University of Louisville delays choosing hospital partner

To allow time for more "discussions and negotiations," the University of Louisville has put off deciding on University Hospital's new health-care partner until the end of June.

It is not known how many entities are interested in partnering with the indigent-care hospital, nor have any entities been identified. The deadline for applications, which was last month, has not been extended. "The university has said it needs a partner with deep pockets that can inject cash required to expand the hospital and attract new patients," reports Andrew Wolfson for The Courier-Journal.

Kerri Richardson, chief spokeswoman for Gov. Steve Beshear, said he is hopeful the hospital will find "a suitable path forward to preserve its public mission and continue to successfully serve citizens in the region."

Last year, Beshear rejected a proposed merger between University Hospital, Jewish Hospital & St. Mary's HealthCare and Saint Joseph Health System, which is owned by Catholic Health Initiatives. Because Saint Joseph would have had majority control in the initial deal, the other facilities would have had to adhere to Catholic health directives, which affect procedures like elective abortions, sterilizations, artificial insemination and euthanasia. Those limitations raised concerns and that the move would have been a loss of control of a public asset, meaning University Hospital.

After Beshear's decision, Jewish & St. Mary's and St. Joseph merged, forming KentuckyOne. (Read more)

Expect more hospital mergers across the country, some with unlikely partners, Moody's Investors Service report predicts

Reflecting several hospital mergers that have already taken place in Kentucky, a new report from Moody's Investors Service predicts hospitals will continue to band together across the country as they respond to changes in health care.

"The difficult business environment and the changes expected in how hospitals will be paid for delivering care are driving many smaller, stand-alone hospital groups into the arms of larger and better-financed organizations," reports Reed Abelson for The New York Times.

Hospitals have long looked for partners to become larger in order to have more negotiating power to ask for higher payments from insurers. But now they are looking at ways to become more efficient too as they expect lower reimbursements from Medicare because of federal health-care reform. That means more consolidation, Moody's says.

While there are traditional mergers in play, there are also more atypical alliances forming. One of the nation's largest nonprofit hospital groups, North Shore-LIJ Health System, will join with Hackensack University Health Network in New Jersey, for example. There are instances of for-profit hospital groups joining with private equity firms. Health insurance companies could even become buyers, and hospitals and doctors could join forces "so they can be more of a one-stop shop," Abelson reports.

As a result, patients will ultimately have fewer hospitals from which to choose, but some small, stand-alone hospitals, especially in rural areas, will still exist. "We're not going to predict the small independent hospitals will all shutter and close," said Lisa Goldstein, one of the authors of the report. (Read more)

Same Catholic health system considering University Hospital's request for proposals

Though Gov. Steve Beshear twice rejected a proposal that would have merged it with a Catholic health system, University Hospital's expected release of a request for proposals is drawing attention from the same Catholic health system, reports Laura Ungar of The Courier-Journal. (C-J photo by John Rott)

"We still believe that a close working relationship with the University of Louisville School of Medicine and University Medical Center is important to our vision as an organization, to this community and citizens across the commonwealth," wrote Ruth Brinkley, chief executive officer of KentuckyOne Health, the company created after St. Joseph Health System, owned by Catholic Health Initiatives, and Jewish Hospital & St. Mary's HealthCare merged earlier this year.

If the deal had gone through as planned, University Hospital would also have been part of that merger. But since University Hospital would have been subject to Catholic health directives — which includes forbidding sterilization and in-vitro fertilization — under the merger, Beshear rejected the deal; University Hospital has been ruled a public entity. The New York Times notes the episode in a story today saying the expansion of Catholic hospitals could limit reproductive health care.

Last week, University Hospital's operator was given permission to make a request for proposals "aimed at attracting interest from other health care entities that could stabilize the finances of the area's main safety-net hospital," reports The Associated Press. Finding such a partner is "very" critical, said Dr. David Dunn, U of L's executive vice president for health affairs.(Read more)

But after The C-J reported permission for the RFP had been granted, Brinkley sent out a note to physicians and administrators of KentuckyOne Health. "As we more closely examine the RFP and begin our planning process, we will share additional information with you," she wrote.

