LOUISVILLE, Ky. (WDRB) – The University of Louisville has become a bidder for Jewish Hospital and the other Louisville-area healthcare facilities that KentuckyOne Health has been trying to sell for more than a year.
On Dec. 21 the university submitted a non-binding letter of intent to Colorado-based Catholic Health Initiatives to “acquire” KentuckyOne Health’s Louisville assets, U of L President Neeli Bendapudi said in an email to a handful of top officials at U of L’s Health Sciences Center.
“This will allow us to do detailed due diligence and vet potential partners,” Bendapudi said in the Dec. 21 email, which WDRB obtained under the Kentucky Open Records Act.
Other details – such as how much the university would pay for the hospitals, who its partners might be and how it might finance such a deal – remain unclear.
UPDATE, Jan. 7: In a brief interview Monday, Bendapudi said U of L would “absolutely” need a financial partner to buy the KentuckyOne facilities.
“Certainly this is world of partnerships so that’s what we would need to look at,” she said.
Bendapudi declined to answer other questions about a potential deal and stressed that discussions are in a “very early” stage.
On Friday, the university’s records custodian declined to provide a copy of the letter of intent, saying it was a “preliminary” document exempt from public disclosure.
KentuckyOne Health, a unit of nonprofit Catholic Health Initiatives, has said since December 2017 that it is exclusively negotiating with BlueMountain Capital Management, a New York private equity firm, for the sale of its Louisville facilities.
But CHI executives have continually delayed the timeline for reaching an agreement with BlueMountain Capital.
Asked whether U of L’s bid means BlueMountain Capital is no longer the “exclusive” potential buyer, KentuckyOne Health spokesman David McArthur said Friday he had “nothing more to add.”
Bendapudi declined to say Monday whether U of L’s interest is in collaboration, or competition, with BlueMountain Capital. But she said U of L is “trying to cast a wide net” for potential partners.
BlueMountain Capital has said recently that “negotiations continue to advance” and that it's “working collaboratively with stakeholders to reach a successful transaction.” A spokesman did not provide an updated comment on Friday or Monday.
Besides Jewish Hospital and adjacent Frazier Rehabilitation Institute, KentuckyOne is looking to sell Sts. Mary & Elizabeth Hospital in south Louisville; Jewish Hospital Shelbyville; the Louisville outpatient centers known as Jewish Medical Centers East, South, Southwest and Northeast.
U of L doctors and medical residents provide a big source of revenue for Jewish Hospital through services like adult organ transplants and cardiac care.
But as a group, the facilities CHI wants to sell are losing money. They lost nearly $57 million in the year ended June 30, 2018, on $731 million in revenue, CHI disclosed last year. The facilities lost another $17.7 million the in three months ended Sept. 30.
CHI chief financial officer J. Dean Swindle said on a Dec. 14 investor call that he anticipated “more clarity around the final outcome of the Louisville operations” by the end of 2018 or in early 2019.
“In the last three months, we have seen a more integrated conversation between all the key stakeholders in Louisville,” he said.
Insider Louisville first reported U of L’s submission of a letter of intent on Dec. 27, attributing Bendapudi’s words to Ken Marshall, chief operating officer of U of L Health.