University denied federal funds to replace hospitals damaged by Katrina

It's a common dilemma for Hurricane Katrina victims -- repair or replace? The task of re-establishing basic health care for the poor in New Orleans is complicated by the fact that some hospitals were substandard and underfunded before Katrina.

Instead of trying to reopen two hospitals closed by hurricane damage, Louisiana State University sought nearly $375 million from the Federal Emergency Management Agency to replace the two neglected facilities, which also served as teaching hospitals for LSU medical students, according to the Government Accountability Office. FEMA has been criticized for squandering some of the hurricane-recovery money, but the agency this time said no.

Charity and University hospitals remain closed, as LSU decides whether to replace them or to restore them to pre-Katrina condition, which was bad enough to put them in danger of losing accreditation, the GAO said. Federal guidelines justify FEMA funds only to repair hurricane damage, estimated by FEMA at $36 million, but LSU asked for 10 times as much -- more than half of the cost of building two new hospitals.

LSU hospitals spokesman Marvin McGraw pointed to the GAO conclusion that basic repairs "might be wasting tens of millions of dollars."

Now the university is trying to get funding from the Veterans Affairs Department to rebuild the hospitals, and poor people without access to health care have one less reason to return to the Crescent City.

In February, New Orleans had only about 20 percent of the staffed hospital beds that were available before the hurricane, the GAO said.

The GAO did the review on its own initiative and sent the report to leaders of relevant congressional committees.