Hurricane Katrina: Status of the Health Care System in New	 
Orleans and Difficult Decisions Related to Efforts to Rebuild It 
Approximately 6 Months After Hurricane Katrina (28-MAR-06,	 
GAO-06-576R).							 
                                                                 
Among the challenges facing New Orleans in the aftermath of	 
Hurricane Katrina is the significant destruction and disruption  
of health care services. Hurricane Katrina, which made landfall  
near the Louisiana-Mississippi border on the morning of August	 
29, 2005, and the subsequent flooding caused by the failure of	 
the New Orleans levee system resulted in one of the largest	 
natural disasters to hit the U.S. Among other things, the	 
hurricane resulted in the sudden closure of hospitals and loss of
other health care providers, including one of the largest	 
hospitals in the area, Medical Center of Louisiana at New Orleans
(MCLNO), which suffered extensive damage and remains closed.	 
MCLNO, consisting of Charity and University Hospitals, is part of
the statewide Louisiana State University (LSU) system and served 
as the primary safety net hospital for many local residents.	 
About half of its patients were uninsured, and about one-third	 
were covered by Medicaid. Furthermore, MCLNO also served as a	 
major teaching hospital and the only Level I trauma center in the
area. The availability of health care services is one of the	 
factors that can affect whether and how quickly residents return 
to the area. To conduct our review, we obtained information on	 
(1) estimates of the availability of health care services; (2)	 
efforts by state and local officials to plan for the rebuilding  
of the health care system; and (3) assessments of the damage to  
the MCLNO facilities, cost estimates for repair or replacement,  
and the costs that are eligible for federal funding.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-576R					        
    ACCNO:   A50237						        
  TITLE:     Hurricane Katrina: Status of the Health Care System in   
New Orleans and Difficult Decisions Related to Efforts to Rebuild
It Approximately 6 Months After Hurricane Katrina		 
     DATE:   03/28/2006 
  SUBJECT:   Cost analysis					 
	     Disaster planning					 
	     Disaster recovery					 
	     Disaster recovery plans				 
	     Disaster relief aid				 
	     Emergency medical services 			 
	     Hospital bed count 				 
	     Hospital care services				 
	     Hurricane Katrina					 
	     Natural disasters					 
	     Public assistance programs 			 
	     Repair costs					 
	     Repairs						 
	     Health care facilities				 
	     Health care services				 
	     Cost estimates					 

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GAO-06-576R

     

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March 28, 2006

Congressional Committees

Subject: Hurricane Katrina: Status of the Health Care System in New
Orleans and Difficult Decisions Related to Efforts to Rebuild It
Approximately 6 Months After Hurricane Katrina

Among the challenges facing New Orleans in the aftermath of Hurricane
Katrina is the significant destruction and disruption of health care
services. Hurricane Katrina, which made landfall near the
Louisiana-Mississippi border on the morning of August 29, 2005, and the
subsequent flooding caused by the failure of the New Orleans levee system
resulted in one of the largest natural disasters to hit the U.S. Among
other things, the hurricane resulted in the sudden closure of hospitals
and loss of other health care providers, including one of the largest
hospitals in the area, Medical Center of Louisiana at New Orleans (MCLNO),
which suffered extensive damage and remains closed. MCLNO, consisting of
Charity and University Hospitals, is part of the statewide Louisiana State
University (LSU) system and served as the primary safety net hospital for
many local residents. About half of its patients were uninsured, and about
one-third were covered by Medicaid. Furthermore, MCLNO also served as a
major teaching hospital and the only Level I trauma center in the area.
The availability of health care services is one of the factors that can
affect whether and how quickly residents return to the area.

We have undertaken work to provide a snapshot of the status of the health
system in New Orleans and efforts to rebuild it approximately 6 months
after Hurricane Katrina devastated the area. We are performing this work
under the Comptroller General's authority to conduct evaluations on his
own initiative.1 To conduct our review, we obtained information on (1)
estimates of the availability of health care services; (2) efforts by
state and local officials to plan for the rebuilding of the health care
system; and (3) assessments of the damage to the MCLNO facilities, cost
estimates for repair or replacement, and the costs that are eligible for
federal funding. The Ranking Minority Members of the House Committee on
Energy and Commerce and its subcommittees on Health and on Oversight and
Investigations requested a briefing on the preliminary observations of our
review. We briefed the committee and other committees of jurisdiction on
February 15 and 16, 2006. In addition, Comptroller General David Walker's
testimony before the Senate Homeland Security and Governmental Affairs
Committee on March 8, 2006, discussed the significant damage to the health
care infrastructure in New Orleans. This report documents the information
presented in those briefings and testimony.

