Federally Mandated Postings of Standard Charges by Louisville Hospitals Are Unusable for Their Intended Purpose.

(But will reveal the the unacceptable and unjust absurdity of how we pay for medical services.)

Reporter Gilbert Corsey of WDRB was, to my knowledge, first on the block locally to take public look at the implementation of a newly enforced federal law requiring hospitals to publish their Standard Charges online. Originally part of the Affordable Care Act (a.k.a. Obamacared) as turned into regulation last year,, the stated purpose was to allow the public to compare the cost of services and choose wisely among hospitals before they incur responsibility for payment. An overlying expectation (?dream) was to improve quality and decrease costs. Hospitals bitterly protested implementation of this law.

Mr. Corsey’s reporting verified the expectation that charges amoung neighboring hospitals can vary greatly. For example, an uncomplicated birth at one Louisville hospital was priced twice as high as another, and an injection of a drug used for prostatic cancer varied threefold. Corsey’s report also concluded that the published lists are confusing and difficult to decipher. I agree. I will go further and argue these lists are essentially worthless for their intended consumer purpose – surely knowingly so. Their value however for unintentionally making the policy point that, like pricing for pharmaceuticals, hospital pricing and billing exists in a logic-free, Alice-in Wonderland zone to the detriment of the public. Allow me to explain. Continue reading “Federally Mandated Postings of Standard Charges by Louisville Hospitals Are Unusable for Their Intended Purpose.”

Can Jewish Hospital in Louisville be Saved? Perhaps Not.

If not, what then?

Surely the end-game of the years-long efforts of Catholic Health Initiatives and KentuckyOne Health to sell some or all of their hospitals in Louisville must be coming to a climax. Transferring management of University of Louisville Hospital to KentuckyOne– a move that turned out badly for both institutions– was always as much or more about saving Jewish than ULH.  Many outside entities came to kick the tires of what KentuckyOne wanted to sell but walked off the lot.  The last acknowledged potential buyer whose keys KentuckyOne was holding was the tag-team of the private equity firm Blue Mountain and its spinoff for-profit hospital management company, Integrity Healthcare– now majority-owned by for-profit Nantworks Companies and Nantworks owner Dr. Patrick Soon-Shiong.  Sound complicated?  It is!  Casting a very dark curtain over this potential transaction in Louisville is last week’s announcement that Blue Mountain & Co.’s first and only attempt to take over a failing non-profit Catholic hospital chain in California has failed– the hospital system has filed for bankruptcy. These six Verity Hospitals (formerly the Daughters of Charity) might be bought by their communities, taken over by others, liquidated for their assets, or otherwise close.  I cannot avoid concluding that the same result would occur in Louisville and for much the same reasons.

CHI has played this one very close to its corporate chest. Fanned by anxiety about the future, rumors have been flying in increasingly disparate and desperate directions ranging from “Blue Mountain” has taken a second look and will sign on soon; or Blue Mountain has walked away for good; or that Nantworks and Dr. Soon-Shiong will move forward with the deal without Blue Mountain; or that CHI will give Jewish to the University for a song; and even that one or both of the sister Jewish & Sts. Mary Hospitals will soon shut its doors.  None of the potential players is in a strong place right now as I will outline below.  The one thing I am sure of is that the ground under the downtown hospital complex is going to quake hard, and that secondary seismic activity will be felt out in the county and beyond.  The Louisville Community is going to have to make some public health decisions that are both difficult and expensive. Continue reading “Can Jewish Hospital in Louisville be Saved? Perhaps Not.”

How Close Really Is KentuckyOne Health To Selling Its Louisville Assets?

Catholic Health Initiatives (CHI) just published its financial report for the first quarter of Fiscal Year 2018– the three months ending Sept 31, 2017.  One initial media report led with what CHI would no doubt wish to emphasize, that the company has cut its “quarterly operating loss by more than half.”  The actual reported system-wide loss from operations in Q1-FY2018 was $77.9 million compared to a loss of $180.7 million in Q1-FY2017. This change is being attributed chiefly to more efficient purchasing and to decreased labor costs.  Indeed, CHI reported a decrease of 2,667 full-time-equivalent employees over the quarter.  Whether such cuts are healthy for the company in the long run remains to be seen.  I await more expert financial analysis than I am able to offer and to see how the financial markets or potential new partners or asset-purchasers react.  It appears these latter are not being hasty.  As I plow through the numbers, I see many other measures going in what appear to me to be the wrong directions.

The report gives special attention to what has been going on here in Kentucky.  [I extracted all mentions of Louisville or Kentucky from the 61-page report into a separate document available here.]  The percent of operating revenues contributed from the Kentucky Region was 7.5% this last quarter compared with 16.2% in 2013. This represents a drop from 2d place to 5th place among the 11 or 12 regions or operational segments.  Perhaps the most newsworthy item is the first notice of which I am aware that the anticipated (hoped for?) date for a closing on the sale of CHI’s KentuckyOne Health facilities in Louisville has been put off six months to June 30, 2018.  A reasonable person might conclude that KentuckyOne is having a difficult time finding a motivated buyer for its hospitals, outpatient medical centers, and physician practices here in Louisville.  I am not surprised. The return of control of University of Louisville Hospital to the University has not improved the financial performance of Jewish/Sts Mary & Elizabeth Hospitals.  With respect to apparently continuing discussions between CHI and Dignity Health to align their activities, the report uses the same language it did at the beginning of this year.  No substantive indication is given as to how things are going.  Although some media reports use the word “merger” to describe the process, that word seems to be carefully omitted in accounts by CHI itself. Continue reading “How Close Really Is KentuckyOne Health To Selling Its Louisville Assets?”

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”