Chal­lenge is­sued

Univer­sity hos­pi­tal seeks pro­posal from gov­er­nor

Modern Healthcare - - REGIONAL NEWS - Ashok Selvam

Two re­jec­tions in 10 days from Ken­tucky Gov. Steve Bes­hear of the Univer­sity of Louisville Hos­pi­tal’s plans to join a three-way merger prompted the hos­pi­tal’s lead­ers to is­sue a chal­lenge for the gov­er­nor: Do you have a pro­posal that works?

“We look for­ward to hear­ing a pro­posal from the gov­er­nor’s of­fice that will make good on his prom­ise to se­cure the fi­nan­cial fu­ture of Univer­sity of Louisville Hos­pi­tal,” Univer­sity of Louisville Hos­pi­tal of­fi­cials said in a state­ment.

Univer­sity of­fi­cials said they thought they pre­sented Bes­hear with so­lu­tions that would ap­pease him and al­low for the hos­pi­tal to be part of Ken­tuck­yOne Health, a new health sys­tem formed ear­lier in the month by two af­fil­i­ates of Catholic Health Ini­tia­tives, En­gle­wood, Colo. The merger was sup­posed to in­clude Univer­sity of Louisville Hos­pi­tal un­der a deal pro­posed in June. Ken­tuck­yone is made up of 14 hos­pi­tals that op­er­ated un­der Jewish Hos­pi­tal & St. Mary’s Health­care, Louisville, and St. Joseph Health Sys­tem, Lex­ing­ton, Ky.

Ken­tuck­yone rep­re­sen­ta­tives said they’re open to adding Univer­sity Hos­pi­tal if the gov­er­nor ever re­verses his de­ci­sion, but Bes­hear and other pub­lic of­fi­cials, in­clud­ing Ken­tucky At­tor­ney Gen­eral Jack Con­way, con­tinue to worry about los­ing con­trol to CHI over the hos­pi­tal, which they con­sider a pub­lic en­tity and valu­able state as­set. They also have ex­pressed con­cern about the pos­si­ble costs to Univer­sity of Louisville Hos­pi­tal if the merger were to fail, forc­ing the par­ties to un­wind it.

Bes­hear first re­jected the $620 mil­lion deal Dec. 30, and then met with Univer­sity of Louisville of­fi­cials, both from the school and the hos­pi­tal, to dis­cuss new merger ideas, in­clud­ing a new fi­nan­cial plan and al­low­ing the state to re­tain con­trol of the hos­pi­tal. Those talks, which did not in­clude CHI, didn’t sat­isfy Bes­hear, who re­jected the deal again Jan. 9.

“Last week, univer­sity rep­re­sen­ta­tives of­fered us some ideas to ad­dress our con­cerns about the orig­i­nal pro­posed merger part­ner­ship,” Bes­hear said in a state­ment. “At­tor­ney Gen­eral Con­way and I have care­fully eval­u­ated those ideas, but found that they will not sat­isfy our con­cerns about the merger pro­posal.”

The gov­er­nor also coun­tered the sug­ges­tion by Univer­sity of Louisville Hos­pi­tal of­fi­cials that the hos­pi­tal is in dire need fi­nan­cially and re­quired an in­fu­sion of cap­i­tal to con­tinue to serve as the city’s pri­mary safety net provider. Bes­hear pointed at the hos­pi­tal’s 2010 prof­its, re­ported at about $13 mil­lion: “Univer­sity Hos­pi­tal is clearly a fa­cil­ity with sig­nif­i­cant strengths,” he said. With­out an in­vestor, hos­pi­tal of­fi­cials last week warned of cuts in­clud­ing lay­offs or ser­vices re­duc­tions. The hos­pi­tal re­sponded in a state­ment that its pa­tient mix in­cluded 20% to 25% indi­gent care: “Univer­sity Hos­pi­tal is un­able to gen­er­ate ad­e­quate cap­i­tal from op­er­a­tions and is not a fa­vor­able lend­ing risk.”

Gov. Steve Bes­hear has twice re­jected Univer­sity of Louisville Hos­pi­tal’s re­quest, cit­ing wor­ries about costs if the merger fails.

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