Fiduciary Audit of UofL Foundation Looks Really Really Grim

Just got 269 pages of documents with a summary.

The summary supports previous claims of major financial mismanagement– if not worse. Oversight by Foundation Board was feeble if not inadequate. The Board shares blame with former President Ramsey and other University executives.

You can read the executive summary here.

Statements by current UofL President and Chairs of UofL Trustees and Foundation affirm their commitment to transparency and emphasize that the report reflects the management of previous administrations and boards.

Bad enough to put people in jail or to claw-back money?  We’ll have to see.

More when I dig into the details.

Here is a copy of the entire document. (6.7 MB)  What do you see that sticks out as either good or bad?

Peter Hasselbacher, MD
President, KHPI
8 June 2017
4:50 pm

Catholic Health Initiatives Gives Investors an Update: Substantial Challenges Ongoing.

Senior executives from Catholic health initiatives (CHI) hosted a webcast and teleconference on May 31 to respond to questions about their FY17 3d Quarter Fiscal report. My colleagues at Insider Louisville have already commented on the update. You can read the slides that accompanied the presentation yourself. The following items were particularly significant to my listening.

1. Except that it was going to occur on July 1, nothing was said about the transfer of University of Louisville Hospital back to University control. Successful relationships with academic medical centers including at Baylor and Creighton were claimed.

2. Little was said about the sale of assets in Kentucky other than the process was “evolving,” that the company was moving with its advisors, that there is “a fair amount of interest,” and that they were “moving as quickly as possible” and “ready to move forward.” However, there has been no release of a Request For Purchase (RFP) so apparently no formal process has yet begun. I have no feeling on how rapidly things are moving or not. I suspect it will be challenging to find buyers for all the properties, certainly all at one group.

CHI will focus on regrouping around its “Legacy Lexington” facilities. I interpret this to imply that those hospitals are not currently on the chopping block. Where KentuckyOne will keep its administrative headquarters was not mentioned at this level of discussion. Continue reading “Catholic Health Initiatives Gives Investors an Update: Substantial Challenges Ongoing.”

Catholic Health Initiatives Third Quarter Financial Report, FY 2017

Is it good enough to turn the tide for CHI?

Catholic Health Initiatives released today its most recent quarterly report covering the first 9 months ending March 31, 2017. Making sense out of the raw financial numbers is for me probably like having a banker decipher a complicated clinical trial or biochemical research paper. I will leave it to the financial experts to explain it to us. To my first pass and naive evaluation, it looks like CHI is hanging on, but not improving to the extent needed to deal with its $8.8 Billion dept. I suspect this is not going to help their bond rating very much. This report reveals much about why CHI is taking the drastic downsizing actions in Kentucky that we are now seeing unroll. This may be an existential move for the company.

At the end of this article, I show extracted verbatim text from the report that I think will be of interest to us here in Louisville and Kentucky. You can read the full report yourself here.

In summary:

• It is very clear that KentuckyOne Health is the weak sister of the CHI regions.

•In Louisville, University Medical Center (UMC) making a profit. (This is not the same as University of Louisville Hospital, is it?) On dissolution of the UofL partnership. CHI expects to incur a loss of $279.4 million, but I have no understanding what that means. Who can help us?

•CHI hopes to close on its facilities that have been designated for sale by the end of 2017. Those facilities lost $61 million in the first three quarters. The estimated total assets for the KentuckyOne operations being divested as of March 31 2017 is $534.9 million. KentuckyOne/CHI hopes to complete the sale(s) by the end of the year.

•The possible merger with Dignity is not a sure thing.

•CHI has been selling other of its physical assets to raise money to the tune of over $1 billion in gross proceeds. (Does this go to its current bottom line and make matters look better in the current year?) It now must pay rent to the new owners of $52.7 million yearly.

•KentuckyOne Health won its first few cases in the litigation over unnecessary angioplasties in St. Joseph London, but began to lose the most recent cases with high monetary verdicts. Settlements are now being made for at least some cases. I suspect this is not going to be cheap.

What does the statement say to you? I expect many others in the business world are going to help us tomorrow. If I have made mistakes in reading this report, help me fix them.

Peter Hasselbacher, MD
President, KHPI
Emeritus Professor of Medicine, UofL
May 19, 2017 Continue reading “Catholic Health Initiatives Third Quarter Financial Report, FY 2017”

KentuckyOne Health To Sell Its Major Assets In Louisville.

Beginning last Thursday, word began trickling out to journalists and the public that KentuckyOne Health, a major regional unit of Catholic Health Initiatives (CHI), was preparing to announce plans to sell almost all its hospitals and medical centers in Louisville and a handful elsewhere in the state. I had been told earlier in the week that the announcement would be made today, Monday, but there were so many leaks that KentuckyOne sent an email to its employees outlining its plans.  I presume KentuckyOne wanted take control of the message before the reportage dam broke. The email can be read here.

