Aftermath as Disaster: An Evaluation of Disaster Capitalism and The Evolution of Healthcare Delivery in New Orleans 15 Years After Katrina

While Hurricane Katrina’s impact on the city of New Orleans has been discussed at length, what remains under discussed is how Hurricane Katrina’s initial destruction was only one part of a protracted disaster that unfolded. The closure of Charity Hospital, described herein through the lens of disaster capitalism, resulted in a concentration of ill-fated consequences for marginalized communities in New Orleans, the effects of which are longstanding. The various sociopolitical maneuvers state officials used to keep Charity Hospital closed— in favor of building a new hospital—should serve as a cautionary tale for communities under the ever-increasing threat of natural disasters secondary to climate change; safety net hospitals like Charity are subject to predatory disaster capitalism that puts the health and safety of the communities they serve at risk.

The first iteration of what would become Charity Hospital— L’Hospital des Pauvres de la Charite—was founded in the French colony of New Orleans with funds bequeathed by Jean Louis for treatment of the colony’s indigent in 17361;(2) fires, hurricanes, and the need for more space forced a series of several moves and rebuilds over the hospital’s history until a sixth and final iteration in 1939 resulted in a twenty story, Art Deco-styled hospital located at 1532 Tulane Ave housing over 2,680 beds.(1-4) The hospital came under public control after the Louisiana Department of Health assumed control from the Sisters of Charity in 1970.(4) Eventually, Charity’s operation was turned over to the Louisiana Health Care Authority (LHCA) in 1991, the state’s network of public safety-net hospitals described as a “holdover remnant of Keynesian New Deal-era policies”5 before ownership of this system was transferred to the Louisiana State University (LSU) system in 1997. While its position as one of the nation’s oldest hospitals alone is noteworthy, it is also Charity Hospital’s sustained function as a hospital of last resort for the region’s poor and underserved amidst a variety of operational changes that makes Charity Hospital’s history unique. The landfall of Hurricane Katrina brought an end to this legacy and irreversibly changed healthcare delivery for the entirety of New Orleans.

On August 29, 2005, Hurricane Katrina made landfall as a Category 3 hurricane; the onslaught wind and rain caused electrical and communication disruption immediately.(7) Charity Hospital’s location on Tulane Ave. became surrounded by water within 24 hours of Katrina’s arrival, leaving the estimated 600 patients and unknown number of healthcare workers stranded within Charity Hospital.(5) The austere conditions within Charity were well documented: surgery was performed under flashlights, tracheostomy-dependent patients ventilated themselves, and critically ill patients were transferred from intensive care units on the twelfth floor to the ambulance bay on the ground level via unlit stairwells.(7) While other hospitals were being evacuated, the people inside Charity were abandoned; neighboring Tulane University Medical Center hired 20 private helicopters to evacuate its 1,400 patients and providers, highlighting the demarcation between public and private healthcare in a visually acute sense.(8)

After Charity’s occupants were evacuated, a collection of employees and U.S. military personnel returned to assess the damage and begin clean-up.(9) The flood water was soon pumped out of the hospital, power could be restored, and the facility was cleaned to a sufficient state. Louisiana’s State Treasurer John Kennedy attested to the state of Charity Hospital following these efforts, saying “The lights and A/C were on. It was clean and functional.”(10) Following the restoration of Charity’s first three floors, efforts made by military personnel to ensure the hospital had reliable power were thwarted. According to testimony from Staff Sergeant John Johnson as documented by Ott, “LSU officials, in my presence, refused to accept generators, and as a result, General Electric took them away”5 and LSU ordered an end to all efforts to reopen Charity Hospital. Administrators then barred former staff members from entering the hospital, threatening them with criminal trespassing charges.5,10 Officials from the Federal Emergency Management Agency (FEMA) stated Gov. Kathleen Blanco refused the services of Task Force Katrina, claiming there was no longer a need to make Charity operational.(11) These actions coincided with the Louisiana state government’s efforts to solicit federal funds for a new medical center.

