February 14, 2003 DHH Budget Gap Estimated at $1.4 Billion

Baton Rouge – The Department of Health Friday announced its response to the Governor’s Executive Budget, which left the department with an approximately $1.4 billion budget shortfall, according to LDH estimates.

To continue operating, LDH will focus on funding its priority programs – primary care, preventative care and community-based care – and target its cuts to institutions such as hospitals, nursing homes, centers that serve people with developmental disabilities, and to mental health hospitals. If enacted, this plan will result in the closure of several mental health hospitals and other facilities, and will eliminate or greatly reduce funding to Medicaid programs that do not fall under any of the three priority care areas.

Southeast Louisiana Hospital in Mandeville, the New Orleans Adolescent Hospital, the Eastern Mental Health System in Jackson and Greenwell Springs, Central Louisiana Hospital in Alexandria and Villa Feliciana Medical Center in Jackson all will close under this plan. Other facilities that would have to close include the following developmental centers: Metropolitan in Belle Chase, Northwest in Bossier, Ruston and Southwest in Iota.

LDH proposes adding funding to community-based services and programs that would serve as alternatives to the care provided in these facilities.

Secretary David W. Hood compared the impact of this budget cut to the alternative impact of an across-the-board budget cut. An all-encompassing reduction would cut at least 30 percent of funding to all LDH programs, services and facilities; still would result in several facilities closing; and would not leave enough community-care programs to accommodate those individuals who would have to leave institutions.

"We have examined numerous options to reduce spending before presenting this plan," Hood said. "Although it is innovative, it will be impossible to implement every feature of it in one fiscal year.. However, with such a significant budget reduction, we were forced to consider drastic cuts. There are no easy solutions. But, we’ve tried to outline a plan that is in keeping with good health care policy. Unfortunately, developing a plan in response to a crisis of this magnitude is not to suggest that it can be easily implemented. We must still ensure that we do not leave our most needy citizens behind."

Hood and members of the LDH staff have been in discussions about the budget with Gov. Mike Foster’s office, as well as Legislative leaders, and believe that numerous changes and improvements to the plan will be made during the legislative process over the next few months.

"I am confident there will be steps taken during the upcoming Legislative session that will address this crisis in health care funding," Hood said. "This is not the first time this department has faced a budget crisis, and experience has shown the ultimate outcome is always different than the initial response."