Louisiana regulators approve LCMC Health purchase of Tulane hospitals

State regulators have approved LCMC Health’s planned acquisition of the three Tulane University Medical Center hospitals from HCA, clearing the way for the $150 million deal to move forward.

In a joint statement Tuesday, LCMC and Tulane announced they have finalized the partnership following approval from Louisiana Attorney General Jeff Landry’s office, which was required by a state law dating back to the 1990s.

The deal, first announced in October, will transfer ownership of Tulane University Medical Center downtown, Tulane Lakeside Hospital in Metairie and Lakeview Regional Medical Center in Covington to LCMC. It also will involve relocating the bulk of Tulane’s 500 medical residents — and the patients they treat downtown — to East Jefferson General Hospital in Metairie, which LCMC also owns.

Though the deal is now done, patients will likely not see any immediate changes. Officials with both institutions say it’s too soon to discuss a timeline for the transition to new ownership, which is expected to take 12 to 24 months.

“We do not have definite plans right now,” said Ruby Brewer, chief nursing officer for East Jefferson General Hospital and interim chief nursing officer at the three former Tulane hospitals. “It will be a gradual change, but it’s hard to say right now. Our goal is to relocate services so that the transition will be gradual.”

Win-win

Tulane and LCMC have heralded the deal as a win-win. In addition to the $150 million payment to HCA, LCMC will invest $220 million in the facilities at East Jefferson, Tulane Lakeside and Lakeview Regional.

The downtown facility will be repurposed to house a new nursing program, clinical research programs and more space for students in medical fields. It's part of Tulane's broader strategy to invest, over time, some $600 million in the a revamped downtown BioMedical District, centered around the former Charity Hospital, where Tulane will be an anchor tenant.

East Jefferson, which only has about 50% of its inpatient beds currently occupied, will also get a shot in the arm. Bringing more doctors and programs to the hospital through the residency program will increase the number of patients. It will also give those patients access to advanced treatments in specialties like organ transplants and bone marrow transplants, two areas where Tulane excels.

But the deal has raised concerns in some quarters. A national nurses’ union argued in a letter to Landry that closing the downtown hospital and increasing LCMC's footprint in the market could limit access to healthcare for the neediest patients and drive up costs.

The group, National Nurses United, had asked Landry to require LCMC to keep the downtown Tulane hospital open.

In a statement today, union member Mea Ratcliff, a registered nurse at Tulane Medial Center, said, “We look to our new employer, LCMC, to work with our nurses to ensure a smooth transition for staff and patients in our community. This sale and closure of our hospital is an enormous change to the landscape of healthcare in New Orleans and nurses want to make sure that patient care services are not compromised.”

Patient care will not suffer, according to Brewer, who said that, to the contrary, it will be improved under LCMC ownership.

“We are looking to grow and expand services,” she said. “People are not going to have to leave for specialized services and comprehensive care. We see this as a growth opportunity.”

Leverage

While the deal was not without critics, national healthcare experts say it makes sense. With healthcare costs continuing to increase, systems like LCMC that have multiple hospitals under one umbrella are in a better position to negotiate affordable pricing with large insurance companies.

"For a hospital, how you are going to get your revenues above your expenses is a very real challenge, and one of the few ways of doing that is having the ability to negotiate with an insurance company as an equal," said California-based healthcare consultant Nate Kaufman. "You have to be large to be able to do that."