Within a month following Katrina, Louisiana’s Department of Treasury had received approximately $340 million in FEMA-managed funds to “to reimburse state agencies and local governments for costs involved in lifesaving emergency work” related to Hurricane Katrina.(12) However, state officials returned the funds, citing it as an overpayment for anticipated costs. Interestingly, it was precisely that figure LSU’s CEO Don Smithburg initially cited as the cost for repairing Charity.(13) Instead, LSU launched legal challenges with FEMA over reimbursement for damages incurred. Central to this was a key policy provision utilized by FEMA: a facility is considered repairable when damages do not exceed more than fifty percent of the cost of replacing the facility entirely.(14) LSU compiled findings that suggested the damages Charity Hospital incurred during the hurricane were not repairable and exceeded FEMA’s fifty percent threshold for full replacement reimbursement. In response, FEMA contended what “the state was trying to claim as storm damage [was the result of] years of deferred maintenance and facility neglect”(11) and that any pre-Katrina findings were not subject to reimbursement. “Only an unprecedented political intervention” would convince FEMA to approve LSU’s demand for the full replacement cost.(5)

Claims that Charity was unsalvageable were not supported by several accounts. Principally, a 2008 report from the architectural firm RMJM Hillier described a plan to not only renovate Charity Hospital to its pre-Katrina state but rather transform it into a modern medical center. The report quotes the firm’s principal architect as saying the assessment “shows that there are no fundamental flaws that would impede the rehabilitation of Charity Hospital into a state-of-the-art modern facility…its rehabilitation would provide the most sustainable way to create a contemporary hospital while preserving a key part of the city’s history. The re-use of this iconic historic landmark would be a symbol of New Orleans’ rebirth.”16 It adds that rehabilitating Charity would “take much less time and will be significantly less expensive than building a new hospital.”16 The firm cites $484 million as the approximate cost of rehabbing, less than half of the eventual University Medical Center’s cost of $1.1 billion.(17)

The legal stalemate between FEMA and the Louisiana state government came to an end in 2009. A 3-judge arbitration panel ruled unanimously in favor of granting the state $474,750,898 for the replacement value of Charity Hospital, citing in its ruling that FEMA’s associates were “less experienced and less credible”18 when compared to state experts on Charity’s state prior to the hurricane. The panel acknowledged the dispute of Charity Hospital’s future as “not relevant to our determination in this case…to proceed with the rebuilding or new construction is a matter for decision by other authorities.”18 This ruling enabled LSU to break ground on what would become Charity’s replacement: University Medical Center of New Orleans.

The events surrounding the closure of Charity Hospital exist within a larger theoretical context, a paradigm of neoliberalism and disaster capitalism. Neoliberalism—a school of thought that advocates for economic control to be subject to free markets rather than government centralization— relies upon “land speculation, privatization, and the reduction of public services.”19 A contextualized extension of this is disaster capitalism, popularized by Naomi Klein in The Shock Doctrine. Herein Klein describes disaster capitalism as the intentional exploitation of a disaster or major event to thoughtfully reconfigure existing structures for capitalist benefit while affected communities are either distracted or displaced.20 Disasters and the immediate recovery period serve as the backdrop for economic exploitation; the events surrounding Charity Hospital’s closure fulfill what lies within the bounds of disaster capitalism, made evident by the efforts of officials to prevent the re-opening of Charity in favor of building a more profitable hospital.

The desire to replace Charity Hospital did not arise in the aftermath of Katrina, but rather before then. When private hospitals became eligible to receive Medicare and Medicaid funds, the federal government— fearing an exodus of both patients and their reimbursements from safety-net hospitals—temporarily enacted the Disproportionate Share Hospital (DSH) program to ensure the survival of these institutions by dispersing additional funds in addition to regular care reimbursement5; DSH evolved into permanent policy with an annual budget of $15 billion.21 Louisiana received the fourth highest amount of DSH funds per capita and the state’s Medicaid budget increased from $1.1 to $4.2 billion during the policy’s tenure, prompting speculation that “Louisiana discovered the golden egg laid by the Medicaid goose.”(22) State officials required hospitals within its charity system pay back what they received in terms of federal payment and federal tax revenue to state government, generating an estimated $2 billion for the state to use.5, 22-24 DSH funds eventually ceased in 1994, and the government turned over governance of the state’s entire charity hospital system to the Louisiana State University after the passage of Louisiana House Bill 1162.5 This, however, did not allay concerns about Charity’s survival without DSH funds but merely transferred responsibility to actors whom already “sought to discard Big Charity as the physical center of its medical enterprise”(5) long before Katrina.

Soon after acquiring Charity Hospital and safety-net hospitals across the state, LSU commissioned an assessment that revealed an overhaul of the state’s safety net hospital program would cost nearly $1.1 billion. In particular, the assessment determined both Charity Hospital and nearby University Hospital were outdated after years of deferred maintenance and a new facility was recommended to provide cost-effective healthcare services.5 For whom the care would be cost-effective, however, was not specified. Rather than stay committed to Charity’s mission of serving the poor and uninsured, LSU’s push for a new hospital was “in part to attract a private patient base and unburden itself of nonpaying patients.”(25) This plan was indefinitely delayed by funding challenges until Katrina hit. LSU capitalized on the hurricane’s devastation and put into motion the series of aforementioned sociopolitical maneuvers that kept Charity’s closure permanent and enabled the construction of a new medical center, motivated by profitability rather than patient care.

