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Tom Miller: University of Louisville hospital acquisitions benefit the entire commonwealth

The University of Louisville’s recent acquisition of Jewish Hospital and other Louisville-area assets of KentuckyOne Health has led to many questions. For us – President Neeli Bendapudi, the Board of Trustees, our physicians and academic and administrative leaders– our decision to move forward came down to the answer to one very important question: What would happen if Jewish Hospital closed?

On Aug. 15, KentuckyOne’s parent company, CommonSpirit Health, was set to announce the closure of Jewish and perhaps another health care facility. It also was planning to sell its other area facilities to the highest bidder. They wanted out of the Louisville market, period.

So why not just let the closures and the sales happen? The closure of Jewish Hospital alone would have had severe negative economic, reputational, social and political impacts on everyone in the commonwealth.

The economic impact on our area would have been catastrophic:

• More than 1,900 people would have lost their jobs. Some would have found employment elsewhere, but many would not.

• More than $100 million in wages would have been lost.

• More than $200 million in non-personnel spending that supports local business and the commonwealth’s tax base would have disappeared.

• Many of these individuals would be seeking unemployment, Medicaid, and other benefits. Louisville Metro and the Commonwealth of Kentucky would have lost millions in payroll taxes – perhaps as much as $25 million when you include the multiplier effect – at a time when governments are attempting to expand their tax base to solve budgetary issues like pension costs, education and safety issues.

The health care crisis would have been equally dire:

• Tens of thousands of people would have had to find other sources of health care in a community that already has limited access. Jewish currently sees more than 35,000 emergency room visits per year, and nearly 600 of those patients are admitted to the hospital each month.

• Many of these patients come from the most underserved areas of Louisville.

• Over a third of the patients treated at Jewish come from outside Jefferson County.

• The organ transplant program would close.

The University of Louisville would have suffered immediately, risking the accreditation of the School of Medicine and critical funding that supports medical research:

• We would have lost the ability to provide an education venue for 68 medical residents.

• The University’s Carnegie Foundation R-1 Research status would be in jeopardy. That represents $150 million in local research funding, of which 2/3 is related to the School of Medicine.

• The land that Jewish sits on is owned by the commonwealth, and the empty facility would revert to the university at a minimum maintenance cost of $5 million per year.

• The School of Medicine would have lost $41 million in critical financial support for resident stipends, professional services and academic programs.

Health care support for the entire commonwealth would have been compromised. For instance, from the Crown Counties alone, these facilities received more than 330 patient visits in fiscal 2019.

Under Dr. Bendapudi’s leadership – with the anticipated $50 million in support from the Jewish Heritage Fund for Excellence and the Jewish Hospital and St. Mary’s Foundation and with the financial commitment of state leaders on both sides of the aisle — UofL stepped up to ensure these devasting outcomes never became realities. Without these promises of support, the University could not and would not have made this decision to move forward.

We are asking for a $50 million loan from the Kentucky Economic Development Finance Authority, of which $25 million would be forgiven only if we meet employment and service criteria set by the state.

We will invest in Peace, Mary & Elizabeth and Shelbyville Hospitals so that the services they provide are enhanced. We will share resources between University Hospital and UofL Health- Jewish Hospital to offer greater value to our patients. In fact, we suspect we will need to hire more people in these areas as the hospital grows.

Will turning around Jewish Hospital and its related facilities be easy? No, but we know we can do this because we already implemented a similar plan at UofL Hospital. We put in place policies and procedures that turned a $40 million loss into a profit – all while improving the standard of care for our patients. Every quality measure has improved at UofL Hospital since we retook management from KentuckyOne in 2017.

Support for hospitals is not unprecedented. Last spring, the legislature approved more than $100 million in funding for community-based and rural hospitals, excluding teaching hospitals at the state’s universities, through a matching program with the federal government.

With support from you-the leaders of our community, the commonwealth and philanthropic partners – this can be a great story in which a university, state government, local leaders and partners improve the long history of great health care in our communities, saving thousands of jobs and lives in the process.

It is a story we are excited about and ready to tell.

Tom Miller is CEO of UofL Health

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