KentuckyOne Health Buys Largest Block of Land at Dupont Medical Center

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The plot thickens, but what is the plot?

It seems like the juiciest news stories break when I am out of town. Last week, John Karman and David Mann of Business First, and Sheldon Schafer of the Courier-Journal informed us that KentuckyOne Health was purchasing additional land at the Dutchmans Lane/DuPont Circle medical center in eastern Louisville. The purchase price has not yet been disclosed.

I have been waiting for this other shoe to fall. This acquisition gives KentuckyOne Health control of a huge block of land making up fully one half of Dupont Circle adjacent to its existing Jewish Hospital East facility. The total land now held rivals the amount occupied by Norton Suburban Hospital. I haven’t seen any contracts yet (and do not expect to), but I understand that some sort or purchase agreement has been prepared and that the sale “won’t be completed for three years in order to honor the leases of the 15 tenants in the center.”  (I did not think that closings could be delayed that long.)  As it happens, all but two of the lots on that half of Dupont Circle are owned or controlled by realtor and former University of Louisville Trustee, Sandra Metts. In my opinion, the sale of land to UofL’s best new partner has never been in serious doubt.

Updated land-use map.
aerial-vew-1000I prepared a detailed updated map of the area showing existing plot lines. (You may also click on the thumbnail to the right for a different but unlabeled aerial view.) All the lots shaded yellow are now controlled by KentuckyOne Health or Jewish Hospital. You can refer to an earlier article describing other acquisitions and a photo gallery of existing buildings. The largest new acquisition, labeled as 4008 Dutchmans Lane, contains the Village 8 Movie Theater and a strip of commercial spaces along Dutchmans Lane. The new block stretches all the way from Dutchmans Lane on the north to Dupont Circle on the south. The reports referenced above tell of a 6.5 acre transfer, but the 4008 lot contains only 5.3 acres. Since the two lots currently in the parking lot labeled 1111 and 3901 Dupont Circle (shaded in lighter yellow on the map) are controlled by Ms. Metz, I assume that they are also being sold as part of the deal.

This leaves only two lots in the western half of Dupont Circle not yet under control by KentuckyOne or Jewish Hospital. There is an operating restaurant on the northwest corner (labeled R) and a strip of partially occupied commercial spaces on the southern corner including a print shop and a hairdresser (labeled C). Also not yet under KentuckyOne control is the strip of commercial development along Dutchmans Lane contiguous with 1108 Dupont Circle and Jewish Medical Center East. Individuals in several businesses have told me of efforts to acquire them and they assume it is just a matter of time.

Most of the remaining lots around Dupont Circle contain some kind of medical or dental offices with the prominent exception of a block of residential condos in the southwest corner. According to residents there, Jewish Hospital made some overtures to acquire the complex in the past, but as there are many owners to deal with, this was not possible at the time. With the deep pockets of a potential new buyer and an increasingly difficult residential environment, who knows what will be possible in the future.

The largest block of land not under control of KentuckyOne is the 6.1 acre lot adjacent on the south of Jewish Hospital East abutting the Waterson Expressway. It is owned by Louisville Gas and Electric and contains utility infrastructure. I have no idea if that will ever be in play for medical uses, but then again, the Yum Arena displaced a similar facility.

On-site inspection.
During a field trip this week, things looks pretty much as they did last March. The buildings at 1108 and 1110 remain empty-looking. The old Vogt office tower at 4000 Dupont also still looks empty, although I was told that some sort of renovation might be occurring on the top floor. The missed-delivery parcel notice to a UofL address that I saw in June is still lying on the floor of the entrance. The only thing different is that its parking lot, which was previously full of the cars and trucks of workmen building the new Norton Hospital, was now empty. It appears that those workers are now parking accross the street on the lot of the former Oliver’s Billiard Parlor. That building was purchased by KentuckyOne and its former occupant displaced. It now has rather abandoned look. Terry Boyd of Insider Louisville speculates that the 4000 Building is a good candidate for KentuckyOne’s corporate headquarters. I think that is quite possible, but I still believe it is also targeted for the private offices of UofL and other physicians.

Where will KentuckyOne go from here?
The big question is, what is KentuckyOne Health going to do with all this land? It is no secret that KentuckyOne wants to build a new hospital complex out in the well-insured Louisville suburbs. Is also no secret that downtown Jewish Hospital is taking a beating financially. Many of the legacy medical staff have been leaving and taking their patients with them. A strategy of turning Jewish Hospital over to the private practices and control of the physicians of the University of Louisville seems not to be working very well. The hospital is still losing money. It has been difficult enough to get the UofL practices to play well together, let alone merge their activities with community practices. If KentuckyOne is to survive in Louisville, it needs a hospital that will be profitable. [I have no idea what is happening at KentuckyOne’s Sts Mary and Elisabeth Hospital in south Louisville. It is linked at the hip with Jewish and rarely in the news.]

