In The News › Jefferson Parish IG concerned lack of direction compromises hospital lease negotiation

Jefferson Parish IG concerned lack of direction compromises hospital lease negotiation

Ben Myers

NOLA.com | The Times-Picayune

April 9, 2014

Jefferson Parish Inspector General David McClintock is concerned the Parish Council’s continued failure to establish clear procedures for leasing the parish’s two public hospitals will compromise negotiations with the companies seeking the leases. In a confidential draft memorandum to council members, McClintock said “the absence and reluctance to establish a frame work for the process continues to color and compromise an optimal outcome.”

The council on Wednesday granted West Jefferson Medical Center’s wish to negotiate a lease with Louisiana Children’s Medical Center, but it is letting East Jefferson General Hospital take more time to find a lease partner. Council members have 30 days to respond to McClintock’s memo before he finalizes and publishes it.

East Jefferson’s first choice, Hospital Corp. of America, withdrew from he lease competition in February, citing uncertainty in the political process. Another finalist, Ochsner Health System, dropped out Wednesday, broadly stating that it wasn’t a good fit.

As West Jefferson Medical Center prepares to enter negotiations with Children’s and East Jefferson searches for a new lease partner, McClintock expressed concern that the Parish Council is not providing direction to either hospital board. “There will be unavoidable conflicts of interest if the council permits the hospitals’ management team, attorneys, advisers or board members to direct negotiations without a process in place,” he wrote. “The risk of conflict is no less were individual council members permitted to direct or influences negotiations.”

Furthermore, “there remains (1) no clear structure and line of authority for future negotiations; and (2) no process which permits a negotiation team to act in such a manner which ensures the integrity of the process,” according to the draft.

McClintock also is concerned that Parish Council’s lack of involvement in hiring professional services will “result in substantial, uncoordinated and potentially duplicative institution-specific expenditures.” That’s a presumed reference to East Jefferson and West Jefferson hiring their own advisers.

The inspector general’s draft memo says Jefferson has already spent $1.4 million on two merger-and-acquisition consultants and additional money on an antitrust law firm. East Jefferson is now finalizing an additional contract with one of the consultants, Joshua Nemzoff, to solicit and negotiate with additional lease partners.

McClintock recommended that Jefferson engage a single negotiating team to work with each hospital board, and to provide “clear direction” concerning contact with potential lessees and related expenses.

Last year, McClintock joined the Bureau of Governmental Research and others in criticizing the Parish Council for failing to establish objective scoring criteria for selecting a lessee for the hospitals.

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