Is accreditation of UofL Medical School hanging on the result?
This case has been slowly grinding through the court system since it was filed in September of 2013. Although things had been brewing for some time, the trigger event was a letter of agreement between Norton and the University of Kentucky to work more collaboratively at Kosair Children’s Hospital. An indignant UofL fired off a letter threatening to evict Norton physically from its hospital and retain the hospital’s equipment for itself. UofL’s self-righteous demand was much discredited when it emerged that the University had earlier promised to turn over its pediatric service to KentuckyOne Health– Norton’s chief downtown rival that badly needs a children’s hospital for its planned statewide system. Norton responded by filing a lawsuit requesting a judicial determination that UofL had no standing to take over the hospital to use with its new best friends. The festering boil is more than ripe to lance! Continue reading “Norton vs. UofL Lawsuit on Front Burner Again.”
In late January, Moody’s, a major bond-rating organization, downgraded the long-term debt of Catholic Health Initiatives (CHI) to A2 from A1. This was the third one-notch drop in as many years. According to municipalbonds.com, the downgrade “follows a fourth year of declining operating performance, and a second year of very poor consolidated results.” Other factors reported to have contributed to the weaker credit profile included “high leverage (which has more than doubled since 2011), declining liquidity, rapid expansion, high capital spending, and poor same-store utilization and revenue growth.” A prior negative outlook was maintained. The rating for CHI’s self-liquidity-backed commercial paper remained at P-1, the best rating possible.
Continue reading “Catholic Health Initiatives Bond Rating Drops Again.”
Operating losses recalculated as greater than reported.
[See also Addenda of Dec 19 & 20 below]
Perhaps it was predictable, but Standard & Poor’s bond rating service downgraded its rating of Catholic Health Initiatives from A+ to A with a negative outlook based on large and unexpected losses in first quarter FY 2015, and an inability to meet the financial targets needed to deal with last year’s losses. The downgrade effects the $7 Billion of existing CHI debt for which Kentucky’s operations are also on the hook. CHI pointed to challenges in a few of its markets (particularly Kentucky) investments in capabilities, and costs in implementing computerized medical record systems.
CHI’s own “unaudited” financial report declared a $134.7 Million operating loss, but S&P recalculated this to $641 Million. Expenses were up 11% while revenues grew only by 8%. As reported by Modern Healthcare, S&P’s analyst predicted that plans by Catholic Health Initiatives to turn around its operations likely won’t be enough to avoid losses for fiscal 2015 based in part on poor performance last year— “It’s just a big hole to dig out of… They missed on their targets last year. We didn’t feel like there was a strong track record to show they will do well.” Continue reading “Standard & Poor Downgrades Catholic Health Initiatives Bond Rating.”
Kentucky operations show improvement.
CHI’s corporate first quarter financial update for the months July through September of 2014 was made public last Friday. The report was not good. There was a loss in patient care services of $122 Million that increased to $132 Million after “restructuring, impairment and other losses’” and was magnified further by non-operating losses to a total loss of $198 Million. This represents 5.4% of total operating revenues and is therefore meaningful. In the same quarter last year, there was a profit of $401 Million— a $599 Million swing in the wrong direction.
Last year CHI’s KentuckyOne operation was generating the greatest losses for the organization. This year its first quarter results showed a positive $1.7 Million profit. Of course, this is before “restructuring” or covering its share of national non-operating losses. I think it is safe to assume that KentuckyOne Health and any other Kentucky operations were paying out more money than they were bringing in. The KentuckyOne region remains at the bottom of the list of CHI regions in terms of operating income. Kentucky contributes substantial operating revenues, but its operating earnings margin is only 0.3% before all the adjustments. Continue reading “Catholic Health Initiatives Loses $198 Million in First Quarter.”
KentuckyOne Health still losing money– But how fast?
CHI riding a wave of acquisitions?
Once again Chris Otts of WDRB is first in our region to report on the release of Catholic Health Initiative’s (CHI’s) annual financial report for FY 2014. Data from the financial report shows continuing losses in CHI’s Kentucky operations of $69 million for the fiscal year ending June 30, amounting to a loss of 3.2% of Kentucky revenues. This compares to a modest profit of $33 million in FY 2013. I do not claim to fully understand such financial reports [help requested!], but Mr. Otts notes that the loss is stated before deducting financial expenses that would make the numbers worse. Continue reading “Catholic Health Initiatives Annual Report, FY 2014.”
In with both feet. But how far?
26 July 2014, 3:30 pm
Reports that KentuckyOne Health was talking with Community Health Systems of Nashville about the sale of Jewish Hospital drew unequivocal denials from KentuckyOne. The hospital system and its partner, the University of Lousiville, finally broke silence and admitted that the couple had gotten off to an unanticipated (but perhaps not unpredictable) rocky start to their marriage. An additional report that Catholic Health Initiatives was talking with Tenet Healthcare has not been denied publicly to my knowledge, as of course it could not be. The fact is that Tenet is now fully engaged in providing services at Jewish Hospital. How much of the Jewish Hospital operation has been transferred to Tenet, and the ultimate outcome of the involvement of yet another out-of-state-corporation in Louisville remains to be seen.
There were of course any number of reasons CHI might wish to talk to Tenet. For one thing, since 2012, the two large corporations have been partners in jointly owned Conifer Health Solutions. Conifer specializes in “revenue-cycle” services for hospitals, including many, if not most of CHI’s. To my non-business mind, such services involve getting every last nickel that’s due out of patient billings. Since KentuckyOne Health has been losing money for CHI, it is not surprising that calls for outside help may well have been suggested or demanded. Continue reading “KentuckyOne Health Is More Than “Talking” with Tenet Healthcare.”
