In a move that could further expand its growing footprint across the state, Ochsner Health System has signed a preliminary “affiliation agreement” with Allegiance Health Management, a Bossier-based company that owns and operates more than a dozen rural hospitals in Louisiana and Mississippi.
Under the terms of the deal announced Dec. 18 — technically, a Letter of Intent to explore affiliation — Ochsner would provide Allegiance hospitals with shared clinical expertise, research, digital tools and access to the EPIC Electronic Health Records platform.
Ochsner also would collaborate with doctors and nurses at Allegiance hospitals and connect Allegiance patients to Ochsner’s network of specialists through telehealth programs.
For Allegiance — whose facilities, like other rural hospitals and clinics around the country are battling rising costs and dwindling reimbursements from insurers and Medicaid — the deal would help patients receive the same level of “quality, innovation, and expertise” found in big cities, Allegiance CEO Rock Bordelon said in a statement.
“By aligning with Ochsner, we are strengthening both the quality and the sustainability of healthcare delivery across the region,” Bordelon said.
For Ochsner, which owns or operates 47 hospitals and hundreds of clinics across the Gulf South, the affiliation would grow the health system’s network by providing Allegiance patients with online access to Ochsner physicians and, potentially, referring them to Ochsner hospitals for specialty care.
Ochsner President and CEO Pete November said the goal of the affiliation is to strengthen rural healthcare in Louisiana and thereby strengthen the state.
“The organizations and providers serving rural communities play a critical role in ensuring that access to quality care is available close to home, while also serving as the largest employers in their communities and as community anchors for surrounding businesses and families,” November’s statement said.
Ochsner is not buying the Allegiance hospitals or taking over management of them, both health systems said.
Ochsner has dozens of affiliation agreements with hospitals and clinics across the state, some of which involve a closer partnership than others. In the months to come, the two healthcare companies will iron out the terms of their affiliation, the health systems said.
It is not clear when the deal will be finalized.
“The LOI between Ochsner and Allegiance serves as a commitment and roadmap to determine the specific programs and opportunities that will make a positive impact on care access, outcomes and affordability,” November said. “Those initiatives are currently being discussed and will be detailed in separate agreements.”
‘Grossly underfunded’
Allegiance Health Management and its subsidiaries own and operate acute care hospitals and specialty facilities in northern and central Louisiana. The company also has a hospital in rural Mississippi.
In recent years, rural facilities have been hit hard by rising healthcare costs and dwindling reimbursements from insurers and the federal government. The problem is threatening to get worse next year, when cuts to Medicaid contained in President Donald Trump’s One Big Beautiful Bill Act go into effect.
Those cuts are expected to total more than $900 billion over 10 years. Though the final version of the bill sets aside $50 billion to help rural hospitals, some experts have said the Rural Health Fund may not go far enough.
As a result, hundreds of rural hospitals across the country could potentially shut down next year, according to industry experts.
Earlier this fall, Bordelon suggested those challenges, in part, were behind millions of dollars in unpaid payroll taxes the company allegedly owes the Internal Revenue Service. Over the past several years, the IRS has filed liens totaling more than $30 million against Allegiance hospitals and clinics for unpaid taxes.
In October, Bordelon told The Advocate that he was working to resolve the situation. He also noted that rural hospitals have been “grossly underfunded for years.”
In 2018, Allegiance paid $1.7 million to settle a lawsuit filed by the U.S. Justice Department alleging it had violated the False Claims Act by improperly billing Medicare for services that were not medically reasonable or necessary, according to a release from the Justice Department.
Allegiance did not respond to a request for comment before publication. Ochsner declined to comment on the issues.
Given the challenges Allegiance and other rural hospitals have faced, national healthcare consultant Nate Kauffmann said the affiliation agreement may not appear to make sense from Ochsner’s perspective.
“From a business perspective, this goes against the general industry consensus,” said Kauffmann, who is based in San Diego, California and is familiar with the Louisiana healthcare market.
However, Kauffman noted, the deal will provide new patients to Ochsner’s telehealth services and could also boost referrals to Ochsner specialists and hospitals.
“If an Allegiance hospital says a patient needs heart surgery, well, if you have Epic Community Connect in your hospital, a drop-down menu comes up and, click click they can get a referral to the Ochsner hospital in Shreveport or New Orleans,” he said.