1 See 31 U.S.C. S: 717(b)(1).

To obtain information on health care services, we conducted interviews in
the New Orleans metropolitan area with administrative and medical staff
officials at 4 hospitals and the city health department, and visited an
ambulatory care center at the New Orleans Convention Center and a
neighborhood that experienced severe flooding from the hurricane. We also
reviewed data submitted daily by hospitals to an Internet database about
their bed capacity. In addition, we conducted interviews in Baton Rouge
with officials of the Louisiana State University (LSU) Health Care
Services Division and the Louisiana Department of Health and Hospitals
(DHH). The Comptroller General also met with LSU officials. Finally, we
reviewed documents and planning reports that described the New Orleans
area before and after Hurricane Katrina. Our information is limited to
what officials reported to us, and we did not independently verify
hospital-reported data on bed availability. Furthermore, the status of
health care services has changed since our visit and continues to change
as local conditions evolve. To obtain information on assessments of the
damage to the MCLNO facilities and estimates for repair or replacement, as
well as what costs are eligible for federal funding, we toured Charity
Hospital and reviewed LSU's consultant report that included facility
assessments and cost estimates. We also reviewed the Stafford Act, Federal
Emergency Management Agency (FEMA) regulations and guidance, and obtained
FEMA's assessments and estimates for repair. In addition, we interviewed
officials with FEMA, LSU, and LSU's consultant, ADAMS. We also reviewed
the LSU and FEMA assessments and estimates to identify their purpose,
scope, and assumptions, and compared estimates using RS Means 20052
estimating guide and industry practices. We did not validate FEMA's or
LSU's estimates. Our site visits were done in December 2005 and January
2006. We conducted our work from December 2005 through March 2006 in
accordance with generally accepted government accounting standards.

Results in Brief

Since Hurricane Katrina hit New Orleans, the health care infrastructure
was severely damaged and the availability of health services declined
significantly. The area's only Level I trauma unit was closed, and the
number of staffed hospital beds in the City of New Orleans was estimated
to be about 80 percent less in February 2006 than before Hurricane
Katrina, according to figures reported by hospitals. At the time of our
visit, many safety net clinics in the city were closed, and those that
were open were reported to have limited capacity. Relatively little was
known about the status of physicians and other health care workers.

Efforts to rebuild the health care system were being affected by several
factors, including uncertainty about how quickly the population would
return and how a future health care system should be configured,
particularly since some experts noted that New Orleans had an oversupply
of hospital beds before Hurricane Katrina. Residents are expected to
return to the area slowly, and their return will be affected by the
availability of housing and other services. Uncertainty about how quickly
the population would return to New Orleans, as well as who would return,
was making it difficult for local officials to plan the restoration of
health services. Although various planning efforts were completed or
underway, at the time of our visit no clear consensus had emerged.

2 RS Means provides a series of estimating and cost index guides used in
the construction industry.

The MCLNO facilities, which were either in poor physical condition or
needed significant repairs prior to Hurricane Katrina, sustained
significant damage from the hurricane. Prior to the disaster, both
hospital facilities had documented deficiencies and were having difficulty
meeting health care standards. Because they were affected by the disaster,
the facilities are eligible for federal aid under the Public Assistance
program managed by FEMA. FEMA's estimate for repairing the damage was
considerably lower than an LSU estimate prepared by ADAMS, a consultant to
LSU. Because the lower FEMA estimate determines federal funding, LSU is
likely to receive less federal funds than it expected. The LSU repair
estimate of $117.4 million for University Hospital and $257.7 million for
Charity Hospital, which included correcting some pre-disaster condition
deficiencies, exceeded 50 percent of the buildings' replacement value and
indicated that replacement of the facilities was the best option. However,
FEMA's estimate of $12.4 million for University Hospital and $23.9 million
for Charity Hospital, which included only those repairs required to return
the facilities to pre-disaster condition, totaled significantly less than
50 percent of each building's replacement value. Although FEMA has decided
that these facilities are only eligible for reimbursement of repair costs,
should LSU repair the facilities, the total reimbursement could increase
as additional problems are discovered. Therefore, given the uncertainty
about the ultimate amount of the federal contribution and the uncertainty
of how a future health care system should be configured, LSU faces a
complicated decision about whether to repair Charity and University
hospitals or build a new facility.