For those of us in Louisville, the only major facility not being sold is Our Lady of Peace, a psychiatric hospital.  Both of KentuckyOne’s acute care hospitals, (Jewish Hospital and Sts. Mary and Elizabeth Hospital), the Frazier Rehabilitation Institute, and all four outpatient Medical Centers (Jewish East, South, Southwest, and Northeast) are on the chopping block. Nearby Jewish Hospital Shelbyville, which recently underwent a critical review by the Inspector General for an EMTALA violation, is also for sale.  KentuckyOne employs many physicians. The fate of individual owned- or contracted medical practices in Louisville and elsewhere is not clear to me from the email. Continue reading “KentuckyOne Health To Sell Its Major Assets In Louisville.”

FDA Panel Finds Opana-ER Not Worth The Risk!

Opana ER is the brand name of the specific extended release preparation of oxymorphone HCL marketed by Endo Pharmaceuticals, Inc.  This was the drug of choice that underlay the explosion of opioid addiction and of HIV/AIDS and hepatitis infections in intravenous users in nearby Scott County, Indiana.  Opana is back in the news, but not in a good way for Endo.  The FDA assembled an expert review panel last week to opine on whether the benefits of Opana ER outweighed its risk to its users.  The short summary of its findings and recommendations is that the benefits do not outweigh the risks, and that the drug’s continued marketing should be controlled in a variety of possible ways including removal from the market, or restrictions on who can prescribe it and under what conditions.

To summarize the findings of the article below, Opana ER is not a big player in the prescription opioid market in any event.  Its active ingredient, oxymorphone,  is manufactured or distributed in the US by at least 19 different companies but fills less than 1% of opioid prescriptions.  (I must admit up front that have no idea who actually makes what pills or where the active ingredient in the various preparations comes from.) A detailed list of individual versions of oxymorphone by NDC from the labelers below is available here. (or here as Excel file.) It occurs to me as I see such long lists of labeler names, that with so many ways for a drug to enter the community, opportunities for diversion from supervised distribution become correspondingly more numerous. Given all the apparent distributors, is it even possible for an Endo or a Mallinckrodt to know where the drugs they might manufacture end up? Mallinckrodt in particular has been accused of not keeping very good track at all, at least in Florida. Continue reading “FDA Panel Finds Opana-ER Not Worth The Risk!”

Newest Proposed Treatment for Duchenne Muscular Dystrophy Abruptly Changes Hands.

Less than one month after our exploration of the recent colossal price markup of a simple drug used by a vulnerable and desperate group of children and their families, a dramatic turn of events occurred which may make things better or worse. In February, the pharmaceutical company Marathon announced its marketing plans for Emflaza, its brand name for deflazacort, a simple corticosteroid widely available in other countries but not in the United States. Emflaza had recently been approved by the FDA for the treatment of symptoms of Duchenne muscular dystrophy (Duchenne MD) in the United States.   Duchenne MD is a usually fatal genetic muscular disorder of young boys for which no curative therapy is currently available, but for which corticosteroids such as deflazacort and prednisone slow the progression of weakness.  Deflazacort– the most commonly prescribed all-purpose steroid in some countries– has been used in Canada and elsewhere for the treatment of Duchenne MD for some time.  The wrinkle in Marathon’s release was that it declared an annual charge of $89,000 per child for a drug sold in many other countries for a price a measured in pennies instead of dollars.

I have already expressed my puzzlement that the FDA gave its approval to Marathon based on clinical data collected many years old by another drug company that for undisclosed reasons walked away from FDA approval. I am still looking for reliable studies that confirm that deflazacort is superior to, or safer than prednisone to treat Duchenne MD. [Prednisone is the most prescribed corticosteroid in the United States. To say that it is inexpensive would be an exaggeration!]  Perhaps a clinician without ties to the pharmaceutical industry will provide us with evidence-based data that Emflaza is an essential or even a better drug for Duchenne MD, or worth the monumental cost for any incremental benefit.

Continue reading “Newest Proposed Treatment for Duchenne Muscular Dystrophy Abruptly Changes Hands.”

Is Emflaza the Latest Drug Pricing Rip-off or Not?

New Money from Old Drugs.  Are children with muscular dystrophy being served by the free market or taken advantage of?

I suspect that it is just because people are paying attention, but reports of unexplainably excessive pricing of both new and old drugs keep coming too fast to keep up with. I recently published a list of 447 drugs whose prices doubled or more between 2011 to 2015. Even that list was incomplete!  This week’s prize winner is Emflaza, a drug that was recently approved by the Food and Drug Administration (FDA) to treat Duchenne Muscular Dystrophy (DMD).

