

Crisis Intervention unit at that public hospital was closed, along with all the services of the entire safety net facility.

The crisis we continue to face is manifested in multiple ways. At the clinical level,

there is an exponential increase in mental illness. Emergency Departments have

been impacted and are under strain because of the volume of patients whose symptoms require special handling, facilities, and expertise not currently available. A

practice of rotation of behavioral health patients among EDs in both Orleans and

Jefferson parishes has been implemented, and these patients and the type of care

they require have contributed to ED overcrowding in the area. Emergency Departments were not designed to accommodate the special needs of these patients, and

certainly not in the volume now experienced. According to one press report, police,

who reportedly answer an average of 185 mental health calls each month, often are

unable to find a hospital able and willing to accept mentally distressed citizens.

They can and do book many of these mentally ill people into jail, but that does not

guarantee proper treatment. One prison spokesperson reported that the jail spends

$10,000 to $12,000 per month—21 percent of its total pharmaceutical budget—on

psychiatric medicine. However, the jail has only one full-time, board-certified psychiatrist and two part-time psychiatrists to treat 2,000 inmates. It is no place to

treat the seriously and persistently mentally ill. Just this past Thursday, a mentally

ill patient who was roaming the New Orleans streets at night with a rusty BB gun

was shot by a patrolling National Guardsman.

Potential solutions to the mental health crisis include:Funding to open additional

inpatient mental health beds. LSU is working to establish 30–40 behavioral beds

at a vacated hospital on a lease basis. Renovation of the space will be necessary,

180

as will support from FEMA. But more capacity is needed in the region.Funding for

long-term care beds. More efficient use of short-term inpatient beds requires the

ability to transfer appropriate patients to a long-term setting.

Funding for outpatient facilities. Improving the availability of outpatient services

will provide alternatives to inpatient and ED admissions and overall reduce the

stress on hospitals. Funding for telepsychiatry. This technology would enable the

state to extend the reach of limited psychiatric resources.Incentives and funding for

recruitment and retention of mental health professionals. The cadre of mental

health professionals was decimated by Katrina. Proper staffing is essential to restoring both inpatient and outpatient clinical capacity.

4. Primary care delivery system. Emergency Department overcrowding existed

prior to Katrina, but it has been severely exacerbated post-Katrina, particularly in

light of reduced primary care capacity. Many patients present to the ED for minor

ailments that are more appropriately addressed in an outpatient primary care setting. This reliance on the ED stresses limited resources, is inefficient and costly, and

does not provide the patient with a coordinated, holistic approach to care. A recent

article in The Times-Picayune reported on the crisis in New Orleans EDs. Hospitals

in Orleans and Jefferson parishes have run out of space in their emergency rooms

and are lacking sufficient numbers of acute care beds. ‘‘There is not a bed available

anywhere in the city,’’ said Jack Finn, president of the Metropolitan Hospital Council. The waiting time in EDs is now seven to eight hours— approximately the time

required to drive to Dallas or Atlanta. Patients remain inside ambulances or wait

in hallways on gurneys until they can be seen. Physicians believe that lack of swift

access to primary care is part of the problem.

Insufficient primary care capacity causes other patients to delay seeking care

until their condition worsens and becomes severe and very expensive to treat. The

likelihood of a poor outcome only increases.

LSU is committed to a model of health care delivery that emphasizes primary

care clinics located closer to where patients live. Primary care clinics are well-positioned to encourage better patient access, facilitate care coordination, and provide

patient education. In a multi-specialty clinic environment with a vigorous disease

management program, it is much easier to consider and treat the patient in a holistic context. The popularity of the ‘‘Medical Home’’ concept for health care reform is

based on an understanding of these principles. As envisioned by the Louisiana

Health Care Redesign Collaborative, the Medical Home Model calls for improved

communication, information exchange, and care coordination (guided by evidencebased protocols). Such a model holds significant promise for improving care, increasing patient satisfaction, and controlling costs.