Background

Charity and University Hospitals, together known as the MCLNO, are part of
the statewide system of ten public hospitals.3 Charity Hospital has been
continuously operating since 1736 and built its current facility in 1937;
the University Hospital facility was built in 1972. MCLNO served as the
primary safety net hospital for many local residents. About half of its
patients were uninsured, and about one-third were covered by Medicaid. In
fiscal year 2004, it provided more than 25,000 inpatient admissions, over
300,000 clinic visits, and 135,000 emergency visits. MCLNO served as a
major state resource through its training programs for health
professionals, including medicine, nursing, allied health, dentistry, and
public health. In fiscal year 2004, MCLNO trained 618 medical residents
and fellows and 2,265 nursing and allied health students.

The MCLNO facilities damaged by the disaster are eligible for federal aid
under the Public Assistance program managed by FEMA. This program,
authorized by the Stafford Act, provides grants to pay up to 90 percent of
costs for restoring a facility to pre-disaster condition. According to
federal regulation, a facility is considered repairable when disaster
damages do not exceed 50 percent of the cost of replacing a facility to
its pre-disaster condition, and it is feasible to repair the facility so
that it can perform the function for which it was being used as well as it
did immediately prior to the disaster.4 Although initial grant obligations
are based on FEMA's estimate of the costs of repairs to restore the
facility to its pre-disaster condition, reimbursements are based on
actual, documented repair costs, which could be higher than the original
estimate. Alternately, if FEMA's estimated repair costs exceed 50 percent
of its estimated replacement costs, FEMA is authorized to grant up to 90
percent of its estimated costs to replace a facility. There is a
possibility for additional federal reimbursements under the Public
Assistance program for required code upgrades that are triggered by the
repairs. Code upgrades, although eligible for reimbursements, are not
included in determining whether repair costs exceed 50 percent of
replacement costs. In the event that FEMA's estimated repair costs do not
exceed 50 percent of its estimated replacement costs, funds authorized for
repair may be used to rebuild a new or improved facility, but
reimbursements will be limited to 90 percent of FEMA's estimated cost to
repair and restore the original facility to pre-disaster condition. In
addition, projects for hazard mitigation to prevent damage in future
flooding events are eligible for Public Assistance funding.

3 Eight hospitals are operated by the LSU Health Care Services Division
and two hospitals are operated by the LSU Health Sciences Center in
Shreveport, Louisiana.

Under the Public Assistance program, FEMA is authorized to reimburse up to
100 percent of eligible costs for emergency work, including costs
associated with providing emergency medical services. Currently under this
provision, FEMA has funded numerous emergency medical services throughout
the New Orleans area.

The Health Care Infrastructure Was Significantly Damaged

The health care infrastructure in the New Orleans area, including
emergency, hospital, and clinic facilities, was severely damaged by
Hurricane Katrina. The MCLNO, along with its Level I trauma unit, was
forced to close.5 Level I trauma services are available in the state in
Shreveport, Louisiana. Other Level I trauma units are located outside of
the state in Houston, Texas; and in Mobile and Birmingham, Alabama.6

Other health services in New Orleans were also severely damaged, including
hospitals, emergency services, and safety net clinics.

o  Hospitals: The number of staffed hospital beds in the City of New
Orleans was about 80 percent less in February 2006 than before Hurricane
Katrina, according to figures submitted daily by hospitals to an Internet
database about their bed capacity.7 Of the 9 acute care hospitals in the
city prior to Katrina, only 3 had re-opened at a capacity of approximately
456 staffed beds as of February 22, 2006 (see table 1).8

4 44 C.F.R. S: 206.226(f).