The price proposed by Marathon Pharmaceutical, LLC is $89,000 per patient per year. We may be getting desensitized to such patient-bankrupting offerings, but what makes Emflaza stand out from the offending crowd is that in Canada, where some of the original research appears to have been done, the same drug for the same disorder costs a dollar a pill or less.  As noted in the Wall Street Journal, the price set by Marathon is 50 to 70 times what most U.S. patients currently pay to buy the drug (illegally?) from on-line pharmacies in the United Kingdom.  The more I learned about Emflaza, the more troubled I became.  Allow me to share some of my discomfiture with you. Continue reading “Is Emflaza the Latest Drug Pricing Rip-off or Not?”

Should Kentucky Physician Assistants Prescribe Controlled Substances?

Kentucky’s high rates of opioid prescription must be reduced before even more prescribers are added. National data suggest that adding Physician Assistants to the prescribing mix is unlikely to reduce the number of opioid prescriptions written. 

Louisville’s Courier-Journal this week featured an opinion piece by Andrew Rutherford, President of the Kentucky Academy of Physician Assistants, advocating for the passage of Kentucky Senate Bill 55 which would authorize physician assistants in Kentucky to prescribe controlled substances. Emphasizing the stakes involved in the proposal, articles later in the week reported on the latest rash of opioid overdoses in our region– presumably due to the inevitable fentanyl-enhanced “bad batch” of heroin.  Several on-line commenters to the second articles suggested that since those who overdosed had made their own risky-decisions, that they should be permitted to suffer the consequences without an intervention of attempted resuscitation. It is suggested that this Darwinian mechanism would ease the opioid abuse problem.  Unfortunately however, among the personal choices leading to opioid addiction is the choice to visit a licensed healthcare professional who, with good intentions or not, prescribes opioids.  Once an individual becomes addicted, the concept of “choice” become irrelevant.  A reasonable question to be asked is, “Do we really need to put more opioids in the hands of Kentuckians?  My answer would be an emphatic no. Continue reading “Should Kentucky Physician Assistants Prescribe Controlled Substances?”

Exorbitant Increases in Prescription Drug Prices Neither New Nor Uncommon.

At least 447 Medicare outpatient drugs had prices more than double between 2011 and 2015 and 36 increased their prices ten-fold!

In every week of recent months our attention is being called to one or another exorbitant or unexplainable increase in the price of yet another prescription drug. We have long recognized continuously rising prices for brand-name drugs, but the new business model of the pharmaceutical industry includes taking control of the distribution of traditionally generic drugs and jacking prices up even faster and higher than their brand-name cousins– if that is even possible.  It appears that the more medically-necessary or lifesaving the drug is, the higher the price increases are. This is what happens in a free market environment when an industry has its consumers over a barrel and is free to have its way with them.

Some poster-children of the trend include the anti-parasitic drug pyrimethamine (Daraprim) which is essential to treat certain infections in immunosuppressed people and whose price per tablet increased from $13.50 to $750 overnight; the EpiPen injector system used to administer epinephrine to people entering anaphylactic shock; insulin for diabetes; Plaquenil, and more recently Suboxone, the drug used to help manage opioid addiction.  As I will show below, there are many more drugs with recently inflated prices still cruising below the radar! Continue reading “Exorbitant Increases in Prescription Drug Prices Neither New Nor Uncommon.”

Gov. Bevin Reappoints His Original Ten-Person Board of Trustees for UofL

Breaking Information:

The Governor’s office released today Governor Bevin’s list of 10 appointments to a replacement Board of Trustees for the University of Louisville.  With a single exception, all 10 are the same as the Board he appointed earlier in 2016.

Newly appointed Trustees:
J. David Grissom, of Louisville, until Jan. 13, 2023.
John H. Schnatter, of Louisville, until Jan. 13, 2022.
Sandra Frazier, of Louisville, until Jan. 13, 2021.
Nitin Sahney, of Prospect, until Jan. 13, 2021.
Bonita K. Black, of Crestwood, until Jan. 13, 2020.
Brian A. Cromer, of Louisville, until Jan. 13, 2020.
Ulysses Lee Bridgeman, Jr., of Louisville, until Jan. 13, 2019.
Ronald L. Wright, MD, of Prospect, until Jan. 13, 2019.
James M. Rogers, of Prospect, until Jan. 13, 2018.
Diane B. Medley, of Ekron, until Jan. 13, 2018.

The exceptions are that James Rodgers is appointed instead of Dale Boden.    In the first set, Douglas Cobb was appointed, but resigned shortly afterwards to be replaced by Brian Cromer who is on the list above.

I have commented on all of these at length, including an analysis of the application documents used for the first appointment process.  It is difficult for me to believe that the Nominating Committee that met last week, with 3 of its 7 members on that day new to the committee, had any meaningful independent influence on this intensely political appointment process.  Surely this was a done-deal from the start.

Peter Hasselbacher, MD
President, KHPI.
Emeritus Professor of Medicine, UofL
3:10 pm, Jan 17,  2017