LSU strongly endorses the Medical Home concept. LSU’s chronic care and disease

management initiatives are consistent with the model and have produced demonstrable results in reducing the incidence of care in expensive settings and improving

quality. We must now expand and strengthen the network of community health centers and neighborhood clinics in New Orleans in order to build upon these successes

and optimize the benefits of the Medical Home model of care.

LSU already has offered to devote resources to community clinics, including a mobile ophthalmology unit made possible by a $300,000 donation from Pfizer and New

York Hospital Association. AstraZeneca donated $1 million for a telemedicine project

to be located in clinics that will facilitate diagnosis and specialty consultations.

CLIQ is a data repository that allows sharing of laboratory and radiology information and is in operation at MCLNO and in PATH clinics. We have offered to implement a clinic referral system that will assign patients presenting at our hospitals

to a community clinic for primary care services and follow-up based on the patient’s

zip code. All of these efforts demonstrate our resolve to bolster primary care clinics

and better integrate them into the state’s health care delivery system. Contrary to

some fears that may exist, we have absolutely no interest in driving community

health centers and clinics out of business. There is no upside to such a shallow

strategy. We firmly believe that our success in delivering quality health care is dependent upon a strong and vibrant network of community clinics. We pledge to do

all we can to support primary care clinics in the state and continue a productive

collaboration with the coalition in greater New Orleans that is evolving.

Obviously, the availability of additional funding is central to our ability to increase primary care capacity through community clinics and implement the Medical

Home approach. Funding should be directed in the following areas:

Physician and other related medical services. As described in detail below, the

Centers for Medicare and Medicaid Services (CMS) does not allow us to claim physician, certified registered nurse anesthetist, and other ‘‘non-hospital’’ costs under

DSH. Rendering these very real and critical costs ‘‘unallowable’’ suppresses the ability of the safety net to provide the extent of timely clinic and other physician servVerDate 11-SEP-98 09:39 Aug 02, 2007 Jkt 000000 PO 00000 Frm 00184 Fmt 6633 Sfmt 6633 Q:\DOCS\110-17 SCOM1 PsN: SCOM1
181

ices that a Medical Home model requires. It is not possible to both implement a

Medical Home structure and go unpaid for some of the most basic services that patients require. If CMS is not willing to change its policy, additional funding is needed to compensate for these services.

Infrastructure. A significant expansion of the network of community health centers and clinics requires an infusion of funds to acquire the necessary zoning

changes and permits, build new facilities, lease space where appropriate, and provide increased staffing levels.

Information technology. The Medical Home model requires the ability to share patient medical information throughout the health care network. Thus, funding to develop electronic medical records and ensure interoperability is essential.

5. WORKFORCE

There has been an exodus of physicians and other medical personnel from New

Orleans post-Katrina. Physician specialists are in short supply, particularly

orthopedists, neurosurgeons, ENTs, interventional and other radiologists, anesthesiologists, and ophthalmologists. We also are experiencing a shortage of registered

nurses and medical laboratory technicians. According to Louisiana Department of

Health and Hospitals officials, there are currently about 450 primary care physicians in the New Orleans area, down from about 1,500 prior to Katrina. There simply are not enough mental health professionals to meet the growing need. The nursing shortage is so severe that annual wage and benefit costs have topped $120,000

in some cases. We also have had difficulty filling administrative/managerial slots,

as well as openings for maintenance workers, electricians, and carpenters.

The reasons for the workforce shortage include hospital closures, the slow and uncertain recovery of the region, lack of affordable housing, and deficiencies in basic

public services, such as schools and police protection. With the closure of Charity

Hospital, medical faculty are being lured to academic health centers in other states,

and this has had a serious adverse impact on our ability to attract and retain medical students and residents and maintain robust medical education programs.

Possible solutions include:

• State and Federal funding that will enable hospitals to offer financial incentives

to meet workforce needs;

• Federal housing assistance; and

• Commitment to a new LSU academic health center. While this facility will not

be built immediately, the political wrangling and attempts by some to halt the process are exacerbating an already uncertain environment that threatens to choke off

supply of future medical professionals in the state. Widespread community support

for a new facility will allay concerns and help all hospitals recruit physicians,

nurses, and other medical staff.

