Understanding the Joint Operating Agreement with Ochsner Health

Slidell Memorial Hospital (SMH) remains 100% owned by the residents of Tax Wards 6, 7, 8 & 9 in St. Tammany Parish. The official name is St. Tammany Parish Hospital Service District No. 2. It operates under a d/b/a, Slidell Memorial Hospital. It was established in 1959 and has remained public throughout its entire existence. In 2015 SMH entered into a Joint Operating Agreement (JOA) with Ochsner Health, the sole owner of Ochsner Medical Center – Northshore (OMC-NS). The two entities agreed to operate the two separately owned hospitals in what many call a “partnership,” but it is not a partnership in the legal/corporate sense of the word. The JOA allows the two hospitals to make joint decisions that help reduce cost, improve efficiencies, share equipment and even staff, avoid duplicating services (part of the efficiency component), and bring more and better services to the community that one hospital alone could not justify doing. The JOA has been a tremendous success for all of us, but mostly for the public. SMH, the public’s asset, benefits from this relationship through services, expertise and operational expertise that the much larger Ochsner Health has developed over the decades. For its part, Ochsner has benefited from the deeply engrained community relationships SMH has built over the years and the outstanding high-end services it can now share, which until the JOA, made no financial sense for Ochsner to invest in due to duplication. Examples of these are the SMH Regional Cancer Center and the SMH Heart Center. Both of those are projects that were physically built by millages approved by the voters (the owners of SMH).

Ochsner does not own SMH, or any part of SMH, and SMH does not own Ochsner – Northshore. Each remains owned, in whole, by its original owner. By state law, only the SMH Board of Commissioners can select the Chief Executive Officer of SMH. Due to that fact, and because the JOA officers (a group of senior officials from each organization) determined that a single CEO should run both campuses, the CEO and the Chief Financial Officer of SMH are also the CEO and CFO of OMC-NS. For SMH-specific business, the CEO reports to the SMH Board of Commissioners. For Ochsner-specific business, the CEO reports to the Ochsner chain of command. For business that involves the two working together, JOA business, there is a common management group made up of board members and senior managers from both organizations which makes recommendations to the boards of each organization. They decide jointly (thus the JOA), how those decisions should go.

Because of all that is stated here, specifically the part about SMH being a public hospital, and a political subdivision of the state of Louisiana, SMH has the right to ask its owners (you, the public) to allow it to issue bonds in order to build capital projects. Those bond issues, of which there are three previous issuances, must be used for the specific purpose stated within the ballot language and must adhere to the state law. They can only build brick and mortar structures, and the furnishings and fixtures within. They have never been able to, are not now able to, and shall not in the future be able to pay for operations.

Currently, property owners within the service district pay 7 mills to allow SMH to pay down bonds that previously were approved by the voters in order to build such things as the SMH Regional Cancer Center, the SMH Heart Center and the Emergency Department. These outstanding, lifesaving services would not be in Slidell if it were not for voter approval of these previous millages.

There is a ballot measure before the public on April 24 that asks the public to allow SMH to issue bonds that will build a new three-story building to house brand-new operating rooms (the current ones were built in the 1970s and would not meet today’s building codes for ORs), add a comprehensive breast cancer service line and add a whole floor of negative pressure to better combat infectious diseases in the future. All of these things would be done, if approved, without increasing the current millage. In fact, it would go down from 7 to 6.75 mills under this proposal. It would extend the time of the payout by five years. However, with continued growth in the area and increases in property values, it is entirely possible, if not likely, that the bonds would taper off several years earlier.

A recording of the Zoom public millage presentation will be shared to our Facebook page this month. We are inviting our owners, you, to hear and see the plan for yourselves. This is 100% an SMH project. The assets will be SMH assets now and into the future. We hope this explanation and the video presentation will help you fully understand the value we are proposing so our community can make an educated vote on April 24.

If you have questions and/or concerns related to the millage vote on April 24, please contact us at: millageinfo@slidellmemorial.org or (985) 280-1035.