Executive Interview: Baptism by Fire

A case of bad timing? Les Hirsch doesn’t look at it that way.

Hirsch’s first day at work as the new CEO of Touro Infirmary in New Orleans’ Garden District was Monday, Aug. 22, 2005. He had just come from the coolness and the mountains of Denver – where he was president and CEO of St. Joseph’s Hospital – to tackle new challenges and new opportunities at Touro, a New Orleans fixture since the 1850s. Days later, it was clear that a major hurricane called Katrina could pose a major threat to the city. By Saturday, Aug. 27, Hirsch had authorized the hospital’s hurricane disaster plan to be put into effect.

By 7 a.m. Sunday morning, with winds of 175 mph, Katrina was upgraded to Category 5 status, making it the strongest hurricane ever recorded in the Gulf of Mexico. (Not long after, Rita would surpass it.) Mandatory evacuations were ordered for large areas of southeast Louisiana as well as coastal Mississippi and Alabama. That same morning, Touro established a command center and assembled a staff of 600 essential personnel to ride out the storm. Counting family members and 250 patients, the facility was sheltering about 2,000 people.

At around 6 a.m. Monday, Aug. 29, Katrina – now a Category 3 storm with sustained winds of 125 mph – made landfall in southeast Louisiana. A few hours later, it slammed into the Gulf Coast of Mississippi, barely skirting New Orleans. That morning, Touro lost power, and the emergency generators took over. By mid-afternoon, Hirsch – and many others in New Orleans – figured the worst had passed them by. At Touro, some windows had blown out and part of a chiller blew off the roof, but that was about it.

…Until early Tuesday. That’s when the people inside the hospital learned that the levees protecting New Orleans from the waters around it had failed. Floodwaters of up to 10 feet were expected. Though it escaped flooding (due to the fact that it is five feet above sea level), Touro and all inside it soon fell victim to a kind of siege. The backup generators failed, and the infirmary lost lighting, air conditioning, elevator service, outside telephone (and cell phone) service, and running water. There was no way to get water or flush toilets.

By Tuesday evening, the facility was dark and hot. It became evident to Hirsch that Touro would have to be evacuated, for only the second time in its 153-year history. With one of the phone lines restored, Touro staff contacted John Matessino, president of the Louisiana Hospital Association, who contacted federal authorities and Acadian Ambulance. Evacuation began Wednesday morning, when 13 infants were airlifted out from the NICU. After many tense moments, on Thursday night, with protection from National Guard, police, firefighters and a SWAT team, Touro evacuated its last patients and closed the doors.

The Journal of Healthcare Contracting spoke to Hirsch in late April about how Touro, the city of New Orleans, and healthcare in the area have fared since those dark days.

Journal of Healthcare Contracting: Can you comment on the current healthcare scene in New Orleans?

Les Hirsch: On Sept. 28, we became the very first hospital to open up in Orleans Parish. We reopened our emergency services that day; and inpatient, surgical and other outpatient services on Oct. 12. Until Feb. 14, when Tulane University Hospital reopened, we were the only adult acute-care hospital operating in Orleans Parish. We’ve been very busy. When we reopened in October, we were operating 51 beds; today, we are operating 250. Our census rapidly increased, to the point where our average daily census is about 215. During the last week, we have been operating in the 240s and 250s.

JHC: Is that high census a blip, or a permanent fact of life for Touro?

Hirsch: Before the storm, Touro operated with an average daily census of 260 to 270. The only difference now is that we haven’t reopened our inpatient psychiatric services or skilled nursing care. But our med/surg census is higher than it was. What remains to be seen is what will happen as others open and as the population increases. [As of mid-April, an estimated 24 percent had still not returned to the city.]

We’ve seen an increase in the amount of uncompensated care [we are delivering]. We do have a community mission, but our uncompensated care is well over 100 percent of what it was [prior to the storm]. We don’t get reimbursed [for providing uncompensated care]. Charity funds go predominantly to the Charity system, as opposed to private non-profit hospitals. [In Louisiana, most state-administered aid for the uninsured and indigent goes to 10 charity hospitals run by the Louisiana State University medical system. In 2004, approximately $1.1 billion in aid was provided in this manner.]

