The Battle for Ownership of Norton Kosair Children’s Hospital.
I do not have a feeling for how this is going to turn out, but the University of Louisville has loosed its dogs of war and nothing will be as it was. Perhaps that is for the good, because the existing structure of the downtown medical center was becoming more and more dysfunctional. Much of what is being aired now in terms of accusation and response is targeted to the media and public opinion. Ultimately a solution will be based on previous agreements to the extent that they are still valid and rational, and, if there is any reason and justice in the world, what our state government leadership judges is best for the citizens of Louisville and the Commonwealth.
After approving and even endorsing the partnership between the University of Louisville and Catholic Health Initiatives/KentuckyOne Health in which the University gave up significant pieces of its academic, clinical, and research independence, Kentucky’s Governor and Attorney General promised us they would monitor how the University of Louisville handled its subsequent affairs. Now is a good time to do so! I have already called for an unwinding of the current partnership structure for other reasons.
While the initial legal and political maneuvering in the background goes on, and in the absence of any inside information at all (Hint, hint!), I begin here to analyze available documents that are said to control our community’s future. In this with additional documents, I will pose questions for which I think the pubic deserves answers in order that it will be able to express it own reasoned opinions to the parties involved, including to our public officials.
In the first (and earliest) document available to me, I find no requirement that Norton Healthcare operate a children’s hospital to the exclusive benefit of any entity within the University of Louisville. Indeed, any benefit is assigned equally to all citizens of Kentucky. Neither do I find in this initial primary document that the lack of an affiliation agreement voids the lease held by Norton. Circumstances that may have made sense 30 years ago have changed dramatically. No party in the current confrontation deserves to be held hostage by the other.
Summary and Analysis:
The only primary document I have available at the moment is the “Agreement” of August 12, 1981 that is referred to by the “Notice of Default and Demand for Cure” presented to Norton by the University of Louisville on Aug 27, 2013. Although this document appears to be referred to in media reports as the “Lease” underlying the current partnership, it is more precisely an agreement to enter a lease. It is a short document of only some two pages of double-spaced, large-typeface text. It contains only 3 “Whereas” and 4 “Now Therefore” clauses. You can download a copy here. (340 KB)
Whereas #1: Intention to Build
Who owned the land?
The first “Whereas” simply states that NKC, Inc. (the corporate name of the Norton Healthcare in 1981) wishes to construct a new pediatric hospital facility on part of the grounds of the old Louisville General Hospital. It states that the land is “owned by UofL.” This of course will be one of the main points of dispute. Whose land was it to be leased? Was or is UofL really “an agency of the Commonwealth of Kentucky” as is defined in the document’s introductory paragraph? Was the document prepared based on an incorrect assumption of the status of parties?
Is UofL private or public?
I find this clause to be terribly ironic. Is UofL willing to claim today that it is an “agency of the Commonwealth”? Seems to me it has been going out of its way to claim the opposite– that it is a private corporation. As an agency of the Commonwealth, it is responsible to, and under the direction of Kentucky government, including its Governor. Is Norton presently struggling against state government, or against a business competitor? Is it fair to Norton and the public that UofL can work both sides of the fence depending on which posture is most beneficial to it at the moment? How far does the authority of the Governor go in settling this matter in the public interest?
Whereas #2: Whose Interests must be served?
This is a clause that lies at the very heart of the dispute. UofL is claiming (variously depending on whose version you read) that the hospital must be operated in the interest of the Medical School, the University, the Department of Pediatrics, or the faculty of the Medical School. The actual language is as follows:
“Whereas, it will be to the mutual interests and benefit of the parties hereto, in the conduct of their respective programs, that said new pediatric facility be constructed on said property where it will provide pediatric care, service and education benefitting the U of L Medical school and the citizens of the Commonwealth of Kentucky;”
It seems chiefly on the basis of this language that UofL seeks to oust Norton from the children’s hospital they built, maintained, and ran for the past 30 years. To my reading, no such grounds are present. There is absolutely no mention here of exclusive benefit to the University of Louisville. To the contrary, equal benefit is due to the citizens of Kentucky whether they live in Louisville or not. It seems to me that increased cooperation with the University of Kentucky of fits easily under this umbrella. Surely the two largest Kentucky Universities can play nicely together. In fact, if you really want to serve the citizens of Kentucky, why not draw in the Osteopathic Medical School in Pikeville? There have long been precedents of multiple medical schools working within the same hospital.
There is no mention whatsoever of the interests of the Shriners who helped found the hospital, attached their name, and continue to help fund it. Have they no say at all any more?
If this matter was all about “pediatric care, service, and education,” why are we not seeing the Dean of the School of Medicine in the forefront ot this debate? Dr. Toni Ganzel, pediatrician and Dean, has excellent credentials in these areas and should be the University’s standard bearer. Instead, this matter is being run from the President’s office. In my opinion this is more about consolidating UofL’s relationship with KentuckyOne Health, funding the UofL Research Foundation, and meeting fundraising goals than it is about education and training. Otherwise reasonable people would have settled this mess long ago.