CONCLUSION

As you know, our challenges are great. But they are not insurmountable as long

as political infighting and self-interest are set aside in favor of the interests of patients. I think we all agree on the problems. Our task is to marshal the intellectual

capital of the entire health care community in New Orleans to arrive at sensible

solutions that transcend parochial interests. If we do that, we will be well on our

way to recovery. However, we cannot accomplish our mission without additional

Federal assistance in the form of increased funding and regulatory changes as outlined above. It is my hope that the interest, attention, and influence of this subcommittee can help facilitate a productive dialogue and produce positive change for

the citizens of New Orleans.

ANSWER TO SUBMITTED QUESTION FROM MRS. BLACKBURN

1. Regarding the mental health crisis in New Orleans, you recommend a

variety of funding options, such as funding for outpatient facilities and

long-term care beds, to alleviate the crisis.

Who should pay for these additional beds and services? Federal and/or

State government?

With the ‘‘brain drain’’ occurring in New Orleans, who will care for these

patients once you have more beds?

Prior to Katrina, the Medical Center of Louisiana at New Orleans (MCLNO) operated 100 acute psychiatric beds on the Charity Hospital Campus. Charity is closed,

and there currently are no psychiatric beds in the LSU interim facility, which is

182

partially open with 179 acute beds. There were just over 500 total beds at MCLNO

prior to Katrina.

As indicated in testimony, LSU is working to open about 40 psychiatric beds in

a vacated hospital on a leased basis. As temporary replacement beds, FEMA funding

for necessary renovation will be requested.

Plans for the construction of a replacement hospital for MCLNO in conjunction

with the Veterans Administration should address the need for acute psychiatric

beds on a permanent basis. The Community Development Block Grant will partially

fund the hospital, with the remainder provided by bonds and FEMA replacement

funds. Ongoing operation of the psychiatric beds in a new hospital is anticipated to

be supported by state and Federal Medicaid funding, by Medicare and by various

private insurance sources.

Recruitment of psychiatrists and other professional staff is problematic today and

will require both continued state and Federal efforts to encourage successful recruitment of health care professionals to the area and the rebuilding of New Orleans

generally. Financial incentives, such as through the Greater New Orleans Health

Service Corp which offers grants to physicians who return and practice for at least

three years, will be critical to success.

Availability of psychiatrists and other specialists is a complicating issue over and

above facility needs. It is impossible to determine the pace at which the ‘‘brain

drain’’ problem in New Orleans will be resolved, but a solution must go hand-inhand with other efforts to restore our health care system and community in general.

MCLNO is attempting to open seven primary care clinics in various areas of

metro New Orleans. While we continue to await city enactment of its zoning variance ordinance, it is estimated that these clinics will support 52,000 to 70,000 patient visits annually. While the clinics will not be providing specialty psychiatric

services, they clinics will be able to screen for such problems and direct care to settings other than the Emergency Room. Such enhancement of the primary care delivery system will be important in unclogging Emergency Rooms and making them

more accessible for emergent problems of all types. It is important to maintain focus

on repairing the health care system as a whole in order for it to effectively address

various kinds of specialized care.

183

184

185

186

187

188

189

190

191

192

193

194

195

196

197

198

199

200

201

202

203

204

205

206

207

208

209

210

211

212

213

214

215

216

217

218

219

220

221

222

223

224

225

226

227

228

229

230

231

1 K. Haslanger, ‘‘Radical Simplification: Disaster Relief Medicaid in New York City,’’ Health

Affairs 22(1):252–8, January-February 2003.

2 M. Perry, ‘‘New York’s Disaster Relief Medicaid: Insights and Implications for Covering

Low-Income People,’’ Kaiser Commission on Medicaid and the Uninsured and the United Hospital Fund, pub No. 4062, August 2002.

3 J. Lambrew and D. Shalala, ‘‘Federal Health Policy Response to Hurricane Katrina: What

It Was and What It Could Have Been,’’ JAMA 2006;296:1394–7.

