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Lawmakers grill University of Louisville hospital representative over proposed loan in Monday hearing


By Tom Latek
Kentucky Today

Members of a legislative committee peppered a representative from University of Louisville Hospital with questions about the proposed $50 million in state funds to help U of L buy Kentucky One Health, which includes the Jewish Hospital system.



Tom Miller, CEO of University of Louisville Health, appearing before the Medicaid Oversight and Advisory Committee on Monday, told lawmakers Kentucky One had been up for sale for over two years, and that the university expressed an interest in buying the system in December.



“At that time, the health system was losing approximately $41 million a year at Kentucky One was struggling to find a buyer,” he said, but talks broke down in June.

Tom Miller, the CEO of Louisville Health, talks to the state oversight committee about the pros of a $50 million state loan. (Photo by Tom Latek, Kentucky Today)



“In August, after communications from Kentucky One that they were suspending the heart transplant service, and later our belief that they, might close Jewish Hospital, a discussion with the Governor provided a partnership option that would also include local foundations to retain jobs in Louisville and keep these critical hospitals open.”



He testified that U of L Hospital already sees 65,000 patients a year in the emergency room alone and couldn’t handle the additional 35,000 ER cases from Jewish Hospital, if they closed, so they agreed to acquire Kentucky One, effective Nov. 1.



What this means to the Medicaid community, Miller said, is that “several critical safety net hospitals will remain open under the University of Louisville’s oversight. Additionally, 2,000 jobs would be secured that might have added to the Medicaid rolls in our community.”



Miller said U of L believes they can turn the $41 million annual loss at Jewish Hospital into a $41 million positive cash flow within two years after taking over the system.



He concluded by saying with the proposal, “The future of health care looks secure in Louisville.”



Committee co-chair, Sen. Stephen Meredith, R-Leitchfield, stated the use of state money for such an endeavor had never been done before, adding, “We experienced the same thing with the Pineville Community Hospital, back in December of last year when they filed for bankruptcy. That’s the only hospital in that county, and I didn’t see our state step forward and say, ‘Here’s a financial package to save you.’ Are we picking winners and losers when we participate in these types of efforts?”



Sen. Morgan McGarvey, D-Louisville, said, “I want to make sure this deal, U of L buying Jewish Hospital, is the right way to make sure we have a first-rate teaching hospital at the University of Louisville. I remain unconvinced that is the case, at this point.”



McGarvey said looking at requirements for Kentucky Economic Development Finance Authority loans that this one doesn’t necessarily add up.



“This loan obliterates every single criteria of being a KEDFA loan. There’s a maximum limit of $500,000. This is one hundred times that,” he said. “KEFA loans require payment on the back end when the project is complete. KEFA loans require jobs to be created, but under your own proposal there will be a loss of jobs from this merger.”



Despite the questioning, Miller told reporters after his testimony that he is still optimistic the loan will be approved, but if it is not, “It will not be easy. We’ll have to cut back on some capital improvements that we would need to do, we would have to move faster on some integration aspects of it. We’re not sure that we can get it done, but we’re going to try to.”



Miller says half of the $50 million loan from the state would be forgivable “under certain conditions” that include retention of jobs, and/or providing services that in the western part of the Louisville area, which is underserved.



The remaining $25 million would be paid back within 15 years, he said.



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