5 Trauma centers are designated based on existing resources and expertise
to treat differing types and severity of injury. Level I trauma units are
able to treat any type of injury, no matter how severe. According to the
American College of Surgeons, a Level I trauma center has a full range of
specialists and equipment available 24-hours a day and admits a minimum
required annual volume of severely injured patients.

6 MCLNO announced plans to re-establish a Level I trauma unit in the New
Orleans area working in conjunction with another facility.

7 The Internet database is called "GNOEMS" and was developed by the
Greater New Orleans Healthcare Taskforce with the assistance of the U.S.
Public Health Service.

8 Before Hurricane Katrina, some health care experts characterized New
Orleans as having an oversupply of hospital beds.

Table 1: Number of Staffed Beds at Acute Care Facilities in the Greater
New Orleans Area Before and After Hurricane Katrina

Facilities in New Orleans                          Staffed beds as         
                                  Pre-Katrina staffed     of Feb. 22, 
(Orleans Parish)a                             beds           2006a  Change
Touro Infirmary                                345             250   (95)b 
Children's Hospital                            175             143    (32) 
Tulane University Hospital and                                             
Clinicc                                        362              63   (299)
Lindy Boggs Medical Center                     168          Closed   (168) 
MCLNO                                          500          Closed   (500) 
Memorial Medical Center                        252          Closed   (252) 
Methodist Hospital                             261          Closed   (261) 
New Orleans VA Medical Center                  206          Closed   (206) 
Total                                       2, 269             456 (1,813) 
Facilities outside of New                                          
Orleans (Jefferson and St.                                         
Bernard parishes)                                                  
East Jefferson General                                                     
Hospital                                       444             444       0
West Jefferson Medical Center                  317             330      13 
Ochsner Clinic Foundation                      472             484      12 
Lakeside Hospital                              102              97     (5) 
Kenner Regional Medical Center                 162              73    (89) 
Meadowcrest Hospital                           179             100    (79) 
Chalmette Medical Center                       138          Closed   (138) 
Total                                        1,814           1,528   (286) 
Total New Orleans and outside                4,083           1,984 (2,099) 

Source: GAO analysis of data from the GNOEMS online Internet hospital
reporting system and from the Bring New Orleans Back Health and Social
Services Committee Hospital and Specialty Care Subcommittee.

a New Orleans and Orleans Parish have the same geographical boundaries.

b Parentheses indicate a decrease.

c At the time of our visit, Tulane University Hospital and Clinic was
undergoing repairs from flooding and an official said they expected to
reopen in February with 63 beds, along with emergency department services.
Tulane opened its limited facility on Feb. 14, 2006.

o  Emergency Care: Increased demand has been reported at the open
emergency departments and has led to slow unloading of patients from
ambulances and to patients being housed in the emergency department
because hospital beds were not available. For example, according to data
reported by hospitals on February 22, 2006, wait times for emergency
medical services (EMS) vehicles to offload stable patients into emergency
departments varied from no wait at some hospitals to as long as 2 hours
reported by 2 hospitals, and hospitals reported that 38 patients had been
admitted and were being housed in the emergency department.

o  Safety Net Clinics: More than three-fourths of the safety net clinics
in the New Orleans area were closed, and many of those that were open had
limited capacity, according to data gathered by officials at the DHH. For
example, prior to Katrina, 90 clinics were in operation, including 70
clinics run by MCLNO, with the remainder being federally qualified health
centers, mental health or addictive disorder clinics, or other specialty
clinics. Post-hurricane, 19 clinics were open according to DHH figures,
generally operating at less than 50 percent of pre-Katrina capacity.

At the time of our visit, primary and emergency department care was
available within the city, though at reduced levels, and access to
specialty and diagnostic care was very limited, local health care
officials said. Two hospitals were open with reduced bed capacity, and
MCLNO was operating a limited emergency care clinic called "Spirit of
Charity" at the Ernest N. Morial Convention Center in downtown New
Orleans. Spirit of Charity medical personnel were using donated Air Force
field mobile hospital tents and portable buildings set up on the
convention center floor to handle minor emergencies such as simple
fractures and lacerations, conduct medical assessments, and manage
overdoses and intoxication, MCLNO officials said. The clinic's medical
personnel were seeing an increasing number of patients each month, with
more than 4,500 visits in December 2005, officials said. At the time of
our visit, MCLNO officials said Spirit of Charity would have to leave the
convention center site by early March.9

