UofL and KentuckyOne Agree to Extend Their Academic Affiliation Agreement Another Four Months.

Barely within the statutory requirement for a response to an open records request, I received two critical pieces of the new contractual agreements between the University of Louisville and KentuckyOne Health that extend the current terms of their Academic Affiliation Agreement (AAA) and Master Support and Services Agreement (MSSA). These documents define the conditions and financial arrangements between the institutions for another four months with an option for automatic renewals. The extensions give some breathing room to the organizations currently working behind the scenes to determine the future of KentuckyOne’s operations in Louisville and simultaneously protect the ability of UofL to place students and trainees at Jewish Hospital and Fraser Rehabilitation Institute while simultaneously allowing Jewish Hospital (and Sts. Mary & Elizabeth) to maintain their status as a teaching hospital for Medicare purposes.

The AAA extends the financial obligations of KentuckyOne to the University until April 30, 2019 at the existing prorated monthly amount of $1.98 million for a total of an additional $7.92 million. This is a blessing for financially strapped UofL. The attachments to the agreements that I requested were not provided leaving me to assume that the intended ultimate beneficiaries of the continuing financial support remain unchanged. (Previous versions of Attachment-C contain a lot of personnel details so I will not to post a copy here.)

The two agreements referenced above are interlocking and these second amendments reinforce their connection.  Specifically, item 3 of the AAA notes that its Exhibit C is amended by adding the “Second Amendment to Master Support and Services Agreement.”  Linking the documents together makes sense, but I am not exactly sure what that looks like in final print, and I do not understand the reasons for changes in term-lengths of the Agreements.  The major clause in the new MSSA allows the agreements to automatically renew for periods of 10 months (up from the previous 6 months of potential auto-renewal) further deferring any last-minute anxiety for the concerned!  (There are several versions of earlier AAAs in circulation. The new language appears to amend Section 8.1 of the previous first amendment to the AAA by deleting and replacing its second sentence. In the original version of the AAA available to me, Section 8.1 contains only a single sentence! Any confusion is probably only mine and I will clarify later for this record if I can.)

Final Comment.
The extension of the agreements was, as I argue previously, critically important for the integrity of the two institutions. Obligations to students, trainees, and patients alone are manifestly inviolable. I commend KentuckyOne for shouldering its responsibility which will certainly present challenges. Its parent organization, Catholic Health Initiatives (CHI), has been under financial stress for some time and which I suspect has complicated its intended merger with Dignity Health anticipated at the end of this month. The long-sought goal of CHI to sell QualChoise, its poorly performing health insurance division, was recently announced and which may give the corporation some temporary room to maneuver financially.

As desirable as the extensions to the current Agreements are, the can is only being kicked further down the road. I have no information or prediction of what is yet to come. It is not clear that Blue Mountain Capital is currently the only party negotiating with KentuckyOne to buy its Louisville hospitals, or to what extent UofL will succeed in finding the money or a partner to take over (and at what non-financial cost).  We are still wandering in the dark woods without even a trail of breadcrumbs to follow. Not all fairytales end well for their protagonists.

Peter Hasselbacher, MD
Emeritus Professor of Medicine
President, KHPI
January 8, 2019

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