LOUISVILLE, Ky. (WDRB) – The University of Louisville has received more time to develop a proposal to take over Jewish Hospital and eight other Louisville healthcare operations that KentuckyOne Health has been trying to offload.
U of L President Neeli Bendapudi said Monday that KentuckyOne's parent company has granted an extension that will allow the university to continue negotiating with potential partners, such as a hospital operator or investment firm, to make a bid for the KentuckyOne properties by June 30.
"Several potential partners told us they simply needed more time to review the opportunity and present a strong proposal," Bendapudi said in a campus-wide email.
U of L's academic affiliation agreement with KentuckyOne Health has been extended for three months, with the goal of the U of L joint venture reaching an agreement with KentuckyOne by June 30, Bendapudi said.
"The extension ... will allow us to be more thoughtful and deliberate in our efforts," Bendapudi said in the email on Monday.
She said Cain Brothers, a healthcare investment banking firm hired by the university, will be talking directly to potential partners, none of whom have been named.
The university also shielded responses that were due March 8 to its February request for proposals for a partner in the venture.
KentuckyOne Health has been trying to sell Jewish, Frazier and other Louisville facilities – including Sts. Mary and Elizabeth Hospital in south Louisville, Jewish Hospital Shelbyville and four outpatient medical centers around town – since May 2017.
KentuckyOne lost $57 million operating that group of facilities in the year ending June 30, 2018, according to financial reports from KentuckyOne’s parent company, which was formerly Catholic Health Initiatives and is now called CommonSpirit Health.
More than a year ago, KentuckyOne identified New York private equity firm BlueMountain Capital Management as the likely buyer of its Louisville assets, but protracted negotiations with BlueMountain Capital have failed to result a deal.
The university, meanwhile, wants to save Jewish Hospital and the adjacent Frazier Rehabilitation Institute, where a number of U of L medical programs are based, from closing.
U of L at first was not interested in acquiring the KentuckyOne assets, but the university changed its approach when the BlueMountain deal fizzled.
"We didn’t see anything materialize, so we want to do our part in looking for a solution,” Bendapudi said in February.
U of L is looking for a partner to put up money to buy the KentuckyOne facilities and to upgrade them. The partner would also bring "operational expertise" to the deal, Bendapudi has said.
University Hospital and the James Graham Brown Cancer Center, which are currently run by an affiliate of the university, could be managed by the joint venture U of L would form with the partner, subject to negotiations.
If the U of L assets -- University Hospital, the Brown Cancer Center and U of L Physicians, the university doctor practice plan -- are combined with the KentuckyOne facilities, the system would have nearly $1.5 billion in annual revenue.
“This could be an opportunity with really leveraging a comprehensive healthcare system to raise the profile of our medical center, to improve our research – more sites, more residencies, more fellows – and our teaching and research mission,” Bendapudi said in Febraury. “… It’s a big issue for Louisville and we think there is enough promise that it warrants this look.”
U of L has already had preliminary talks with at least one potential partner, Nashville-based for-profit hospital operator Ardent Health Solutions, as WDRB reported in January.