           In addition to the severe damage sustained by health facilities,
           maintaining and attracting the workforce for these facilities is
           also a serious issue for local officials. An estimated 3,200
           physicians lived in the metropolitan area before Hurricane
           Katrina, with 2,664 of those physicians residing in New Orleans
           itself, according to DHH figures. We were unable to obtain an
           estimate of how many physicians are currently in New Orleans.
           Hospital officials said they faced a shortage of support staff,
           such as food service or janitorial workers, who were unable to
           return due to a lack of housing or were being offered higher wages
           at hotels and restaurants.

Long-Term Decisions About the Health Care System in New Orleans Are
Affected by Uncertainties About the Future

As the city struggles to restore some capacity to meet the immediate needs
of the population currently there, long-term decisions about how to
rebuild it are affected by questions about whether the health care system
should be rebuilt to its pre-Katrina configuration and uncertainties about
the returning population. Some health policy researchers have noted that
the efficiency of the pre-Katrina health system in New Orleans could be
improved by moving away from New Orleans' hospital-centric system. Some
local officials have also suggested that the health care situation prior
to the hurricane was less than ideal and the city has a chance to rebuild
a better system.

Uncertainty about how quickly the population will return to New Orleans,
as well as who will return and where people will settle, poses difficult
challenges for officials attempting to plan the restoration of health care
services, such as how much capacity will be required and where to locate
services. Prior to Katrina, the 2000 Census estimated the city's
population at 484,674 people. The most recent estimates of the size of the
population found that as of December 2005, the number of people who
remained in the city each night (referred to as the "core" population) was
about 156,900, a decline of approximately 68 percent, according to figures
reported by DHH. The population increased by about 100,000 during the day,
including former residents living outside the city and returning during
the day and workers involved in reconstruction activities. The estimates
showed that most of those returning were between the ages of 35 and 44.
DHH noted that relatively few children had returned, in large part because
most schools in New Orleans remain closed. One projection estimates that
the population in 2008 will be 247,000, about half of the pre-Katrina
population, due to a lack of housing and other services.

9Spirit of Charity was moved to a former department store located near
Charity Hospital on March 11-12. Costs associated with this move and
leasing of the site were funded by FEMA under the Public Assistance
program.

Over the long term, rebuilding the health care system will be vital to
attract people back to New Orleans and ensure its recovery. State, local,
and federal governments all have important roles to play in the recovery
process. At the state and local levels, commissions to plan for the future
health care system have been established, and one has completed its work.
The Mayor of New Orleans' Bring New Orleans Back Commission issued
recommendations to shift the focus, to the degree possible, toward
ambulatory care, wellness and preventive medicine, health promotion, and
chronic disease prevention and away from institutional care; maintain a
university teaching hospital in New Orleans; and build capacity for
electronic medical records. The commission also noted the difficulty of
doing effective planning without reliable information on the population
and what segments of the population will return. The Louisiana Recovery
Authority, established by the Governor, included one task force dedicated
to health care issues. At the federal level, the Department of Health and
Human Services has a support role under the National Response Plan for
long-term community recovery and mitigation to enable community recovery
from the long-term consequences of a large-scale incident.10

Despite the multiple planning efforts that had been completed or were
still underway, a clear consensus on how to rebuild had not yet emerged at
the time of our visit. Several hospital officials we interviewed said they
were looking for strong local leadership to emerge. LSU officials were not
waiting for the results of the planning efforts and were proceeding with
their own plans. LSU officials said they intended to fulfill their
statutory mission of care for the uninsured and also did not want to
abandon the work in trauma services and health professions' education. In
particular, LSU officials were focusing on the disposition of the Charity
Hospital facility. In February 2006, they signed an agreement with the
Department of Veterans Affairs to explore the feasibility of jointly
building a teaching hospital and Level I trauma center in downtown New
Orleans.

Funds Available From FEMA to Repair MCLNO Hospitals Will be Limited to
Hurricane Damage

Hurricane Katrina and the subsequent flooding caused by the failure of the
New Orleans levee system have exacerbated the already deteriorating
physical conditions of Charity and University Hospitals. Prior to the
disaster, both hospital facilities had documented deficiencies and were
having difficulties meeting health care standards. LSU Health Care
Services Division had decided to support the construction of a new
facility to replace both Charity Hospital and University Hospital and was
in process of seeking funding for the project when the storm occurred.

