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”

There Is A New Hospital in Louisville!

nch-logo-500The anticipated announcement that Norton Healthcare would change the name of its Children’s Hospital following the settlement of its legal dispute with Kosair Charities was made today.  On November 10 the, former Kosair Children’s Hospital will be named Norton Children’s Hospital.  The new name follows the format used by Norton’s other local hospitals.  The Kosair appellation will also be dropped from other healthcare facilities that shared names including outpatient centers, a women’s and children’s hospital, and a network of pediatric medical general and specialty practices.

According to today’s press release:
“In 1981, the Kosair Charities Committee and Norton-Children’s Hospital entered into an agreement whereby the Kosair name would be used on the hospital.  Following a mutual decision in late June 2016 to end the naming rights agreement, Norton Healthcare and Kosair Charities agreed that the name Kosair would be removed from all Norton-owned facilities and medical practices.” and…

 “We thank Kosair Charities and its members for their support and dedication to the Commonwealth’s children,” [Hospital President] Kmetz said. “Both organizations remain committed to meeting children’s health care needs. We will now pursue that focus independently.”

Commentary.
And so, what began as an amicable partnership that became a major focus of Kosair Charities’ fundraising efforts, ends deceptively gently after an acrimonious legal dispute initiated by Kosair Charities.  For a relatively small contribution towards charitable care in the Children’s Hospital, Kosair Charities had a top billing in the name of the largest and most respected children’s healthcare network in the state. Continue reading “There Is A New Hospital in Louisville!”

KentuckyOne Poised To Announce Layoffs of Senior Executives.

I have been advised by two sources that KentuckyOne Health will soon announce the elimination of several system-wide or senior executive positions designed to improve efficiency, reduce costs, and emphasize local leadership.  The as-yet unconfirmed names of the individuals currently in those positions include clinical and operational executives at the highest level.  I am unaware if the names of included leadership comprise a complete list or represent the tip of the iceberg of things to come.  Perhaps as an early indicator, the senior physician executive at Jewish and Sts. Mary & Elisabeth Hospitals left that position a few weeks ago.  As a company outsider, it is impossible to know all the reasons for changes in personnel.  These often include the personal career plans of the employee, but also concerns about the fit between employer and employee in meeting the goals of the particular corporation.  KentuckyOne may well once again be feeling financial pressures that cannot be denied. It has laid-off employees in the past to decrease expenses – a strategy that in the longer run was not entirely successful at University Hospital.

On the other hand.
One of the most common complaints I hear from my University of Louisville colleagues reflects what is considered to be unwanted and disruptive outsourcing or other “outsider intrusion” on the part of Catholic Health Initiatives or KentuckyOne management that does not allow for appropriate local initiative or control, or which treats all hospitals the same no matter where they are located, or fails to acknowledge the particular needs of their patient population. From this perspective, a diminution of the role of system-wide executives might be considered a worthwhile result. On the other hand, I suppose it is possible that a state-level KentuckyOne system control might be replaced by even more direct CHI control from Colorado!  The desire for local control is, however, at odds with current national and local policy, or financial pressures for hospital and health system consolidation and coordination.  The health of KentuckyOne and its partnership with the University of Louisville is a matter of critical concern for Jefferson County and the Commonwealth.  Things have not been going well so far. Continue reading “KentuckyOne Poised To Announce Layoffs of Senior Executives.”

Potpourri of Health Policy Issues in June.

My cup runneth over with potential issues to explore.

June has been a busy month both locally and nationally insofar as things I like to write about. The shame-on-me is that I have not carved out enough time to do so!  In part I am still picking up the pieces after my early spring travels. Exploring how to unpack and deal with the new Medicare prescription drug data base also took a lot of time.  The truth is that I am a slow writer handicapped by a default and probably over-wordy professorial style.  I haven’t even been able to update the Institute’s Facebook and Twitter pages!  What follows is a list of things that occured during the month that I wanted to write about and hope to do so in more detail later.  These are not necessarily in chronological order or of importance.

