DECEMBER 2005 HOT TOPIC

Rebuilding the Health Sector of Metropolitan New Orleans

The health infrastructure of New Orleans, devastated by Hurricane Katrina, must be rebuilt. But the extensive damage provides an opportunity to redesign the infrastructure in ways that can improve health care and accessibility for the region's residents. Shortly after the storm, a group of more than 100 individuals from local, state, and federal health agencies; private providers; nonprofit organizations; and community groups gathered to discuss how the various elements of the health infrastructure could be redesigned and rebuilt. To inform the process, RAND Health was asked to analyze seven specific issues: the uninsured, the public hospital system in New Orleans, the level of state involvement in municipal hospitals, the safety of health care structures, the health care workforce, health information technology, and the effects of neighborhoods on health. In each area, RAND identified options and assessed their advantages and disadvantages. Options in some of the areas are highlighted below.

The level of state involvement in reconstructing the municipal health care system. A key decision is how to govern the process of reconstructing the health care system. Allowing market forces to guide the process decreases the risk that Louisiana policymakers will make a high-profile mistake and separate the decisionmaking process from politics. Decisions can be made quickly, however, markets cannot address issues such as social protection and equity. The state could retain control of the process. However, a lack of data on which to base decisions increases the risk that the state could make a wrong decision, and a centralized process may not be responsive to all stakeholders. Consensus-based decisionmaking ensures that diverse needs are met and demonstrates a sense of community, but the decisionmaking process could become stalled as accountability is diluted.

The public hospital system. The state must decide whether and how to rebuild Charity Hospital, one of the nation's oldest public hospitals. The state could rebuild it as a comprehensive public hospital. However, rebuilding would not address the hospital's unstable financing before Katrina, and poor quality and medical errors are more prevalent in financially distressed hospitals. In addition, the demand for health care post-Katrina is uncertain, making investment in bricks and mortar risky. The state could create public-private partnerships, which could attract a patient mix that would enhance financial stability. But mixed systems require time and planning from all segments of the health care system, and may require statutory and regulatory changes. The state could also allow the private sector to provide New Orleans' safety net. This option promises greater efficiency, lower costs, and investment in new equipment, but private hospitals may not be willing to provide all of the needed uncompensated care and may not offer the types of services needed by the poor and uninsured.

Planning the safety of health care structures. Engineering and construction standards can reduce damage to hospitals from future natural disasters. To protect against wind hazard, the State of Louisiana could apply the general building code to hospitals. However, these codes provide no protection against nonstructural damage, which could still make hospitals inoperable for extended periods. In addition, changes to building codes usually apply only to new construction. The state could also develop hospital-specific building codes. Key issues would be defining requirements to ensure operational capability and deciding whether older hospitals should be retrofitted. To protect hospitals from flood damage, Louisiana could rely on regional flood control measures, but these are usually designed for communities, not for single structures. The state could mandate performance requirements for hospitals during flood conditions. For example, “submarine” doors that create waterproof underground vaults can protect critical components. This type of investment should probably be regulated through performance requirements (e.g., continued operation through a flood) rather than through engineering details in a building code

Recruiting and retaining high-quality health care personnel. Policies for attracting health care workers need to match the goal at hand. During the transition period (the first year post-Katrina), short-term incentives such as bonuses or above-average salaries for “traveling nurses” could fill the immediate need. During the stabilization period (6 months to two years post-Katrina), recruiting drives and incentives such as repayment of school loans, dependent care benefits, and financial assistance for housing construction could draw a stable workforce to New Orleans. These incentives might be supplemented by accelerating promotions and career advancement programs. During the maintenance period (beyond two years), financial and other incentives can be phased out in favor of policies that tackle overall shortages in the industry.

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