Merger critics said pairing up with KentuckyOne Health would lead to the same problems as the first proposal. "It's still the same pig. They're still trying to make it into a silk purse," said Honi Goldman of Louisville. "It's a dangerous road to go down ... Why are they stuck on this one suitor?" (Read more)

Beshear says no for second time to University Hospital merger

For the second time, Gov. Steve Beshear has rejected a proposed merger for Louisville's University Hospital, saying he still didn't think ideas suggested in a meeting last week would be enough to allay his concerns. Beshear said no to a controversial proposal Dec. 30 that would have merged University Hospital with Jewish Hospital & St. Mary's HealthCare and St. Joseph Health System.

Beshear would not go into details about what ideas University Hospital officials presented last week, saying only that he remains "committed to working with the university to explore all appropriate paths forward for the hospital and for our Kentucky taxpayers," Patrick Howington and Laura Ungar report for The Courier-Journal.

The merger would have give majority control to St. Joseph, which is owned by Catholic Health Initiatives, so all three health systems would have been subject to Catholic health directives. Jewish & St. Mary's and St. Joseph announced last Friday they will merge without University Hospital and call the system KentuckyOne Health. Beshear said he rejected the merger because it would mean the loss of control of a public asset and raised "constitutional church-and-state issues," Howington and Ungar report. (Read more)

St. Joseph Health System announces merger with Jewish Hospital & St. Mary's HealthCare

Rebuffed in its bid to take over Louisville's University Hospital, Catholic Health Initatives announced today that its St. Joseph Health System had merged with Jewish Hospital & St. Mary’s HealthCare, effective retroactively to Jan. 1. Gov. Steve Beshear rejected the original merger plan because of University Hospital's public status and the proposed control of CHI, which follows Catholic health directives.

The new organization is called KentuckyOne Health and is headed by Ruth W. Brinkley, as president and chief executive officer. She is a former executive at CHI and Ascension Health. The organization "includes hospitals, clinics, specialty institutes, home health agencies, satellite primary care centers, and physician groups with more than 80 locations, 2,500 staff physicians and more than 13,000 employees across the state of Kentucky and southern Indiana," CHI said in a press release. It said it will invest $320 million into the merger.

"As part of KentuckyOne Health, historically Jewish facilities will remain Jewish," the release said. "Historically Catholic facilities will remain Catholic." Dr. Gerald Temes, chair of Jewish Hospital HealthCare Services, said in the release, “We have had a mutually beneficial relationship with Catholic Health Initiatives for the last six years. We’re confident this is the right direction for the Jewish Hospital organization.” (Read more)

Beshear talks to University Hospital officials about future

Gov. Steve Beshear met with officials with University Hospital officials yesterday to discuss ways the facility can take part in a merger. Last week, Beshear rejected a much-publicized proposal that would have unified University Hospital with Jewish Hospital & St. Mary's HealthCare and Saint Joseph Health System, which is owned by Catholic Health Initiatives.

Beshear called the meeting "productive" and said he would get back to officials next week, reports Patrick Howington of The Courier-Journal.  "We remain committed to supporting University Hospital in reaching our common goals of care for our most vulnerable citizens while maintaining sound financial footing for the institution," Beshear said. James Taylor, CEO of University Hospital, declined to go into detail about the one-hour meeting.

Because Saint Joseph would have had majority control in the initial deal, the other facilities would have had to adhere to Catholic health directives, which affect procedures such as elective abortions, sterilizations, artificial insemination and euthanasia. Those limitations raised concerns, and Beshear said his major reservation was that the move would mean "the loss of a control of a public asset," meaning University Hospital.