DIANE ROWLAND ANSWERS TO SUBMITTED QUESTIONS FROM MR. GREEN

Your testimony referred to the Disaster Relief Medicaid Program for New

York after the tragedy of September 11, 2001, and how a different approach—the waiver process—was utilized to address Medicaid issues as a

result of Hurricane Katrina. There is no question that the Federal response

was more effective in New York, so I would like to explore why CMS did

not build on that experience to respond more effectively to Katrina.

In your opinion, what factors contributed to the use of a waiver approach, and did you sense a lack of political will to respond in a manner

similar to the response after the attacks of September 11, 2001?

Additionally, what legislative changes would you suggest we make to ensure that the Medicaid program can effectively respond to a disaster and

provide real help to Americans during a public health emergency?

On September 19, 2001, 8 days after the terrorist attacks, New York Governor

George Pataki announced a program called Disaster Relief Medicaid. The state had

received Federal approval to implement a program to address the challenges Medicaid administrators faced as they attempted to operate with computer systems rendered defunct in the wake of the attacks. The program also addressed the health

needs of New York residents by providing temporary Medicaid coverage beyond the

scope of coverage available prior to September 11th. In the four months between the

terrorist attacks and the end of January 2002, when New York’s Disaster Relief

Medicaid closed to new enrollees, over 350,000 New Yorkers signed up for the program. 1

Included in New York’s Disaster Relief Medicaid were administrative simplifications that made it easier for New Yorkers to apply for coverage and expanded eligibility levels for Medicaid, particularly for adults. The state shifted from an eightpage Medicaid application to a single page and dramatically reduced the amount of

documentation applicants were required to present. Eligibility interviews lasted

about fifteen minutes and determinations were made on the spot, reflecting a

change in procedure that appealed to low-income residents who could leave the

interview with an assurance of immediate coverage.2

The state also increased eligibility levels for adults in New York City that had

been approved but not put into operation as part of the state’s Family Health Plus

waiver in 1999, and it administratively implemented a New York Court of Appeals

decision that required Medicaid to enroll all legal immigrants in the state, regardless of whether they arrived before or after 1996.

The State and Federal Government quickly partnered to implement New York’s

Disaster Relief Medicaid, putting in place within weeks a solution for those still

grappling with the health and emotional aftershocks of the terrorist attacks. Simplified documentation requirements and application materials as well as expanded

eligibility enabled more individuals to apply for and enroll in public coverage. An

extensive outreach campaign, aided by private philanthropy and fed by the positive

experiences applicants had with New York’s Disaster Relief Medicaid, helped link

vulnerable residents with health coverage and services.

In their September 2006 article in the Journal of the American Medical Association, Jeanne Lambrew and Donna Shalala reflect upon the Federal health policy response to Hurricane Katrina and provide suggestions to improve the Federal response to future disasters.3

To mitigate against future harmful delays in the Federal health response to disasters, Lambrew and Shalala recommend that Congress consider enacting a permanent emergency Medicaid authority that could build upon the program’s existing eligibility and payment systems to address health coverage needs after disasters.

Fully-funded, temporary expansions to broad or targeted groups could be triggered

by legislative criteria or an executive agency designation. Lambrew and Shalala also

point out that Congress and the executive branch can employ budget policy to appropriate funds for public health programs, such as through the Public Health and

Social Services Emergency Fund. A reserve for use in disasters could be retained

in this fund, which would revert to the Treasury if unspent.

232

In the face of the massive destruction to the Gulf Coast, and especially the New

Orleans region, in the aftermath of Katrina there was no ready mechanism to extend coverage to the displaced, uninsured population and assist the providers trying

to meet their health needs. Having emergency authority to extend Medicaid coverage and provide full Federal financing in disasters from a disaster reserve fund

would provide an important safety net for the needy in times of crisis.

The witnesses on the hearing’s second panel shared different views about

the effect of CMS’ proposed rule on Medicaid financing and limitations to

cost. Given that the public hospital infrastructure has been crippled due

to Hurricane Katrina and the private hospitals have taken on the bulk of

uncompensated care, can you address the likely effect of this proposed rule

on New Orleans’ ability to shoulder uncompensated care costs?

