Last December 17, representatives of the University of Louisville, Norton Healthcare, and the Commonwealth of Kentucky signed a set of agreements that, for the next eight years at least, settle disputes over the physical, programatic, and financial control of the currently named Kosair Children\u2019s Hospital.\u00a0 Both principal parties pledge a new beginning and promise to work together for the benefit of our community.\u00a0 I congratulate them.\u00a0 All of us should take them at their word, and help in whatever way we can to honor their promises to each other and to us.\u00a0 After all, Children’s Hospital is a unique and vital resource for our community.\u00a0 This and related litigation has not been helpful for it.<\/p>\n
In a series of articles<\/a> in these pages beginning over two years ago, I made available to the public as many documents relevant to the dispute as possible to allow readers to form opinions of their own about the dispute. In this spirit, and in what I trust will be the the last installment of the series, I publish in their entirety the settlement documents which were kindly provided to me by the University.<\/p>\n In brief summary, it appears to me that both parties got most of what they initially declared was most important to them. Norton receives adequate protection against the threat of eviction from their hospital.\u00a0 The Hospital\u2019s medical staff remains open to all credentialed physicians in the community and Norton retains the ability to cooperate academically and clinically with the University of Kentucky.\u00a0 The University is declared to be the sole academic sponsor of the graduate medical education program at the hospital and is assured of a predictable and generous flow of financial support \u2013 albeit with a greater degree of accountability attached.\u00a0 One might reasonably ask then, why did it take so long to come to agreement? What changed in the recalcitrant endgame?\u00a0 I will venture a few thoughts on this question at the end of this article.\u00a0 In the meantime, here are the four documents with a few comments about each.<\/p>\n 1. Amendment to the Land Lease.<\/a> A 1981 agreement contemporary with the initial lease allowed for a representative of UofL to sit on Norton\u2019s Board of Directors and attend its Executive Committee meetings. In less competitive times, that practice may have acceptable, but given the University\u2019s new and nearly exclusive partnership with KentuckyOne, it became unreasonable if not inappropriate.\u00a0 These requirements are dropped.\u00a0 Instead, Norton will now \u201cpermit a representative of the University to present annually to the board of Norton.\u201d<\/p>\n 2. Settlement Agreement<\/a>. Money<\/b>. Exclusivity<\/b>. Specialty Physicians. 3. Amendment to Master Academic Affiliation Agreement<\/a><\/b>.<\/a> 4. Agreed Order of Dismissal.<\/a><\/b> Is this an enduring fix? Aside from local healthcare and academic politics, the born-again Norton-University partnership will have to survive the tidal wave of national change in a healthcare system that is testing and changing everything that has gone on before.<\/p>\n Kosair Charities vs. Norton Healthcare?<\/b> In my opinion, Norton does not need Kosair. In fact, I believe Norton would have more credibility at present if Kosair Charities was out of the Louisville hospital picture altogether. To my mind, Kosair Charity\u2019s overblown claims about misuse of its donated funding blew away like so much smoke. With its new and better-integrated relationship with the Department of Pediatrics, a Norton Children\u2019s Hospital can do just fine without Kosair stirring the pot.\u00a0 Admittedly, there would continue to be some awkwardness for the University if it affiliates with\u00a0the Kosair name on its research buildings and outpatient clinics but not on its hospital and other major clinical facilities.<\/p>\n My personal advice to Kosair Charities is this. If you want to continue to be able to raise money in the name of the hospital, that you swallow your pride and pony up what you have\u00a0been withholding. Norton and the University have pledged to work together for their mutual benefit and that of the children of our community. Follow their lead. \u00a0Either withdraw gracefully, or be perceived as trying to make even more trouble for a Children\u2019s hospital whose reputation has been injured by the troubles of these past few years and in which you played a role.\u00a0 If you want to stay in the Children\u2019s Hospital game \u2013 and if Norton will still have you \u2013 be a better partner by making a bigger financial contribution more commensurate with the naming rights of the hospital, and stop throwing mud on the enterprise.<\/p>\n How did this come to pass?<\/b> Will anyone else rise to sabotage the settlement?<\/b> I do not personally believe that Dr. Dunn can return to his former position and I believe that President Ramsey\u2019s useful time at the University has long passed. He has become an embattled President. I cannot personally imagine that either of these two men could be constructive in closing the gap that emerged between the two long-time allies \u2013 Norton Healthcare and the University of Louisville.\u00a0 The settlement sits in a precarious position, but the rank-and-file staff and professionals at Children\u2019s Hospital have continued to work effectively together throughout. They deserve the support of the community and protection from those who will rise to sabotage the settlement.\u00a0 We as a community must not let that happen.<\/p>\n If I have made an error of fact, help me correct it.<\/p>\n Peter Hasselbacher, MD
\n<\/b>A change or clarification to the lease of the land under the Hospital was a critical part of the settlement and which required the agreement of the the Commonwealth (as the Lessor). For its part, Norton agrees to make $35 million of capital improvements and repairs to the hospital over the next 5 years (which it probably would have done anyway.)\u00a0 All other past, present, and future financial obligations in the lease are otherwise declared satisfied. It is also made clear that only the Commonwealth, and not the University, may assert a claim for breach or default.\u00a0 Additionally, \u201cNorton shall not be in default \u2026 if UofL unilaterally determines not to continue its affiliation in pediatrics at Kosair Children\u2019s Hospital.\u201d Presumably this new language and other provisions in the settlement provided Norton the confidence they needed to move ahead in the face of the University\u2019s earlier pledge to turn its pediatric service to KentuckyOne Health.<\/p>\n
