On Friday January 6, the relationship between Catholic Health Initiatives and its Louisville hospitals was reshuffled as Jewish Hospital and St.Mary’s Healthcare joined the rest of CHI’s Kentucky hospitals without the University of Louisville Hospital. The University still has hopes that it will be able to join the new entity at a later time. The announcement gives us some insight into what the earlier acquisition would have looked like: the New CHI-directed system will be called KentuckyOne Health, and it already has a logo.
This is a logical move for these institutions. The formerly independent Jewish Hospital was already under the effective control of CHI having merged with the former Caritas Hospital (now St. Mary’s). By all accounts, Jewish Hospital (and St. Mary’s?) were already in a desperate financial situation as their clinical services continued to unwind. The new merger has been backdated to January 1. There was probably lot of scrambling over the past week to rearrange the former deal. Somehow the phrase “having a gun to your head” pops into my mind. I have no knowledge what other offers have been made to Jewish. Obviously CHI wanted to keep the institution in its fold.
What has not been spoken of at all is what role St. Mary’s Hospital has in this new future. It was not one of the premier hospitals in Louisville before, and has lost even more of its luster since. I am being told by people who’s contacts are better than mine that the plan is to close St. Mary’s and transfer its beds to Jewish Medical Center East, much as Norton closed Southwest Hospital and opened Brownsboro East. (The plan from its construction was to turn Jewish Medical Center East into a hospital.) The new Jewish Hospital East will become a woman’s hospital to compete with Norton and Baptist just up the street and around the corner. Indeed, we are already seeing the advertisements for the new Jewish Hospital Women’s Center. Perhaps University Hospital will reduce the size or even close its obstetrics service as it sends more of its patients to the East End or even to a Jewish Hospital Downtown: certainly it will now have more competition for patients. If it had still been in the deal, my wager at even odds would have been that University Hospital would have transformed itself, or at least part of itself, into a stand-alone cancer hospital. The above predictions and speculation fit well with the facts as they are emerging. I suspected they were coming weeks ago. I understand now why the proponents of the old deal were not willing to say that jobs in Louisville would not be lost in their new entity. I suspect we will find out in short order much of what was hidden in the prior two or more years of sub rosa planning.
Officials at the University of Louisville and its Hospital are still campaigning to be allowed to join KentuckyOne Health. We are still hearing the claim that the hospital cannot succeed unless it does so. I remain unconvinced but am willing to listen to real arguments, not cries of wolf. I have begun to examine the Form 990s that not-for-profits like the University of Louisville Research Foundation and University Hospital must submit to the IRS each year. To my initial review, it looks to me like University Hospital turns more profit from its hospital operations than any other in Louisville. In 2008, even after turning $17 million over directly to the University (rent + research money), it still makes a profit! Many more millions are transferred indirectly to the University under the descriptor of “fee-for-service” payments. To my sometimes cynical eye, these transfers look like a way to reduce the Hospital’s apparent bottom line to make it seem more needy than it is. Such transfers are uncomfortably reminiscent of the transfers that were illegally taken during the recent Passport scandal. University officials had referred to the former Passport as a source of slush funds. Prove to us that University Hospital is not being used in the same way.
The University Research Foundation Form 990 for 2009 listed as revenue $180 million from “Clinical Services!” This stunning figure was more than the University received from government grants that year. It looks to me like the Medical center and its hospital is funding the bulk of the University operations from clinical operations! I have absolutely no idea where that money comes from, but before anyone again allows University Hospital to cry poor under a cloak of concern for the indigent, we deserve to find out.
It is clear that we are witnessing a new round of hospital wars that will be fought with even more animosity than before– if such a thing is possible. Believers in free markets will claim that this will give us better service at lower prices. In the business of healthcare I predict a very different result. Armies of health care professionals will be working their hardest to extract as much money as possible out of the system (that’s you and me). It is a well accepted fact that such an approach does not translate into the best medical care for the rest of us. In American medicine you get less than you pay for.
Peter Hasselbacher, MD
KentuckyOne Health sent an update to its medical staff giving its reaction to the rejection of the merger and its promise to continue to cooperate with the University of Louisville. The update can be downloaded here.