Whereas #3: Intention to enter into a lease.
This item is a simple statement that “NKC wishes to enter into a long term lease of said property from U ofL.”
The “Now Therefores” are a combination of the profound and profane.
Therefore #1: Observers at Board Meetings.
This clause contains the language that promises to continue NKC’s practice of inviting a representative of the School of Medicine to its Board of Directors and Executive Committee meetings in order to “assure full and open communication between them.” In addition, NKC “invites a member of UofL’s Board of Trustees to regularly attend these meetings.” This individual is selected from a list of three submitted by UoL. There is no mention of a reciprocal invitation of representatives from Norton to attend UofL meetings.
I do not know how this privilege has been requested or honored over the past years. Perhaps it has been abandoned and is no longer relevant. While this level of access to operations may have made sense once, it certainly does not now. Norton’s Board structure and responsibility has changed considerably. Instead of a single Louisville Hospital, today it has five, as well as many other affiliated business activities. Both Norton and UofL have a variety of “Boards” with different responsibilities. Norton-Kosair Children’s Hospital Advisory Board is a different animal from full board of a health system of which Kosair is only one of many business lines. No rational authority would insist that Norton inform UofL of its plans at Audubon or another Norton Hospital. I believe it is access to the Kosair Advisory Board that is the most relevant today. The claim of blanket privilege is in my opinion a straw man, but it may prove difficult to resolve.
UofL has changed too. It was in 1981 a minor clinical school of medicine with a mostly private-practice clinical faculty. Today it places its highest priority on its commercial research enterprise and has delegated responsibility for the bulk of its clinical activities to Norton’s most bitter clinical competitor, and to a brand new faculty private practice organization that is promised to the service of KentuckyOne Health. UofL also has a variety of connected Boards, the internal activities of which it seeks to keep secret.
The willingness to assure full and open communication was once generous, but now is suicidal. A senior spokesperson for the University of Louisville complains bitterly that Norton proceeded in secret with its plans to cooperate with the University of Kentucky. I do not know if this is true or not, but UofL’s outrage is in my opinion supremely hypocritical. In my personal experience, the University of Louisville wrote the book on secrecy in its operations and planning. Did UofL tell Norton ahead of time that it was making plans to transfer its pediatric activities to Catholic Health Initiatives? This seems to me to be the deal-braking breach, and one with substantial damages to Norton. I have been told that from the very first plans to merge with CHI, UofL knew it had a problem of what to do with Norton and Kosair Hospital. In my opinion, the present confrontation is serving as UofL’s solution.
If “full and open communication” was really important to the University of Louisville, it would reciprocate and invite a representative and Board member of Norton to attend the Board and Executive Committee meetings of the University and KentuckyOne Health! Of course, the current confrontation is not about full and open communication, is it?
Therefore #2. Parking places for UofL.
The new children’s hospital was built on a parking lot. Norton promises to provide 200 parking places to UofL to be assigned at UofL’s discretion and offered at best customer rates. (Having a good parking place is one of the most valued perks the University has to bestow. It would say a lot about priorities to learn who got those spaces. My congratulations to UofL if those spaces were offered to its patients, students, or those actually using the children’s hospital.)
Therefore #3. Affiliation Agreement.
In two sentences, NKC agrees to “review and update” the current agreement of Dec 12, 1962. “This agreement covers the long-standing relationship between Children’s Hospital (now Kosair-Children’s Hospital Division of NKC) and U of L, particularly the Department of Pediatrics of U of L’s Medical School.”
No provision for ongoing management or future revisions of an affiliation agreement is contained in this document. Nor is there any statement incorporating an affiliation agreement into the terms of a lease. UofL is now claiming that lack of a current affiliation agreement is grounds for voiding the hospital lease. Perhaps such language is to be found elsewhere. I do not see it here.
Therefore #4. Approval by the Commonwealth.
In the final “Therefore,” UofL promises to “recommend and seek to obtain the approval and authorization by the Kentucky Department of Finance to the execution by the Commonwealth of Kentucky of a Lease in form substantially as attached here, as a part herof…” In exchange, Norton promises to make a grant to the University of Louisville Foundation of $592,042– the full appraised value of the property.
Finally, the document is signed by the Presidents of the University of Louisville, and NKC, Inc.
Too Bad, So Sad.
Obviously there are other documents out there with additional language. Send them to us if you can. I suspect this process of claims and counter-claims will play out in court and in the political arena for several years to come. A burning-of-bridges policy has turned into a scorched earth one. In the meantime, the Louisville community will continue to be embarrassed by coverage in the national media while our children are used as chips by the University of Louisville in a self-serving game of poker. Don’t we deserve better from non-profit organizations that claim to serve the public?
Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
September 4, 2013