A measure of the difficulty facing our Louisville Hospitals.<\/span><\/p>\n Last March I gave an update on the struggle of King\u2019s Daughters Hospital in Ashland, KY to recover from the abrupt decrease in patient volume and income following the disclosure of a Federal investigation of their cardiac program. Several years of financial boom and building turned into a bust of multi-million dollar losses and a downgrading of their bond rating. A paragraph in their FY2013 Audit<\/a> led me (and pretty much everyone else) to believe that the hospital had reached a settlement with the Department of Justice and Inspector Generals\u2019 offices. My efforts to obtain a copy of the settlement from Kentucky authorities was unfruitful despite apparent cooperation with my request. A report in today\u2019s Modern Healthcare gives the reason why as well as an interim financial update.<\/p>\n The jury is still out!<\/strong> \u201cStandard accounting principles require a reserve be set to reflect potential exposure for legal matters once the amount can be reasonably determined. Unfortunately this accrual was reflected in the audit footnote disclosure as though a final settlement agreement had been executed. While it is true King\u2019s Daughters has been in ongoing negotiations with the Department of Justice, a final settlement has not occurred. King\u2019s Daughters will update this notice if a final settlement with the Department of Justice is reached.\u201d<\/em><\/p>\n Ongoing losses despite some improvements.<\/strong> How are local\u00a0hospitals dealing with large budget deficits?<\/strong>
\nIn fact, settlement discussions were indeed in progress but are not final. The $48.9 million mentioned in the footnote of the audit referred to a reserve set aside to cover any fine and associated legal costs. The Hospital corrected the misleading language.<\/p>\n
\nAs of March 2014 the hospital reported a 13.5% decrease in admissions and a 15.2% decline in patient days for the year. Meaningful savings in operating expenses were won and the state\u2019s expanded Medicaid program led to a decrease in \u201cself-pay\u201d uninsured patients. These gains were lost to unspecified severance benefits, and consultant and legal fees. The hospital, like others, continues to pay a heavy price for its alleged angioplasty-misadventures.<\/p>\n
\nThis notice comes the same day that leadership of KentuckyOne Health is scheduled to make an announcement to its employees about the status of its own efforts to close an even more staggering budget deficit systemwide of $218 million. Others with experience in hospital finances opined that closing a gap of this size would be essentially unprecedented, and certainly could not be accomplished without earth-shaking changes (such as closing hospitals in a chain). Employees, creditors, and a concerned public are waiting on the details of the announcement. The fact that \u201ctown forums\u201d are now scheduled Tuesday for all shifts at the Jewish and University hospitals suggests that this announcement will not routine.<\/p>\n