The Supremes Rock & Rule!
We were presented with two back-to-back major decisions by the U.S. Supreme Court. The first, King v. Burwell, allows federal subsidies of health insurance premiums for low income individuals and their families to continue even if their insurance was purchased in states that chose to allow the federal government to operate their health insurance exchanges.  The lawsuit brought by Obama/Obamacare-haters to limit premium support to insured individuals in states like Kentucky that chose to operate their own exchanges would have essentially gutted the Affordable Care Act (ACA) and tossed millions back into the uninsured category. For the time being, Obamacare stands intact for at least the next year and a half, despite promises by opponents to throw up additional challenges. All our legislators should be working together to deal with a major remaining deficiency of the ACA.  The Act has been very successful in decreasing the number of uninsured people, but it makes little headway against the exploding costs of unnecessary, marginally effective, or for that matter even necessary medical care.  Continuing to forbid the federal government to negotiate over the prices of drugs is a case in point. Subsidies were deemed necessary for a reason! Continue reading “Potpourri of Health Policy Issues in June.”

More Layoffs In Store for Catholic Health Initiatives.

  Kentucky unlikely to be spared.

Tamara Chuang of the Denver Post reported yesterday of an announcement by CHI confirming the 1500 additional job cuts planned for January 2015. Laura Ungar of our own Courier-Journal was ahead of the game in reporting this considerable reduction.

From Denver: “As a result of lower-than-expected operating and financial performance in the first quarter of the 2015 fiscal year, Catholic Health Initiatives and its market organizations will take action to reduce expenses across the system,” said spokesman Michael Romano. “The losses were due to a number of external and internal factors, including reduced utilization of services.”

The positions to be cut will be announced in mid-January are said to focus on administrative and support staff and to affect the entire national enterprise. Given that KentuckyOne Health is one of the larger of CHI’s regional operations and continues to produce the largest financial losses, it must be assumed that additional job cuts will follow the 500 or so lost last March in Kentucky.

This unfortunate news is not a complete surprise. CHI’s financial report for FY 2014 released last month showed a slowing of recent losses, but KentuckyOne was the only region of CHI losing money.  The profit from operations nationwide was razor-thin.  I am unaware of how the earlier job cuts were spread out around the state, but I am told that the cuts hurt, and even led to decreased clinical capacity in some facilities. The required formal financial report for the first quarter of FU 2015 will not be available until the end of the month. It should contain more specifics.

Peter Hasselbacher, MD
President, KHPI
December 7, 2014

Financial Status a Barrier to Organ Transplantation But Not Donation.

It is easier to give than to receive in the transplant world.

organ donationIn a comment added to a recent article about the current financial status of Catholic Health Initiatives (the parent company of KentuckyOne Health) it was alleged that Jewish Hospital in Louisville did not accept Medicaid patients for organ transplantation. Because of the seriousness of this allegation, I was reluctant to allow it to stand without further comment. I therefore did some research and elicited comments from involved parties. The results trouble me and highlight yet another major example of the disparity of access to health care in our inherently unfair non-system, dividing Americans as it does by socio-economic status. In the case of transplantation, the operational result is particularly ugly, because the weight of government regulation and community has given us a morally indefensible result analogous to the rich stealing organs from the poor. I call this an example of the “Reverse Robin Hood” nature of America’s National Health System! Neither Jewish Hospital nor UofL are responsible for this situation, but have benefited from it. Continue reading “Financial Status a Barrier to Organ Transplantation But Not Donation.”

UofL Hires New Director for Bone Marrow Transplant Program.

One program or two?

