5 Years After Katrina, Mayor Plans New Hospital

New Orleans, LA – Mayor Mitch Landrieu announced plans to deliver a full-service hospital in New Orleans East. After renegotiating a flawed real-estate deal with Universal Health Services (UHS), Landrieu announced that the City will purchase the Pendleton Memorial Methodist Hospital site for $16.25 million – representing a $23.75 million dollar savings for the real estate deal alone. Landrieu laid out a plan to renovate and open the hospital for a projected cost of $110 million – resulting in projected total savings of $53 million for the taxpayers. 

“It has been nearly five years since Hurricane Katrina, and it is shameful that more than 80,000 residents in New Orleans East, the 9th Ward and parts of Gentilly still have to drive up to 30 minutes to an emergency room,” Landrieu said. “I understand that this is a matter of life and death. That’s why I’ve been so focused on putting together a plan that will give the people of the East a quality, full-service hospital as quickly as possible. And that’s why it’s so important that we put in place a hospital that is financially sustainable over time.” 

Landrieu also released his administration’s Eastern New Orleans Healthcare and Hospital Report (attached), which outlines a strategy to deliver quality healthcare in New Orleans East. According to engineering estimates in this report, the full-service hospital is expected to open by the Fall of 2013, and an on-site ambulatory care facility providing emergency room services will be completed in approximately one year. Mayor Landrieu and his team are in preliminary negotiations with a not-for-profit healthcare provider to operate the hospital. 

During focus groups with physicians and community members held in the last 60 days, many expressed concern about emergency transport time from the eastern parts of New Orleans. To address this issue, as a new hospital and emergency room is being developed, the City will post an additional ambulance in New Orleans East. 

Landrieu added, “Today, we have laid out a comprehensive plan for healthcare in New Orleans East, from our vast network of primary care clinics to a full-service hospital at the old Methodist site.” 

Saving Taxpayer Dollars 

Under the old deal, the city would have purchased three flooded buildings for $40 million – including Lakeland, Lake Forest, and Methodist. Under the Landrieu plan, the city will purchase only the building that’s needed – the Methodist Building – for $16.25 million. As a consequence, the two other properties will continue to generate projected tax revenues of at least $160,000 each year for the city. At the same time, the city will not be responsible for the $270,000 in annual maintenance and construction costs of these properties. 

Under the old deal, the city was projected to spend $163 million to purchase, renovate and equip the new hospital, according to the Billes/ Wink Study, a feasibility study completed in 2009. Under the Landrieu plan, the total projected cost for the hospital is $110 million. 

Landrieu said, “Our comprehensive healthcare plan saves the City precious federal funds. Every dollar that we save on this deal is another dollar that can be used to rebuild a playground or another worthy recovery project.” 

Timeline 

During the transition period before Landrieu took office, he met with the CEO of UHS and also convened a Healthcare Task Force and a subcommittee, which made recommendations for healthcare in New Orleans East. 

In his first 74 days in office, Mayor Landrieu has worked aggressively with community leaders and health care experts to open a hospital in New Orleans East. 

In his first days in office, Landrieu convened a working group on the issue whose goal was to create a visioning document to articulate the broad goals for the future of healthcare in Eastern New Orleans. As part of that effort, focus groups were completed with physicians currently practicing in the area, hospital administration experts, and community members. 

On May 15, Mayor Landrieu asked for a 60-day review of the controversial $40 million property deal between the New Orleans Hospital Service District A and UHS. 

Since the review period began 60 days ago, the City engaged Compass Clinical Consulting to produce programming and financial aspects of a technical plan for a hospital in New Orleans East including an estimate of operating costs. 

Just last week, Mayor Landrieu announced a new Hospital Service District A board, who will be tasked with moving the hospital forward in the coming years.