10 We will be following the Department's efforts to fulfill this role in
the coming months.

FEMA's estimate for repairing the damage to the MCLNO facilities caused by
the hurricane was considerably lower than an estimate prepared by ADAMS, a
consultant to LSU. LSU's estimate included correction of pre-disaster
deficiencies that under the Public Assistance program are ineligible for
federal funding, while FEMA's estimate included only repair to what it
considered damage caused by the hurricane.

Shortly after Katrina struck the New Orleans area, LSU hired ADAMS
consulting to conduct a facilities assessment and develop an initial
estimate for repair of the MCLNO facilities. The estimate developed for
Charity Hospital was $257.7 million and for University Hospital was $117.4
million. These estimates included whole building repair, meaning that they
addressed damage from Katrina and many deficiencies that had been
identified before the hurricane. ADAMS also estimated replacement costs at
$395.4 million for Charity Hospital and $171.7 million for University
Hospital. Based on these estimates, ADAMS determined that repairs exceeded
50 percent of replacement costs for the MCLNO facilities.

As noted earlier, the LSU estimate is for a whole building repair. This
estimate also includes a 66 percent cost escalation over a commonly used
index of labor and material cost for New Orleans. The cost escalation was
meant to anticipate material and labor shortages over the next 3-6 years
as a result of the hurricane. According to the LSU assessment, the
structural systems, such as columns, beams and flooring systems, are in
functional condition, although destructive testing would be required to
verify this condition. However, the mechanical, electrical, and plumbing
systems are beyond repair and there are significant environmental safety
problems. Repair cost estimates were based on visual inspections of
systems.

FEMA's basis for its estimate for repair cost for the MCLNO facilities was
for work to rectify the damage from flooding and wind only, since these
are the only repairs eligible for federal reimbursement. The agency
conducted surveys and prepared estimates based on FEMA regulations and
guidance. Its estimate for repair of Charity Hospital was $23.9 million
and for University Hospital $12.4 million.

Like the LSU estimate, FEMA's cost estimate was based on a visual survey.
Unlike the LSU estimate, it was detailed in exact material items needed,
such as number of doors and windows and costs associated with
installation. FEMA also used a cost index of labor and material for New
Orleans with no cost markups. A recently awarded contract for renovation
work for the New Orleans Arena had three out of five bids submitted at
below the government estimate. Based on this data, FEMA concluded that
cost increases to its original estimate due to wage and material inflation
were not justified. Table 2 compares LSU's repair and replacement
estimates to FEMA's.

Table 2: LSU and FEMA Estimates for Charity and University Hospitals

                                      LSU estimate in        FEMA estimate in 
Charity Hospital                          millions                millions 
Repair estimate                             $257.7                   $23.9 
Replace estimate                            $395.4         $147.7 - $267.3 
Percent of replace estimate                    65%                9% - 16% 
University Hospital                                
Repair estimate                             $117.4                   $12.4 
Replace estimate                            $171.7          $57.4 - $103.9 
Percent of replace estimate                    68%               12% - 22% 

Source: ADAMS 2005 Emergency Facilities Assessment and FEMA Project
Worksheets.

Based on its assessment and estimates, LSU believed that its facilities
were damaged beyond 50 percent of their total replacement cost, meeting
the Public Assistance program criteria for replacement funding. Based on
FEMA's initial repair and replacement estimates, repair costs as a
percentage of replacement costs ranged from 9 to 22 percent, well under
the threshold for qualifying for replacement funding. Although LSU could
appeal the estimate that FEMA developed, it will not be able to increase
the scope of eligible repairs to correct pre-disaster deficiencies.
Consequently, LSU is likely to receive federal funds that will be
significantly below its original expectation.