\n<\/b>The first 6 of the 10 pages contain the meat of the agreement as well as a brief chronology of the claims and counter-claims. Since they catalog the principle concerns of the parties, I urge readers to review them.\u00a0 Principle clauses\u00a0include financial commitments to the University accompanied by increased accountability for expenditures to Norton. In terms of pediatric medical training,\u00a0 University clinicians promise to use Children\u2019s hospital, for at lest half of their inpatient admissions and Norton promises to make at least 90% of its inpatient resident slots available to UofL. It is made clear that physicians other than UofL faculty may admit and treat their own patients. Important for the University, it \u201cshall have the right to be the sole sponsoring institution for pediatric residency at Kosair Children\u2019s Hospital\u201d but Norton is allowed to implement its letter of intent of Aug 23, 2013 with the University of Kentucky to cooperate over pediatric cardiology and other initiatives.<\/p>\n
\nThe amount of money now in play is considerable. For the next 8 years, Norton promises to pay $30 million yearly in \u201cAnnual Support Payments\u201d for use of the Department of Pediatrics.\u00a0 This amount is intended to cover all of a large existing array of current contracts and payments. In addition, in a pool of funding termed \u201cAdditional Financial Support,\u201d Norton agrees to pay the University $24 million in aggregate over the eight year term of the settlement.\u00a0 The use of these latter funds, as well as unspent money from the former Annual Support Payments are subject to recommendations of a new joint hospital governance committee and ultimately approval by both Norton and the University.\u00a0 As a final sweetener, Norton agrees to pay UofL a one-time lump sum of $8 million to settle all outstanding additional claims related to expenses incurred by the Department of Pediatrics for services provided at the Hospital.\u00a0 It is not obvious to outsiders how much of the money specified in the settlement is \u201cnew\u201d money. What is clear are stipulations of accountability and how the money may be spent. For example, Norton is permitted to audit the use of the funding.<\/p>\n
\nThe partnership of UofL with KentuckyOne was obviously a touchy subject for the negotiators.\u00a0 Accordingly, the University agrees not to participate with other organizations in providing pediatric services within a core set of counties termed the \u201cGreater Louisville Region.\u201d The right to collaborate outside the core counties is maintained.<\/p>\n
\n<\/b>If Norton identifies a need for a pediatric specialist, it agrees to give the University the first right to recruit an an acceptable individual, but retains the right make such a hire itself if UofL cannot do so in a timely manner.\u00a0 Norton agrees to encourage its current employed physicians to accept faculty status.<\/p>\n
\nDifficulty in negotiating an update to the earlier agreement of 2008 was an early indicator of difficulties between the two parties.\u00a0 As part of the settlement, a way forward is agreed to.\u00a0 With respect to \u00a0 the training programs for students and residents, the University has full authority.\u00a0 However, with respect to clinical programs and operations at Children\u2019s Hospital there are considerable changes including shared responsibility.\u00a0 Chief among these is the formation of a new system of Governance and Leadership under the auspices of a Pediatric Academic Medical Center Committee (PAMCC). This new committee is made up of three representatives each from the University and Norton and which which must act by majority vote. The PAMCC shall make recommendations with respect to the following at Children\u2019s Hospital:\u00a0 relationship management, access and quality of care, negotiating additional contracts, ensuring accountability and transparency, changes and expansions of services, approving a Medical Director and Chief of Staff, and defining the scope and responsibilities of these two latter officers.\u00a0 What else is there left to oversee? This is a powerful body that must work together for the hospital and the Department of Pediatrics to succeed! It will be telling to see who is appointed to the committee.<\/p>\n
\nThis one-pager is a joint request to the court by the three parties to dismiss the case, with each party to bear its own costs. Thus endeth the litigation.<\/p>\nOther Comments:<\/b><\/h4>\n
\n<\/b>The settlement\u2019s term runs for the next eight years. That aught to be long enough to heal the wounds that have been festering for more than two decades. If all goes as is promised, and the pediatric partnership flourishes as we all want it to, then renewal in to the future should be no problem.\u00a0 The settlement makes it clear however, that there remains a basic disagreement about who is responsible for funding an academic medical center in pediatrics. UofL will have to learn how to work successfully with more than a single clinical partner \u2013 which in my opinion would be a desirable goal \u2013 but its parallel relationship with KentuckyOne will always be there as a complicating factor.<\/p>\n
\nWhile Norton was grappling with the University, in the other corner waiting for the tag was Kosair Charities<\/a> which was actively switching its financial support from the hospital that bore its name to the University\u2019s research activities.\u00a0 The last I heard, this litigation was proceeding apace.<\/p>\n
\nNorton and the University appeared to come close to agreement numerous times over the past three years only to have things blow up at the last minute.\u00a0 It made no difference whether the negotiations were held independently, or under the supervision of court-ordered mediations. You can form your own opinion if any blame need\u00a0be assigned. It is clear to me that movement on the dispute only occurred when the UofL Board of Trustees became active in the process, and that only occurred because the executive leadership of the University was crumbling.<\/p>\n
\nThe Board as a whole had voted some time earlier to allow its Executive Committee to act on its behalf as the litigation proceeded.\u00a0 In the meantime, Dr. David Dunn, the University’s chief strategist and negotiator in the dispute with Norton, was put on leave while he is under FBI investigation, and President James Ramsey was distracted\u00a0by his sombrero episode and losing the support of both his Board and community. The Teflon had worn off.\u00a0 A mere handful of days after Dr. Dunn left the picture, Board Chair Larry Benz brokered and announced a comprehensive settlement that appears to give both sides what they claim to have wanted all along!\u00a0 Is there any reason to doubt why President Ramsey has joined with Governor Bevin<\/a> to remove Mr. Benz and other Trustees from the Board?<\/p>\n
\nPresident, KHPI
\nEmeritus Professor of Medicine, UofL
\n26 Jan 2016<\/p>\nShare this:<\/h3>