LSU leadership acknowledged the pivot from charity care to more lucrative management practices that privileged the care of the insured. LSU’s Vice President of Communications and External Affairs Charles Zewe was quoted to have said plans for a new medical center were to transition away from “from a charity matrix to a university teaching hospital matrix,”(5) a statement that mischaracterizes Charity’s long history as a site of medical and nursing education. Chancellor Dr. Larry Hollier publicly extolled examples of charity hospitals that converted to public-private partnerships, stating that the same was “underway in New Orleans, where we are building a new academic health center which will serve both uninsured and insured patients.”(5) This was congruent with the recommendations of consulting services rendered by Adams Management, as quoted by Ott, suggesting leadership “expand the volume of insured patients through focused programmatic development efforts and a marketing strategy”(5) rather than continue the mission of Charity within the proposed University Medical Center.

Evidence suggests the economic rationale employed by state officials to justify the construction of a new medical center, under the guise of cost-effectiveness and economic renewal, did not align with the city’s economic recovery.(5,9,10) Keeping Charity closed not only prevented the region’s residents from receiving medical care but also “hindered economic development…reopening Charity and keeping the 2,000 members of staff could have been considered a stimulus package to the city as it recovered from catastrophic flooding, all without formal government earmarks.”(26) Reopening Charity Hospital would have been both less expensive and a source of serious economic generation in the region, calling into question whether the concerns of LSU were to aid the economy recovery of New Orleans or rather to build a hospital that attracted a larger proportion of insured patients, effectively supplanting Charity’s mission.(5)

The timing of Charity’s closure and subsequent efforts to open a more lucrative medical center fulfills the temporal parameters of disaster capitalism, happening when the city’s population was preoccupied or displaced. These actions did not have evenly distributed consequences for residents but rather reaffirmed existing racial disparities in New Orleans. This enabled the city to become “whiter, less affordable, and more gentrified…[an example of] putatively color-blind policies that are blind to their effects on people of color.”(19)

While Klein fails to include race in her original framework, others posit that disaster capitalism occurs along racial and ethnic lines in accordance with how “race and racism were and are powerful motors of neoliberal advancement”(27) of which disaster capitalism is intertwined with. It is undeniable that “for poor and African American residents who had struggled to return and rebuild broken lives, Charity Hospital’s closure reinforced their sense that the city was being redesigned for white, middle class residents and tourists.”(25) Not only did Charity’s closure affect how many of New Orleans’ Black and African American residents received care, but also where they resided in the city; the new University Medical Center (UMC) was slated for construction within New Orleans’ Seventh Ward, a predominantly Black neighborhood devastated by Katrina.(28) The construction prevented many displaced residents from returning to their former neighborhoods, an example of how disaster capitalism relies on the exploitation of marginalized communities and their displacement.

Despite initiating plans for a new medical center while many were still displaced, LSU encountered significant pushback from colleagues and community members. LSU CEO Don Smithburg asserted that Charity Hospital was issued its “death warrant”(29) by Katrina, but his comments spurred dissent from those who worked at Charity; a group of former Charity physicians argued Smithburg’s comments were an “excuse to achieve the state’s long-sought goal of demolishing Charity, getting millions in federal dollars to build a new hospital, and then moving away from a promise that has long been made to the city’s poor.”(30) This public display of opposition prompted LSU to threaten staff members with disciplinary action if they were to speak out.5 Under the mechanisms of disaster capitalism, the fears of physicians and community activists were realized as Charity Hospital’s closure altered the landscape of healthcare throughout the regions, resulting in health disparities still evident 15 years later.

One of the most acute and protracted concerns that arose from Charity’s closure was the elimination of a significant number of inpatient psychiatric beds in the city, leaving many in New Orleans without adequate mental health services. Prior to Katrina, residents accessed mental health services in one of two ways: insured patients typically relied on six private community hospitals with psychiatric services whereas uninsured often received care at Charity Hospital. In the year prior to Hurricane Katrina, Charity’s emergency psychiatric services cared for over 6,268 patients of whom 31% were admitted for inpatient treatment32; Charity Hospital had 115 licensed psychiatric beds across seven individual units.(31) Assessment of mental health services four months following Charity’s closure revealed that public psychiatric bed capacity was reduced by 96% and a reassessment one year later revealed the city was operating with 70% less beds than prior to Katrina.(32)

Research indicates that mental health services still have not recovered from Hurricane Katrina; University Medical Center only added 60 licensed psychiatric beds33, leaving a net absence of approximately 55 inpatient psychiatric beds for the entire metropolitan. The lack of mental health services coincided with a significant increase in need for mental health services following Katrina; the World Health Organization found a statistically significant increase in the estimated prevalence of mental illness in New Orleans, a near doubling of the rate before Katrina. When this is contextualized alongside the rise in deaths by suicide and increase in calls made to New Orleans Police Department’s crisis unit,(34) Charity’s closure can be pointed to as a likely suspect in this injustice.