This question seems to arise from Gary Muller’s testimony stating: ‘‘as we understand the proposed rule, CMS will require states to direct Federal funds back to

governmentally operated healthcare providers. This certainly seems to be aligned

with how the Federal Government intended these funds to be used in the first place.

For WJMC, we believe this will result in equitable distribution of funds to our hospital.’’

It seems that there is a misunderstanding about how the regulation would affect

hospitals and providers and some confusion with this regulation and the way the

state currently distributes Medicaid disproportionate share hospital payments

(DSH). DSH is the primary mechanism used to support uncompensated care in Louisiana and the majority of Medicaid DSH funds are now targeted to the Charity

Hospitals. This rule does not impact or affect the distribution of DSH payments.

The proposed rule would place new restrictions on reimbursement for government

providers and limit the definition of a public hospital which restricts a states’ ability

to use intergovernmental transfers and certified public expenditures to fund their

programs. The American Hospital Association, the National Association of Public

Hospitals and the American Health Lawyers Association have all submitted comments to CMS to request that the rule not be implemented or significantly changed

because of the impact of the regulations on safety-net providers and on how states

fund their Medicaid programs. Ultimately, these changes could leave states with

less funding available for safety-net providers which could further hinder efforts to

support uncompensated care. Because Louisiana has in the past relied on intergovernmental financing arrangements to fund the charity system more heavily than

other states, the proposed rule could have a larger impact on safety-net financing

in Louisiana compared to other states. If the rule is implemented, it could also limit

the state’s ability to use similar financing arrangement with other public providers

in considering options to restructure the health care delivery system.

For more specific comments about the regulation see the following:

http://www.aha.org/aha/letter/2007/070315-cl-cms2258p.pdf

http://www.naph.org/naph/advocacy/NAPHCommentLetter.pdf

http://www.gwumc.edu/sphhs/healthpolicy/chsrp/downloads/AHLA—medicaid—IGT—030907.pdf

233

234

235

236

237

238

239

240

241

242

243

244

245

246

GARY WILTZ, M.D. ANSWERS TO SUBMITTED QUESTIONS

QUESTION SUBMITTED BY HON. GENE GREEN

I am a strong proponent of health centers and understand the tremendous job the do to serve the uninsured. The cities of Houston and New Orleans both have high levels of uninsured with too few FQHCs to meet the

need. So, I appreciate the challenges you face.

I understand that you have worked with Governor Blanco to craft a proposal for health center construction. Can you provide the committee with

additional details on that proposal and explain how it will be utilized to

leverage additional health care financing?

Additionally, with health centers saving three Medicaid dollars for every

one federal dollar spent on them, there is no question that FQHCs are a

good use of scarce health care dollars. As we look at rebuilding health care

in New Orleans, can you on what role FQHCs will—or should—play in the

reconstruction of the health care system?

For the first time in Louisiana Federally Qualified Health Center’s (FQHC) history, a one time special capital outlay set aside has been allocated with the Governor’s budget to expand existing site and service expansion initiatives. Louisiana

Primary Care Association (LPCA) is currently working with Capital Link, Inc. to develop a capital funding program for FQHCs that would leverage New Market Tax

Credits (NMTC) funding and HRSA or USDA Loan Guarantee Programs to maximize funding available for FQHC infrastructure development. The program under

consideration would require a state investment of $55 million in CDBG or other

state funds to leverage approximately $38 million in NMTC, private sector investments and $33 million in HRSA or USDA guaranteed low-cost loans. This pool of

$126 million would fund the expansion and new site development of 58 health centers and the acquisition of 11 electronic medical record (EMR) systems. The health

center expansion and new access point initiative is projected to provide health care

to an additional 180,000 Louisianans.