Last Thursday, Chris Otts of WDRB News may have been the first to report on Catholic Health Initiatives’ (CHI) most recent quarterly report to its creditors covering the 90 days ending March 31, 2014. Meant to be read in conjunction with last November’s audited annual report, the current unaudited update covers the first full year that CHI has controlled “substantially all of UMCs operations” at University of Louisville Hospital (ULH). The news report focused on the fact that KentuckyOne Health, the manager of CHI’s multiple hospital-related operations in Kentucky, had lost an additional $134 million on its “faith-based” hospital operations over that 90-day period. This stunning loss comes on the heels of an earlier report that KentuckyOne had lost $100 million in the six months ending December 31, 2013.
More than just financial data is provided.
The full report is in the public domain. My reading confirmed what was reported by others. However, I was struck more by other tidbits of information that confirm or add to our knowledge of what is happening behind the surgical drapes hung to to keep the rest of us from assessing the health of this hospital system of which a public asset is part. Continue reading “Catholic Health Initiatives Reports Increasing Financial Losses in Kentucky.”
Not so bad so far!
I have been scanning the usual media outlets for some clue about what went on at the Tuesday institutional town meetings that Jewish Hospital announced publicly last week. I am finding nothing, nor have I any idea what was discussed. I have a feeling that if something big had been revealed, that we would have heard of it by now. KentuckyOne and the University of Louisville continue to keep the lid on pretty tight.
What I did find was a YouTube video message from KentuckyOne’s CEO, Ruth Brinkley. It contained nothing particularly surprising or controversial. Its principal function appeared to be to calm employee anxieties that arise naturally during rapid institutional change. It begins by telling the “good news” that half of the $218 million budget deficit has been made up through the hard work and sacrifice of employees, although no details are offered. It restates the obvious, that major change takes time and is difficult. Employees were told that no further large-scale layoffs were anticipated.
Patient referrals and provider recruitment.
Other successes announced include increased referrals to system physicians and mid-level primary care providers through the “Anywhere Care” tele-health initiative or from referrals through HealthGrades. Fifty-eight new primary care providers of a variety of professions have been added to the network.
Employees are told they can help by speaking well of and conveying their pride in the organization to their family and friends. They are urged to select KentuckyOne primary care providers. Suggestions for cost-saving measures from employees are solicited with special recognition awarded for measures that are adopted. Much of the rest of the message is a restatement of the goals of the organization including improving the health of Kentuckians. It is noted that the challenges still facing KentuckyOne are not unique to it. [I agree.] Continue reading “Changes Coming to Downtown Louisville for KentuckyOne Health.”
Settlement proceedings with federal agencies ongoing.
A measure of the difficulty facing our Louisville Hospitals.
Last March I gave an update on the struggle of King’s Daughters Hospital in Ashland, KY to recover from the abrupt decrease in patient volume and income following the disclosure of a Federal investigation of their cardiac program. Several years of financial boom and building turned into a bust of multi-million dollar losses and a downgrading of their bond rating. A paragraph in their FY2013 Audit led me (and pretty much everyone else) to believe that the hospital had reached a settlement with the Department of Justice and Inspector Generals’ offices. My efforts to obtain a copy of the settlement from Kentucky authorities was unfruitful despite apparent cooperation with my request. A report in today’s Modern Healthcare gives the reason why as well as an interim financial update.
The jury is still out!
In fact, settlement discussions were indeed in progress but are not final. The $48.9 million mentioned in the footnote of the audit referred to a reserve set aside to cover any fine and associated legal costs. The Hospital corrected the misleading language.
“Standard accounting principles require a reserve be set to reflect potential exposure for legal matters once the amount can be reasonably determined. Unfortunately this accrual was reflected in the audit footnote disclosure as though a final settlement agreement had been executed. While it is true King’s Daughters has been in ongoing negotiations with the Department of Justice, a final settlement has not occurred. King’s Daughters will update this notice if a final settlement with the Department of Justice is reached.”
Ongoing losses despite some improvements.
As of March 2014 the hospital reported a 13.5% decrease in admissions and a 15.2% decline in patient days for the year. Meaningful savings in operating expenses were won and the state’s expanded Medicaid program led to a decrease in “self-pay” uninsured patients. These gains were lost to unspecified severance benefits, and consultant and legal fees. The hospital, like others, continues to pay a heavy price for its alleged angioplasty-misadventures. Continue reading “Troubles Persist at King’s Daughters Hospital.”
Waiting on KentuckyOne Downsizing Day.
By all accounts, today is the day KentuckyOne Health will begin to reveal the first steps of its plan to decrease expenditures by $217 million before the end of Fiscal Year 2015. Specific details were not offered at the time the cuts were announced, but nothing was taken off the table. It seems likely that some hospitals or outpatient facilities will be closed or sold. We should expect to see clinical programs eliminated or consolidated rather than trying to offer everything everywhere. We will surely see terminations and reassignment of staff members.
None of this is in intrinsically inappropriate. KentuckyOne has to balance its books. There is much duplication of clinical services in Kentucky, but unfortunately also many areas with limited resources. The challenge for KentuckyOne is to achieve a balance of downsizing, consolidation, and redistribution of services in a way that does not give the appearance of compromising their goal of providing excellent care to Kentuckians at prices they can afford. I wish KentuckyOne well. One of my principle objections to KentuckyOne’s operations is that it is using its publicly funded healthcare system in public facilities as a vehicle to promote the religious objectives of its owners. It may even be possible that some of KentuckyOne’s financial problems stem from its position on religion-based healthcare. That may be a problem KentuckyOne cannot fix on its own. Continue reading “D-Day Today for KentuckyOne Health?”