What Will Louisville’s Medical Landscape Look Like in 2019?

Isn’t it about time that the curtain is raised a little?

As we enter the new year, many anxious folks in Louisville are waiting to learn about the status of a proposed sale of KentuckyOne Health’s Louisville assets, and what that will mean to the University of Louisville and its Health Sciences Center. The University and KentuckyOne had an existing, multiply-extended, Academic Affiliation Agreement that would have expired December 31, 2018. This critically important document and related agreements defined the financial, administrative, educational, and clinical relationships between Jewish Hospital and the University. A valid Affiliation Agreement is essential for Jewish Hospital for Jewish and Sts. Mary & Elizabeth Hospitals to claim the financial bonuses and other advantages of a Medicare teaching hospital. An Academic Affiliation Agreement is equally important for the accreditation of the Medical School if it wishes to continue to train students and residents in Jewish Hospital or document that it has adequate clinical teaching facilities for its family practice and all its specialty programs. These are no small details.

The language of the Agreement of 2018 specifies that KentuckyOne will do nothing to jeopardize the license or accreditation of any of the University’s programs within KentuckyOne facilities. Closing its doors or even terminating services would be such actions. KentuckyOne also promised not to transfer the Affiliation Agreement to a third party without the written consent of the University. Since the previous Agreement includes substantial financial payments, the University could be forgiven for not being willing to sign off on whatever is happening (or not happening) between KentuckyOne and Blue Mountain Equity, its business partners, and its investors. I would therefore not be surprised if the existence of previous Agreement in at least some ways limited how KentuckyOne was able to go forward in its attempt to sell its teaching hospital.

KentuckyOne’s parent company, Catholic Health Initiatives (CHI), has once again delayed the closing of its planned merger with Dignity Health– now promised at the end of January, 2019.  Given the ongoing substantial financial losses from KentuckyOne’s Louisville assets adding to CHI’s other operational losses, I would not be surprised if the further delay in a merger was due at least in part to the uncertainty of what is happening in Kentucky.

The University is finishing a disastrous decade of mismanagement and scandal. Its budgets are being slashed; its clinical practices hold substantial debt. It is been reported that a request to the state for financial assistance was rebuffed, indeed rebuffed with prejudice! Nonetheless, there is a recent blockbuster report by Boris Ladwig of Insider Louisville that the University itself is moving to enter negotiations with KentuckyOne to acquire some or all of its the Louisville assets. It is reported that UofL is actively looking for a “partner” with which to make a deal.

At the same time, UofL has hired Tom Miller, an experienced healthcare administrator to oversee the medical center’s overall clinical operations. Given voids in leadership and a lack of relevant experience on the part of the University’s President and Board, this was an essential hire. Seems like a good idea to me no matter what is going to happen. More hires will likely be needed. To acquire “all the assets” or even some of them will take big money. However, the thought of yet another outside partner gives me the shivers. In my opinion, none of the multiple partnerships since 1984 with for-profits and non-profits alike have worked out to the University’ s advantage– indeed these have set us up for failure and perpetuation of a two-tiered healthcare system. The University, its Medical School, and its other healthcare operations need to be able to set their own priorities and call their own shots that follow the highest ethical standards that we would teach our children. The ideal solution would be for the state or city to put up the finances for what is necessary. That seems most unlikely given current politics and community dynamics.

In a perfect world, there are at least parts of the KentuckyOne assets that the University of Louisville should be able to acquire or use. In my dream world, a University of Louisville healthcare system would be a resource equally available to the community and healthcare providers in the region and where access to patients would be through a single door with the same standards and environment of care for all. One place for poor people and another for those who can pay is not right. A state school is after all a community resource– yes? Unfortunately, healthcare citadels and silos within the county and state are the name of the game.

It will take more than a rabbit out of a hat to solve our community dilemma. Mr. Miller, the new Medical Center “CEO,” has inherited a thorny problem. He will need time to study the clinical landscape and explore the degree to which the Governor and his entirely hand-picked Board of Trustees (and the Trustees appointed University President) are willing to let him lead. As long as the Governor’s office can bully a University or its hospital about what can be said, or who and what relationships and contracts can be entered, I predict a prolonged disaster from which an independent University of Louisville Medical School is indeed in jeopardy.

I gave written a good bit about these issues in the past. Not having seen a letter of intent to purchase from the University, or even a new Academic Affiliation Agreement, I can offer nothing new. Surely something has to happen– and soon– but such predictions have been made before. Jewish Hospital is not likely to close in the next month, but the end of that story has not yet been written.

Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
President, KHPI
2 Jan 2019

Addendum:  A copy of the Academic Affiliation Agreement with all its attachments available here>  (3.1 MB, 155 pages)

I asked UofL for a copy of what I assume must be a new AAA.  I am told I need to submit an open-record request! I did so yesterday, January 3.

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