Subsequent to the tragedies of Hurricanes Katrina and Rita, health officials within the state have deemed FQHCs as a viable option for public and private

partnering as Louisiana reengineer its fragile health care infrastructure. Louisiana

currently ranks 50th in the nation in poor health indicators, and the cost of health

care is spiraling upward due to unwarranted emergency room visits to Louisiana’s

charity hospitals. The average cost per ER visit is $383. Nevertheless, the average

cost to see that same patient in one of Louisiana’s Health Centers is $130. Louisiana’s Governor Kathleen Blanco has expressed on several occasions the need for a

better community based system of care. The Louisiana’s Health Care Redesign Collaborative has echoed the same sentiment proposing the ‘‘medical home’’ concept as

the model for redesigning Louisiana’s health care system. The medical home concept

includes four basic components which are similar to the federally qualified health

center’s model—access to a primary care physician (PCP), an insurance connector,

a Quality Forum and a health information technology system.

Most importantly, Louisiana’s FQHCs are staffed by PCPs and nurse practitioners. Louisiana’s FQHCs provide dental and mental health services, access to prescription assistance programs and the 340B program which provides for lost cost

and in some cases free prescription drugs. The majority of Louisiana’s FQHCs are

Certified Medicaid Application Centers which serves as an ‘‘insurance connector’’.

FQHCs are governed by a 51 percent consumer majority board similar to that of

the Quality Forum—the establishment of a forum to oversee the quality of the care

provided by the Medical Home. Additionally, many of Louisiana’s FQHCs are

JCAHO accredited or are applying for re-accreditation.

QUESTION SUBMITTED BY HON. ED WHITFIELD

Ms. Diane Rowland stated that pre-Katrina New Orleans had only two

federally qualified health centers (FQHCs). Can FQHCs play a larger role

in New Orleans? If so, what impediments do you see to the expansion of

FQHCs at the federal, state, and local level?

There are two Federally Qualified Health Center organizations in New Orleans.

One is the New Orleans Health Department Healthcare for the Homeless Program

and the other is EXCELth, Inc. which operates the EXCELth, Inc. Primary Care

Network (the EXCELth Network). The Health Care for Homeless program takes in

more than its traditional population as a result of the effects of Katrina. As a network, the EXCELth Network has multiple sites in Orleans, Jefferson and East

Baton Rouge Parish. Two sites are operated by the Daughters of Charity Services

247

of New Orleans in Orleans Parish and one more in Jefferson. Two EXCELth Network sites are operated by the New Orleans Health Department in Orleans Parish.

There is another EXCELth clinic in East Baton Rouge, as well as, two mobile medical units operated by EXCELth, Inc. in New Orleans and East Baton Rouge (that

goes mainly FEMA trailer sites).

However, there are additional FQHCs in the New Orleans Metro area. Jefferson

Community Health Care Centers (JCHCC) is an FQHC in adjoining Jefferson Parish. St. Charles Community Health Care Center (St. Charles) operates in St.

Charles Parish and in Kenner, LA, part of Jefferson Parish.

In post-Katrina Metro New Orleans, the collaboration between the FQHC organizations has been remarkable in that they have worked together to expand services

by sharing their resources. The organizations regularly meet among themselves and

other safety net providers to plan services to assure that gaps are addressed. A case

in point is the March of Dimes Mobile Pre-Natal Van (The MOM Van). Collectively

the EXCELth, JCHCC, Daughters of Charity and St. Charles Health Centers submitted a successful proposal to the national March of Dimes to operate the Mobile

unit to outreach underserved communities in the combined Orleans and Jefferson

area. Each has taken different roles to assure coordination and comprehensive care

of this population at particular risk due to the loss of pre-natal providers in the

area.

In this respect, the best solution for addressing the needs of the New Orleans area

is to support the existing organizations that have bonded together and increased

their capacity to provide community solutions. Additional, support to these organizations will increase their collective capacity and the opportunity for success.

Impediments that affect these health centers are generally the difficulties in quick

resolution to financial and policy needs at Federal and state levels. Most have seen

increased uncompensated costs (uninsured rates have increase to 80 percent in some

sites of service). While block grants have helped, the limited and unpredictable

length of their existence impedes practical planning of service delivery and response.

Additionally, long term support for increasing workforce availability is also critical.

Æ