Catholic Health Initiatives Releases Annual Financial Report.

Catholic Health Initiatives (CHI) released its Annual Report for Fiscal Year 2017 last week. Given that the company is in the middle of discussions with Dignity Health about a possible merger or alignment, and the attempted sale of half of its hospital beds in Kentucky, the report is of considerable interest. I cannot pretend to understand the arcane rules of accounting underlying the numbers and discussion in the report. Others in a position to do so emphasize the increasing $585 million loss in operational income from the company’s core healthcare business, and the considerable outstanding debt of $8.7 billion. There is a reason that bond rating agencies have been downgrading CHI’s rating and assigning a negative outlook. What I intend to do below is to highlight material from the report that is specific to Kentucky, to offer a few general comments, and to ask my readers to help us interpret what is at stake for Kentucky.

Earnings Before Interest, Depreciation, and Amortization (EBIDA).
CHI uses this method of accounting to present much of its financial numbers. EBITDA is (according to Wikipedia) “not recognized in generally accepted accounting principles” but intended to allow comparison of profitability between different or heavily leveraged companies. [The ‘T’ in EBITDA is for taxes, which are less relevant for a non-profit.]  It has been suggested that “EBITDA doesn’t give a complete picture of a company’s performance.” and that because it is not defined in GAAP, “companies can report EBITDA as they wish.” Furthermore, CHI lists its EBIDAs “before restructuring, impairment, and other losses.” In short, I have no confidence in my ability to interpret the financial health of CHI from this report. Can anyone help us?

Items Specific to Louisville.
From the 127-page document, I extracted all paragraphs in which Louisville (or Kentucky) is mentioned, along with the page number from the original document. A lot is stuff we already knew here in Louisville. There is a good bit of repetition, boiler-plate, and business-speak language that seemed not very specific or informative to me. Maybe that is the nature of annual reports. Allow me to highlight (in sequence) some of the mentions. Continue reading “Catholic Health Initiatives Releases Annual Financial Report.”

Who Should Control the Curriculums at Kentucky Universities?

Lest anyone doubt Gov. Bevin’s inclination, indeed intention to intervene in the academic decisions of Kentucky’s state universities, I draw your attention to his recent speech to the Kentucky Council on Postsecondary Education (which sets Kentucky’s higher education policy and which he largely appoints) in which he “suggests” to our university Boards and administrations that they should shed whole academic programs that do not contribute to employment and economic development as he envisions it. This should not come as a surprise to anyone, because he made the same statement early in his term shortly after he celebrated his intention to open the separation of church and state more widely. Others have already noted how a broad-based general education has not done badly for the Governor personally. I will add that the Governor’s initial public spokesperson in Kentucky did not do very badly with her history major from a Kentucky college. She moved from working for a governor to working for the president of the United States.

It is my impression that a “suggestion” from Gov. Bevin forebodes a more aggressive intervention on his part. I point to the “pressure” brought to the University of Kentucky to fire a professor who was critical of one of the Governor’s healthcare policies, and his “pressure” brought on the University of Louisville Hospital and KentuckyOne Health to sever and not renew its transfer agreement to accept the rare patient from Planned Parenthood or other abortion provides who has a serious complication from surgery. (This latter matter is now in Federal Court.)

Although the Governor’s office denies any intervention on his part, in my opinion, and that of the parties being leaned on, the pressure could only have come from the Governor himself directly or indirectly through proxies. The Governor has not been shy about stating his intention to achieve his economic and religious agendas. Why should be not believe him? In my opinion, such tactics do not deserve the banal description of “pressure,” but meet the definition of bullying. We all know what happens when a bully is not confronted – the result is more of the same. University accreditors at SACS, are you watching? Kentucky elected officials and our general public, are you?  Our Universities cannot fight this battle by themselves.

Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
September 14, 2017

Alice In Wonderland in a Louisville Federal Courtroom.

“Contrariwise,’ continued Tweedledee, ‘if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”
Lewis Carroll

I began my day yesterday morning attending Medical Grand Rounds at University of Louisville Hospital.  These weekly sessions teach the principles of evidence-based, scientific medicine to the physicians of tomorrow.  They simultaneously emphasize the ethical and patient-centered ideals that underly and legitimize the practice of medicine.  For the physicians of today (and of yesterday like me) they provide a way to refresh and celebrate the ever-expanding knowledge of the science of medicine, and to reaffirm and share together our commitment to the highest standards of our profession.