I had not planned on writing quite so soon about bone marrow transplantation, but in doing my background work on U.S. News & World Report’s designation of the James Graham Brown Cancer Center as a regional high-performing cancer program, I learned that the Center has just recruited a new director for their bone marrow transplant program. Dr. William Tse is an experienced clinician and academician, was recruited from West Virginia University, and will begin in Louisville in early November. This was a fast, high-priority recruitment for the University of Louisville and the Brown Cancer Center following the loss of several clinical and research faculty faculty to the University of Kentucky, and a requirement for a minimal number of specifically-trained physicians to retain essential accreditation. Bone marrow transplantation, part of the growing field of cellular or stem-cell therapy, currently plays important part in the treatment of leukemia and other malignant diseases, and of inherited genetic disorders. Cellular therapy comprises a prominent part of the University’s commercial research portfolio.

Things looking up?
I had the opportunity to speak with one of the program’s current physicians who is optimistic about the future of the program. Although I was not given the updated procedure numbers for the two programs, I am told that they are on the way back up, as are are the numbers of clinical research protocols planned. Here is a chart updated with numbers of bone marrow transplants in 2013 as reported to the state. Continue reading “UofL Hires New Director for Bone Marrow Transplant Program.”

University of Louisville Hospital Designated as Best Regional Hospital for Cancer in Louisville.

Kudos to my colleagues at University Hospital.

jgbcancercenterI recently wrote about the disappointing representation of Kentucky’s hospitals in this year’s 2015 version of US News & World Reports list of Best Hospitals. Of Kentucky’s approximately 130 acute-care hospitals for adults, not a single one achieved national ranking in any of 16 different specialties. Nine Kentucky Hospitals were designated as a “Best Regional Hospital” by having one or more of 16 specialty services considered “high-performing” as defined by scoring in the top quarter of all eligible hospitals for that specialty nationally.

I went on to discuss what are in my opinion some of the difficulties and shortcomings of current attempts to rank hospitals for quality and safety. I reinforced US News’s stated intent that their program was designed to identify hospitals best suited for the most difficult cases where the services of large, high-volume teaching hospitals with abundant in-house technology might make a difference. Hospitals not on their lists may still provide high quality routine care. With a focus on cardiology and cardiac surgery, I also discussed how the mix of data elements examined can boost or diminish a given hospitals standing [and perhaps even add fuel to the current technology arms-race among hospitals]. Continue reading “University of Louisville Hospital Designated as Best Regional Hospital for Cancer in Louisville.”

Recent Court Decisions Impact University of Louisville Hospital.

Same-sex marriage advances– hospital secrecy recedes.

While I am sure it is coincidental, I find it ironic that on the same weekend the Supreme Court refused to take on the same-sex marriage issue in Washington– thus making such marriages legal in 11 additional states– the Kentucky Court of Appeals ruled that University Medical Center Inc. is indeed a public agency. I wondered what was happening to that lingering litigation. I will try to assemble and post the various briefs from the trial and appeals courts and try fill in the gaps. The opinion gives a useful overview of hospital history. Read it here. Continue reading “Recent Court Decisions Impact University of Louisville Hospital.”

Why Is There Only One NCI Cancer Center in Louisville?

In Reporter Michael McKay’s account of the UofL Board meeting earlier this month when progress towards the University’s 2020 Plan was summarized, and when the post-fraud “Audit” was formally presented; President James Ramsey commented on the University’s failure to earn a National Cancer Institute (NCI) designation for its James Graham Brown Cancer Center. Dr. Ramsey stated that it was unlikely that UofL would receive an NCI designation because the UK program is so close. (The Markey Cancer Center at the University of Kentucky was designated as an NCI Comprehensive Cancer Center in 2013.) Dr. Ramsey is said to have implied that UofL had been in talks for some sort of “partnership” with UK before that institution went on its way alone. These comments sound more to me like excuses than explanations. I found nothing in the NCI application documents that would indicate that distance from another center would be a factor. Indeed, depth of collaborations with other research and clinical centers is highly desirable if not essential.

Continue reading “Why Is There Only One NCI Cancer Center in Louisville?”