Is the University of Louisville a Scofflaw? Or Just Ethically Confused?

I have been unsettled by the University of Louisville’s unseemly rush to have its own takeover by Catholic Health Initiatives approved before the overriding issue of whether it is a private hospital or not works its way through the courts.  My discomfort is amplified because I have seen the University do this kind of thing before.  For example, it was reported publicly that the University plans for finance the construction of a new instructional building  for its medical school with tuition increases, especially for non-resident students.  (Most of us think that medical students already graduate with exorbitant debt that distorts their career choices.)  The University plans to increase its proportion of out-of-state medical students to leverage this unconstrained source of income.  I was surprised to see the Medical School admit that it already has 25% non-resident students despite a Kentucky state law that specifically limits such students to 15%.   If the University does not like a law, it has the right to try to change it, but not a right to ignore it.  Because I believe this pattern of behavior is relevant to the current merger-mania, I wrote to the Attorney General of Kentucky about the matter.  The text of my personal letter is below, and its supporting documents are available here.

Dec 20, 2011
Attorney General Jack Conway
Capitol Suite 118
700 Capitol Avenue
Frankfort, Kentucky 40601-3449

Re: Acquisition of University of Louisville Hospital by CHI

Dear Attorney General Conway,
You are aware of the proposed acquisition of University of Louisville Hospital by Catholic Health Initiatives and its previously acquired hospitals in Louisville and elsewhere in the Commonwealth.  The justification for this remarkable transfer of a public asset to a private religious one is the claim by the University of Louisville that its hospital is a private entity– not withstanding the opinion of your office to the contrary.  The University and its Hospital appear to be ignoring your opinion and moving swiftly to close the deal, making moot the determination of the public vs. private issue.  I wish to draw your attention to a major stated justification of the University’s plans whose solution under the proposed merger appears to be illegal according to Kentucky law. This would render impermissible a major planned implementation of the merger and adds to the increasingly complicated legal issues that should be settled before the acquisition is allowed to proceed.

One of the major claims by the University to justify acquisition by CHI is that the relationship will allow the new partners to increase physician manpower across the state.  How this is to be done, why it requires merger, and why this is should be a primary responsibility of the hospitals has not been revealed.  In preparation, the University of Louisville Medical School has announced that it has increased its class size, and will continue to do so by targeting out-of-state medical students.  It is reported that the current class already has 25% out-of-state students (40 out of 160 students).

However, KRS 164.475 clearly states that the medical schools of Kentucky shall not exceed 15% non-resident students.  To my understanding this is still controlling state law.  The UofL School of Medicine was aware of this law before it began to target the out-of-state students, done principally to collect higher out-of-state tuition payments.  I believe this is another example of the University acting even when the legality of a plan is in doubt, hoping that they are not held accountable afterwards.  So it may be with the CHI acquisition.

Perhaps I am incorrect.  Perhaps the University found a way to work around the Kentucky statute.  If so, I hope you will give me advice on the matter.  If I am incorrect, I owe the University of Louisville a public apology.  If I am correct, I urge you and the Governor’s office, for this reason and other more critical ones, to slow down this run-away train of public asset transfer until all the legal issues have been settled.

Peter Hasselbacher, MD


KRS 164.475;   Courier Journal Article of Aug 23, 2011