Hospital officials said earlier this week they will continue to work together to put together a proposal that Beshear "would feel compelled to approve,'" reports Laura Ungar of The Courier-Journal. "The jockeys are not changing right now," University Hospital spokesman David McArthur told her. CHI spokeswoman Mary Elise Beigert said her company "is evaluating potential options." Jewish & St. Mary's officials had no comment. (Read more)

In an editorial, The Courier-Journal applauded Beshear's decision to reject the merger. "Gov. Beshear and the Attorney General [Jack Conway] both hit the nail right on the head," the paper said. "It's time to drop this misbegotten merger effort, and seek other ways to strengthen the local hospitals." (Read more)

Beshear says no to hospital merger

Gov. Steve Beshear has said no to the much-discussed merger between three major Kentucky health systems, which, because it required his blessing, puts an end to the proposal.

"After exhaustive discussions and research, I have determined that this proposed transaction is not in the best interest of the commonwealth and therefore should not move forward," he said. "In my opinion, the risks to the public outweigh the potential benefits."

The merger would have been between University of Louisville's University Hospital, Jewish Hospital & St. Mary's HealthCare and Saint Joseph Health System, owned by Catholic Health Initiatives. Because Saint Joseph would have had majority control in the deal, the other facilities would have had to adhere to Catholic health directives, which affect procedures such as elective abortions, sterilizations, artificial insemination and euthanasia. (C-J photo by John Rott)

"That raised concerns among many community members and leaders, who also worried about the possibility of more limitations in the future if Catholic directives change," reports Laura Ungar of The Courier-Journal.

Beshear said the merger would result in considerable legal and policy concerns. "However, most troubling to me is the loss of control of a public asset," he said. "University Hospital is a public asset with an important public mission, and if this merger were allowed to happen, U of L and the public would have only indirect and minority influence over the new statewide network's affairs and its use of state assets."

Attorney General Jack Conway applauded Beshear's call. "I believe he ultimately made the appropriate decision on behalf of the commonwealth's interests," he said.

Hospital officials expressed disappointment, saying the "greatest beneficiaries of the proposed merger" would have been the patients of the commonwealth.

Beshear acknowledged the changing face of health care landscape does present new problems, but added he is committed to helping University and Jewish Hospital & St. Mary's HealthCare reach "our shared goals of providing quality care, especially to our poorest and most vulnerable citizens, as well as finding ways to ensure both facilities remain on strong financial footing," he said. (Read more)

Beshear must reject hospital merger, C-J argues in huge editorial

Gov. Steve Beshear must say no when it comes to the merger of University Hospital, Jewish Hospital & St. Mary's HealthCare and St. Joseph Health System because it jeopardizes the separation of church and state, contends a lengthy editorial in The Courier-Journal. (C-J photo of University Hospital by John Rott)

The merger would mean the University of Louisville's hospital, a public institution, would be subject to Catholic health directives because St. Joseph is owned by Catholic Health Initiatives. "The result of merger would be that this community's public hospital, built only after voters approved a bond issue for its initial funding and with millions of taxpayer dollars flowing into it for decades, would be bartered away without public input, open bidding or any other formal procedures, to a religious group that limits standard medical care based on religious dogma," the editorial reads.

In order to take place, the merger requires the green light from Beshear, who must not give it, the editorial argues. Instead, he must remember when "he recognized the problem with posting the Ten Commandments in public school classrooms" while he was attorney general 30 years ago. "He needs to recall that brave and principled stance and tell U of L that no, you cannot sell the people's hospital to a religious organization."

The editorial, which took up the vast majority of the Sunday paper's Forum section, not the usual space on the first inside page of the section, also points out there is no other church-state medical complex anywhere else in the county because "it's unconstitutional."

The editorial also contends the merger is discriminatory. If it were to go through, women who have given birth to a baby at University Hospital would have to be taken to Baptist East Hospital if they wanted to receive a tubal ligation, a procedure that is often performed after a birth. "It is a deplorable solution to a problem that shouldn't exist to begin with," the editorial reads. "And it won't exist if Gov. Beshear has the sense and courage to reject this misbegotten scheme." (Read more)

University Hospital merger documents being released

The University of Louisville will hand over records pertaining to the merger involving University Hospital, under a settlement signed Tuesday.

