FRANKFORT, Ky. (WDRB) – The University of Louisville’s top health care official faced pointed questions Monday from lawmakers about the university’s plan to take over Jewish Hospital and the other KentuckyOne Health Louisville assets, especially a key piece of the financial puzzle: a $50 million forgivable loan from state taxpayers.
In a surprise, it was a lawmaker from U of L’s backyard, Sen. Morgan McGarvey of Louisville, who displayed the most skepticism about the deal during a legislative committee meeting Monday.
McGarvey said he’s not opposed to using state money to ensure U of L has a “first-rate teaching hospital.”
But he worries that, in fact, U of L may be understating “huge costs” associated with taking over the KentuckyOne facilities and that the quickly moving deal could end up like “a KentuckyWired situation on the back end,” a reference to the rural broadband project that has saddled taxpayers with big cost overruns.
“I don’t know exactly, with what they have provided us so far, how buying Jewish Hospital actually makes U of L successful,” McGarvey, the leader of the Senate Democrats’ minority caucus, told reporters following the meeting.
U of L President Neeli Bendapudi announced Aug. 14 that the university would buy KentuckyOne’s Louisville healthcare properties – four hospitals, four outpatient centers and a physician practice group.
The primary motivation is to keep financially distressed Jewish Hospital – where U of L doctors account for 40% of the patient volume – from closing and laying off thousands of people.
“The university is doing this for the community,” U of L Health CEO Tom Miller, who will run the combined healthcare system, told lawmakers Monday. “We feel like no one else was going to step up, and we couldn’t be in a situation with Jewish Hospital closed down in this community.”
Because the properties are losing about $43 million a year as a group, the deal calls for KentuckyOne – a unit of Chicago-based healthcare giant CommonSpirit Health – to provide $126 million to U of L over four years from various sources.
U of L’s financing plan also hinges on a $50 million economic development loan from the state.
And U of L plans to close the KentuckyOne purchase on Nov. 1 – with no guaranty that lawmakers will approve the $50 million when they come back into session in January.
Gov. Matt Bevin and his Republican allies – House Speaker David Osborne and Senate President Robert Stivers – have said they support the $50 million loan. Osborne said last month he’s “quite confident” lawmakers will appropriate the money.
But what happens if they don’t? McGarvey pressed U of L’s Miller on that point, saying it isn’t clear whether the $50 million loan proposed for U of L would be legal under current economic development programs maintained by the state.
Miller told reporters following the meeting that it would be “very difficult” for U of L if the $50 million doesn’t come through.
U of L wouldn’t be able to make the physical upgrades – called capital expenditures -- needed at the KentuckyOne facilities, primarily Jewish, he said. He estimates those expenses amount to $120 million over three years.
Miller added that U of L would have to speed up the “integrational aspects” of the deal, a reference to the savings and revenue boosts he sees from integrating the KentuckyOne facilities with U of L Health.
“It’s not easy. We are not sure that we can get it done, but we’re going to try to,” Miller said.
McGarvey pressed Miller on U of L’s estimates for information technology and other costs, and also noted that U of L has told lawmakers that Jewish Hospital’s downtown tower has only a three-year lifespan.
In an interview, McGarvey said his fear is that the university may need much more than $50 million to take over the KentuckyOne facilities – but is only asking for what’s politically feasible.
“I would rather take $100 million and do this right than take $50 million and have it fail,” he said. “I am not worried about the amount of money … Lets have an honest discussion about it.”