JHC: Is anything being done to ensure that Touro gets reimbursed for the charity care it is providing?

Hirsch: There has been a great deal of advocacy on the part of the hospital industry, and there is legislation pending. But even in some of the proposals being discussed, there would still likely be a shortfall in the amount of reimbursement for charity care provided by the non-profit and public hospital sector, outside the charity system.

JHC: New Orleans lost a good portion of its population following the storm. How has that affected staffing at Touro – both of employees and physicians?

Hirsch: It has been reported that a large number of physicians left the New Orleans area; I have no reason to doubt that. In the case of Touro, we had some 50 physicians either retire or relocate, but we have added 87 new members to our medical staff; so we’re net 30 ahead. It appears to us that the major admitters and major groups that were very, very active remain active at Touro. The only thing I am concerned about is this: The average age of our medical staff is in the 50s. I’m speculating here, but the doctors who left New Orleans were probably the younger ones. That raises the average age of physicians in this area even more. In the next five to 10 years, who will be the next generation of physicians in New Orleans? As the population continues to regenerate, New Orleans will be a place of opportunity.

JHC: In January, Touro acquired St. Charles Specialty Hospital, its medical office building and its parking garage. At the time, you said that the acquisition – just two blocks from the Touro campus – would help Touro reach its goal of a 500-bed capacity. Was that deal in the works before you came to Touro? To what extent have you been able to focus on Touro’s mission and its future development, and to what extent must you focus on recovering from Katrina?

Hirsch: In answer to your first question, St. Charles came on the table shortly after we reopened, although there had been efforts in the past to acquire what was then called St. Charles General Hospital.

Regarding No. 2, we are running two tracks. We have been in a recovery mode. But as we begin to stabilize, we are looking at what we need to do to plan for the future. We have gotten our staff up to [almost] 1,400 people; we’ve put on 700 full- and part-time employees post-Katrina. We have become a melting pot. I don’t think there is a hospital that closed that we haven’t hired from. What had been a stable Touro staff now is representative not only of the people who were here before, but a lot of others too. So we are forging a new Touro, and there’s a lot of opportunity in that.

At the same time, our marketplace is very different. Hospitals have closed, and the population has been reduced. New Orleans was considered an overbedded market, and the state of Louisiana is 48th in a variety of health status [measurements], in terms of outcomes. So there’s a great opportunity to reshape healthcare in the New Orleans metropolitan area and in the state.

Insofar as our mission is concerned, it is clear: We have served the New Orleans community for the last 153 years, and we’ve always had a charitable mission. We’re the only adult acute-care hospital in New Orleans that is non-profit; the others are for-profit or public. We’re the only faith-based hospital in the city. If you look at the amount of uncompensated and charity care we have provided post-Katrina, we’re up more than 100 percent. What used to be $12 or $13 million [of charity care] a year, valued on a net revenue basis, now we may be between $25 and $30 million. That’s the kind of run rate we’ve had in the first three months of the year.

Touro will only grow in its importance in the New Orleans community as a major provider of healthcare. We will continue to grow as a major teaching hospital, with our relationships with LSU [Louisiana State University Health Sciences Center] and Tulane [University Health Science Center]. The number of residents training at Touro has already doubled – we’re now at 40 slots for graduate medical education. And as the playing field shifts in New Orleans, we’ll see even more.

JHC: Did your physical plant sustain damage? Have you had to replace equipment?

Hirsch: We had an angel on our shoulder; we didn’t get flooded. We’re about five feet above sea level. But we did experience about $20 million in property losses and more than $40 million in operating losses. We’ve had to replace a lot of supplies and equipment, including a couple million dollars of radiology equipment, and $4.5 million in elevators that had to be replaced.

JHC: Have insurers been responsive?

Hirsch: We are actively working to have our insurance carriers fairly adjudicate our claims. We’re working with FEMA as well. We actually had to file suit against one of our carriers; I’m hoping the fact that we did so will get their attention in terms of working with us aggressively and in good faith.

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