Over time, should LSU decide to proceed with repairs to one or both
facilities, FEMA's estimate and the subsequent federal reimbursement is
likely to increase. For example, FEMA's current estimate does not yet
include clean up or removal of environmental hazards such as asbestos or
mold, does not include any elevator repairs, and does not include code
upgrades that may be triggered by renovation work. Any of these costs, if
found to be legitimate, may be eligible for reimbursement above and beyond
the initial FEMA grant. Even including all of these factors, it is
unlikely that the repair work cost totals will reach 50 percent of the
replacement costs.

Should LSU decide to rebuild the hospitals, LSU is authorized under the
Public Assistance program to use funds approved for repair on a
replacement facility. However, the amount eligible for reimbursement will
not increase past the initial FEMA grant for repair, pending any appeals
of the estimate and their resolution.

Concluding Observations

Approximately 6 months after Hurricane Katrina hit New Orleans, city,
state, and hospital officials we interviewed generally agreed that the
local health care system had been severely compromised and that the number
of operating facilities and available health care providers remained much
smaller than before the hurricane. Population return is projected to be
slow, and population projections suggest that New Orleans will be smaller
in the future compared to its pre-Katrina status.

Apart from self-reported hospital data, it has been difficult to find firm
information about the returning population and the status of the
workforce. The lack of reliable information makes planning difficult and
can create risks for moving forward due to uncertainties about what the
future will look like. Although various planning efforts were completed or
underway, at the time of our visit no clear consensus had emerged.

Because MCLNO played a major role in the pre-Katrina health care
infrastructure in both New Orleans and for the State of Louisiana, LSU's
decision about rebuilding these facilities could have significant
implications for health care service delivery in post-Katrina New Orleans
and for statewide training and Level I trauma care. Faced with uncertainty
about how quickly the population will return, how a future health care
system should be configured, how much LSU will receive from the Public
Assistance program for repair of Charity and University hospitals, and
uncertainties about availability of other funds, LSU faces a complicated
decision about whether to repair Charity and University hospitals or build
a new facility. Since the facilities were severely damaged and were
already outdated, proceeding with federal funding for repairs may be
wasting tens of millions of dollars. Further major renovations or new
replacement facilities would be needed to provide facilities that meet the
standards of modern health care delivery. If LSU decides to build a new
facility, FEMA Public Assistance funds would likely not cover the cost.

We provided a draft copy of this report to DHS and LSU for review and
comment. DHS and FEMA officials provided oral comments and LSU officials
provided comments via e-mail. These were technical comments which have
been incorporated as appropriate.

We are sending copies of this report to the Secretary of DHS and other
interested parties. We will also make copies available to others on
request. In addition, the report will be available at no charge on the GAO
Web site at http://www.gao.gov . Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report.

If you or your staffs have any questions about this report, please contact
Cynthia Bascetta at (202) 512-7101 or [email protected] for issues related
to health services. Please contact Katherine Siggerud at (202) 512-2834 or
[email protected] for issues related to health facilities. Major
contributors to this report were Terrell Dorn, Assistant Director; Linda
Kohn, Assistant Director; Michaela Brown, George Depaoli, and Karen Doran.

Cynthia Bascetta

Director, Health Care

Katherine Siggerud

Director, Physical Infrastructure

List of Committees

The Honorable Charles E. Grassley

Chairman

The Honorable Max Baucus

Ranking Minority Member

Committee on Finance

United States Senate

The Honorable Michael B. Enzi

Chairman

The Honorable Edward M. Kennedy

Ranking Minority Member

Committee on Health, Education, Labor and Pensions

United States Senate

The Honorable Larry E. Craig

Chairman

The Honorable Daniel K. Akaka

Ranking Minority Member

Committee on Veterans' Affairs

United States Senate

The Honorable John D. Dingell

Ranking Minority Member

Committee on Energy and Commerce

House of Representatives

The Honorable Steve Buyer

Chairman

The Honorable Lane Evans

Ranking Minority Member

Committee on Veterans' Affairs

House of Representatives

The Honorable David R. Obey

Ranking Minority Member

Subcommittee on Labor, Health and Human Services, Education and Related
Agencies

Committee on Appropriations

House of Representatives

The Honorable Bart Stupak

Ranking Minority Member

Subcommittee on Oversight and Investigations

Committee on Energy and Commerce

House of Representatives

The Honorable Sherrod Brown

Ranking Minority Member

Subcommittee on Health

Committee on Energy and Commerce

House of Representatives

(290521)

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