Charity Hospital’s closure also brought forth changes in trauma care for the Gulf Coast region, leaving the western Gulf Coast without a trauma center for more than seven months.(5) A make-shift trauma infrastructure eventually emerged following Charity’s closure. Charity physicians provided trauma care at the New Orleans Convention Center—known as “The Spirit of Charity”—until LSU used $3 million in federal funds to renovate the defunct Elmwood Medical Center into a functional clinical site for trauma care.(35) After a year at the Elmwood facility, trauma care was permanently relocated to the renovated University Hospital in 2007, achieving ACS-verified Level 1 status in 2009 and remaining as the region’s only Level 1 trauma center until the University Medical Center opened in 2015.(36)

Patient and population perspectives on healthcare post-Katrina reflect how the city’s most marginalized residents struggled as a result of Charity’s absence. Without a safety-net facility, uninsured and underinsured individuals had to travel to Baton Rouge—75 miles away from New Orleans—to receive care at a safety-net hospital.(37) A report published by the Kaiser Family Foundation in 2007 revealed precisely how post-Katrina New Orleans suffered. Among both economically disadvantaged and uninsured respondents, 22% of each group reported Charity Hospital as their hospital of choice prior to Katrina. After Charity’s closure, 61% of previous Charity users reported no source of usual care outside of emergency services. This study also demonstrated that former Charity patients reported substantial health challenges associated with the hospital’s closure: 22% and 23% of respondents reported a decrease in physical and mental health, respectively, while and 60% of former Charity users reported a decline in their overall quality of life.(38) An evaluation of emergency department utilization from 2009-2010 revealed a positive correlation between poverty, race, and ED utilization, suggesting the persistence of these disparities in access.(39) These findings suggest that the individuals that relied on Charity prior to its closure were disproportionately affected by Katrina’s devastation and the actions of LSU officials to keep it closed.

Charity was not the only hospital that closed in the wake of Katrina. Three facilities owned by Dallas-based Tenet Healthcare closed as a result of New Orleans; the most notable of the three was Memorial Medical Center (Memorial). Memorial was the subject of national attention as one of its physicians and two of its nurses were arrested in connection with the suspected euthanasia of several of Memorial’s patients.(40) Tenet sold Memorial, along with Kenner Regional Medical Center and Meadowcrest Hospital, to the Ochsner Clinic Foundation for $146.5 million the year following Katrina.(41) This resulted in substantial growth for the private health system; if it were “not for the storm, Ochsner might have gone on to be acquired by a larger rival…instead, it has expanded through acquisitions and partnerships, to become Louisiana’s largest health system. It now owns nine hospitals and has partnerships with more than a dozen other facilities.”(42) Though Charity’s closure had the largest magnitude on the region as a whole, it was not the only change that occurred in the post-Katrina healthcare landscape of New Orleans and must be considered when evaluating the consequences of Katrina. While the sale of Tenet-owned healthcare facilities does not typify disaster capitalism in the same manner that Charity Hospital’s closure does—as their closure did not supplant mission in favor of neoliberal goals of profit but rather transferred facilities from one private institution to another—their closure led to changes that undoubtedly altered how many in New Orleans received medical care.

The analysis put forth points to how Hurricane Katrina was used as the catalyst for predetermined plans to subvert the mission of Charity Hospital. Predatory legal and economic practices enabled LSU to build a more profitable hospital and depose of Charity’s mission of caring for the city’s poor and uninsured. Disaster capitalism does not exist in a vacuum but rather has far-reaching consequences for communities in crises. As communities grapple with the increasing threat of natural disasters secondary to uncontrolled climate change, the story of Charity Hospital serves as a cautionary tale of the dangers that might befall communities in the wake of hurricanes, tornados, floods, and the like. The closure of Charity Hospital has resulted in widened healthcare gaps within New Orleans’ healthcare landscape, worsening the health disparities already concentrated in communities of color and among the city’s poor and uninsured persons. Disaster capitalism can and should be considered a potential and life-threatening consequence of natural disaster, playing out long after the immediate crisis passes. While several plans for the site have been proposed, rejected, and neglected, Charity Hospital remains an Art Deco skeleton among high rises in downtown New Orleans.