Isn’t it about time that the curtain is raised a little?
As we enter the new year, many anxious folks in Louisville are waiting to learn about the status of a proposed sale of KentuckyOne Health’s Louisville assets, and what that will mean to the University of Louisville and its Health Sciences Center. The University and KentuckyOne had an existing, multiply-extended, Academic Affiliation Agreement that would have expired December 31, 2018. This critically important document and related agreements defined the financial, administrative, educational, and clinical relationships between Jewish Hospital and the University. A valid Affiliation Agreement is essential for Jewish Hospital for Jewish and Sts. Mary & Elizabeth Hospitals to claim the financial bonuses and other advantages of a Medicare teaching hospital. An Academic Affiliation Agreement is equally important for the accreditation of the Medical School if it wishes to continue to train students and residents in Jewish Hospital or document that it has adequate clinical teaching facilities for its family practice and all its specialty programs. These are no small details. Continue reading “What Will Louisville’s Medical Landscape Look Like in 2019?”
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.”
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”
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.”