Because I was already nearby and interested in the proceedings, I drove across town to observe the second day of trial in the courtroom of Judge Greg N. Stivers in the United States District Court for the Western District of Kentucky to hear the constitutional challenge to new Kentucky abortion restrictions which was brought by EMW  Women’s Surgical Center (joined by Planned Parenthood) against Gov. Matthew Bevin and Health Secretary Vicky Glisson.  Judge Stivers will pass judgement on whether the language, intent, or implementation of laws controlling transfers and transport of women with complications of abortion from an outpatient clinic to a hospital unduly burden the right to terminate a pregnancy. Continue reading “Alice In Wonderland in a Louisville Federal Courtroom.”

Who Will Defend Kentucky’s Academic Institutions Against Political Capture?

[Below is the full text of my shortened Op-Ed piece published on-line by the Courier Journal on Aug 8, and in the print edition of Aug 9.  The complaint by Dr. Mullins and links to background and documentation are also available.]

I submit this as an open letter to the Southern Association of Colleges and Schools Commission on Colleges (SACS) and to the Louisville community. On August 2, the Courier-Journal reported extensively on a lawsuit brought against senior members of the University of Kentucky’s administration and the administration of Governor Matthew Bevin by Dr. Raynor Mullins, a distinguished senior member of the faculty of the School of Dentistry at UK. The lawsuit alleges that Dr. Mullins was fired from his non-tenured faculty position in retaliation for comments that were critical of Gov. Bevin’s plans to reshape Kentucky Medicaid– a plan intended to considerably reduce the number of Medicaid beneficiaries and cut back on benefits, including dental services. The lawsuit names as defendants “Mark Birdwhistell, UK’s Vice President of Administration for UK HealthCare; Dr. Stephanos Kyrkanides, Dean of the UK College of Dentistry; and ‘John Doe,’ described as an official in the Bevin administration.” (Dr. Birdwhistell is a major architect of Gov. Benin’s healthcare plan.) The story was picked up by the Associated Press and is appearing across the country. What is happening in Lexington is relevant to the accreditation status of the University of Louisville and the reputation of our Commonwealth. Continue reading “Who Will Defend Kentucky’s Academic Institutions Against Political Capture?”

Louisville’s Human Organ Transplant Program Stagnates As Lexington’s Grows

Financial and operational stresses at Jewish Hospital likely to be taking a toll on one of the headline partnerships between the Hospital and the University of Louisville. Increasing dependence on Medicaid patients and a blossoming load of uncompensated care may be blocking access for the medically indigent and recipients of color for at least some solid organ transplants such as heart and liver.


Since the middle 1980s when I came to Louisville, Jewish Hospital has branded itself as a high tech “Heart Hospital.” It promotes the early adoption of high-technology. Indeed, a few years ago it received a special designation as a heart hospital in Kentucky from U.S. News & World Report that it would not have received had it not had a cardiac transplant program. In the middle 1990s, the University of Louisville formally shifted the private practice activities of its cardiologists to Jewish Hospital. The transplant surgeons at Jewish, to my knowledge, all have formal University faculty appointments. Jewish Hospital and the University of Kentucky Hospital are the only two hospitals in the state with a Certificate of Need (CON) for adult human solid-organ transplantation. (The University of Louisville does not own this CON for transplant.) Accordingly, this high-profile program is both important for, and a marker of the institutional health of both Louisville institutions.

For this and for other reasons, I have been writing about Kentucky’s transplant programs for the last few years. Most medical schools with a major clinical medical center consider having a transplant program as an important part of their service profile. I became concerned that although in the 1990s through 2010, Jewish Hospital performed the most such organ transplants in Kentucky, that a steadily-growing UK program overtook our own as early as 2010. My academic pride was injured. My concern included that a weakening Jewish Hospital was losing the resources or the will to continue this important program. It is after all an expensive undertaking. Continue reading “Louisville’s Human Organ Transplant Program Stagnates As Lexington’s Grows”

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. Ramsey supporters, enablers, and apologists, and  shares blame with former President Ramsey and other University executives. The so-called elite, chardonnay swilling, trouble makers who dared rock the boast and ask questions are vindicated in spades.

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!”