The documents will include "the June 14 agreement to consolidate the three health-care systems into one — though without some supporting documents — and the new system's affiliation agreement with U of L," reports Patrick Howington of The Courier-Journal. The move is a victory for Jefferson County Attorney Mike O'Connell (C-J photo by Pam Spaulding), who sued U of L after merger-related documents were not provided to him upon his open- records request. Though he will not receive all the documents he wished to view, he agreed to settle because of time constraints; the merger is expected to be final by Dec. 31.

The merger involves University Hospital, Jewish Hospital & St. Mary's HealthCare and St. Joseph Health System.The records, which will be handed over by Thursday, will include "the bylaws and articles of incorporation of the still-unnamed new system and a new lease agreement for the state-owned University Hospital property," Howington reports.

A table showing the merger's benefits to U of L was given over Tuesday. It shows U of L will get a larger piece of the hospital's profits than before. "The hospital gave U of L $11 million each of the past four years, but the new company would give the university $11 million each year, adjusted for inflation, plus 24 percent of the 'excess cash' — loosely meaning profit — of the entire system," Howington reports. (Read more)

Baptist-Trover hospital merger another example of trend

Though the proposed merger of Saint Joseph Health System, University Hospital and Jewish Hospital & St. Mary's HealthCare has grabbed recent headlines, another merger is under way, with Baptist Healthcare System hoping to expand its reach to Western Kentucky with the acquisition of Trover Health System in Madisonville.

"There's a lot of territory . . . and certainly Trover fits a geographic hole that Baptist has in the western part of the state," said Andy Sears, vice president of planning and development for the Louisville-based Baptist system.

Trover is made up of a 390-bed regional medical center and several clinics, resulting in the company having seven locations in six counties, reports Patrick Howington for The Courier-Journal.

"With reimbursements from government health plans set to tighten under health-care reforms, experts say stand-alone hospitals will have more difficulty keeping up than larger systems, which can spread costs and have more purchasing power," Howington reports.

During the first nine months of 2011, there were 71 deals involving 132 hospitals and totaling $6.9 billion, according to Sanford Steever, editor of Health Care M&A Report. (Read more)

To read more about hospitals merging nationwide, click here.

University Hospital files suit saying it is not public; could affect merger, open records

 Attorney General Jack Conway may have ruled it a public entity and thus subject to open-records laws, but University Hospital officials are insisting that's not the case and have filed a lawsuit saying it should not have to turn over documents to, among others, The Courier-Journal.

The implications go beyond the records issue and could affect the merger between University Hospital, Saint Joseph Health System and Jewish Hospital & St. Mary's HealthCare. A public governmental entity cannot favor one religion over another, under the state constitution. But if the merger goes through, all three health systems would be subject to certain Catholic health directives, such as those pertaining to sterilization, because Saint Joseph is owned by Catholic Health Initiatives.

"A ruling in the public-records case that University Hospital is a public entity will bolster the arguments of those opposed to the merger, while a ruling that it isn't a public entity will favor merger supporters," reports Dan Klepal of The Courier-Journal.

The lawsuit argues that University Hospital is a private, nonprofit corporation "because it is controlled by a board of directors, not the University of Louisville," Klepal reports. U of L board members also cannot constitute a majority at any board or committee meetings; the hospital selects its own CEO; and manages its own finances and daily operations.

The suit further points to the fact that former Attorney General Greg Stumbo ruled it was not a public entity in 2006. "But that ruling was made when two private companies, Norton Healthcare and Jewish & St. Mary's, were still partners with U of L in governing the facility. The following year, Norton and Jewish withdrew, leaving U of L as the hospital's only overseer," Klepal reports. (Read more)