Race to the east?
If it has not already done so, KentuckyOne must have some difficult decisions to make. Up to now, individuals with the best medical insurance live in eastern Louisville. For the 30 years in which I have been living in Louisville, Louisville’s hospital corporations have been moving to the eastern suburbs to be of service and are still doing so. The downtown Baptist Highlands closed and without the challenge of serving many of the disadvantaged, Baptist East has soared. The downtown Methodist Hospital closed and was purchased by Norton. Norton also purchased the former Humana hospitals, closed its hospital in southwest Louisville, built a new one on the Jefferson Expressway, and is currently finishing a large new hospital for women and children in the same Dutchmans/Dupont Medical Center that is the subject of this article. I also remember St. Anthony’s Hospital downtown that closed (now Vencor) ultimately leaving south Louisville’s Sts Mary and Elisabeth as the only “formally” Catholic hospital in Louisville.

Several new suburban outpatient medical centers owned by KentuckyOne, Norton, and Baptist further draw away patients who might otherwise have come downtown for diagnostic and therapeutic services. This is what happens in an uncontrolled competitive medical marketplace. Three cheers for the free market! Having winners and losers is what progress is all about– yes? The bummer is that we of the public must live with the consequences, including mal-distribution and duplication of services, bad traffic at popular street corners, and higher costs.

Sit tight or roll the dice?
Should KentuckyOne sit tight on its downtown and south Louisville hospitals and hope that Obamacare will provide more paying patients, and that the University of Louisville will be able to deliver on its promise to steer patients its way? Should it start building a new hospital at Dupont Circle as soon as possible so as not to lose more ground to its competitors regardless of the impact on traffic or the surrounding area? A problem with going all in on Dupont Circle is that if construction cannot even begin for three years, the hand may be over by then. Perhaps it is possible to convert all or part of Jewish Hospital East from an ambulatory center into an actual in-patient hospital.

Should KentuckyOne it leapfrog out to its existing land on Old Henry Road and take the risk of sucking air while waiting for residential development to catch up? (Norton is already out that far and doing well.) Are there other sites that KentuckyOne is contemplating? (I rather doubt that it or any other hospital corporation is making plans to build a new hospital in Louisville’s West End where such a facility is badly needed.) I do not envy KentuckyOne’s predicament, but its parent corporation, Catholic Health Initiatives, has had deep pockets up to now and presumably is in it for the long run. Who knows what creative minds and willing partners might come up with.

Status quo not so hot either, at least for the public.
In the meantime, as long as KentuckyOne has the cash to hold the properties at Dupont Circle, it is ahead. I learned during my stint as a government affairs officer that in the political game, the only thing better than doing something good yourself, is making it more difficult for the other guy. Machiavelli and Sun Tzu probably had similar maxims. By holding on to this valuable land at Dupont Circle, it is unavailable to KentuckyOne’s competitors or other potential users aligned with them. So much for a coordinated or cooperative system of healthcare. Being a good neighbor need not necessarily be part of the equation. As far as I know, other hospitals have tried to do the same. Regardless, the result can be an expanding commercial eyesore and a ghetto of unused and effectively abandoned facilities in the heart of St. Matthews with attendant loss of tax revenues for the community. Obviously something different will happen. Reasonable and responsible people will not allow such a situation to persist.

As usual, if I have made an error of fact, please help me to correct it. If you have information that would be of use to the public, please leave a reply below, or contact me confidentially.

Peter Hasselbacher, MD
President, KHPI
Emeritus Professor of Medicine, UofL
November 4, 2013

2 thoughts on “KentuckyOne Health Buys Largest Block of Land at Dupont Medical Center”

  1. Learned yesterday that the big pow-wow for December 2 was cancelled. Apparently KentuckyOne was not prepared to answer the questions that had been asked by its staff. It is difficult to avoid speculating that things are not going well at a once proud hospital. I also hear that initial efforts to turn several services such as the ICUs and the emergency room over to University physicians did not go well. More details would be appreciated. Please comment or email me confidentially.

  2. I am beginning to hear confidentially from employees of KentuckyOne Health.

    Jewish Hospital is said to be limping along with at least three wards closed, but Sts. Mary & Elizabeth Hospital is in much more trouble. (We already knew from verified financial reports that the hospital pair were continuing to lose large amounts of money.) The plan, as my sources understand it, is to move the beds of Sts. Mary & Elizabeth to the existing Jewish East Medical Center. Apparently some thought was also given to moving some or all of the beds to Jewish Hospital Northeast. Expanding the capabilities of existing outpatient units would solve the problem of a long delay to build an entirely new one on land not yet entirely vacant.

    These new comments confirm earlier things I have heard, and solidify my earlier speculation based on land purchases and precedent. I rather hope all this wrong, as abandoning or diminishing another inpatient unit in southern Jefferson County would leave the whole of western and southwestern Louisville without a hospital. Norton Audubon and the downtown hospitals will have to take up the slack.

    Additionally, I was told that the leadership of KentuckyOne and UofL will hold a forum on December 2d to discuss with their combined medical staff the future of their jointly managed downtown medical facilities. What I do not know is whether KentuckyOne and UofL are ready to show any of their cards, or whether this will be a team-building exercise to gather advice and help to bring the two orbiting groups of physicians closer together. Dr. Charles Peck, Interim President of Jewish Hospital, previously espoused a policy of abundant disclosure of hospital plans to its partner physicians. I agree that it is about time to see some of this in Louisville and I am sure both physicians and their patients are eager for the news.

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