Citing “significant challenges” in the health care industry, KentuckyOne Health said Friday that it will sell Jewish Hospital and other Louisville facilities to as yet unknown buyers.

Insider Louisville was first to report Friday that the hospital was being sold, based on sources familiar with the matter.

After Insider’s report, KentuckyOne said in a press release that it also will sell Frazier Rehab Institute, Sts. Mary & Elizabeth Hospital, Medical Centers Jewish East, South, Southwest and Northeast, Jewish Hospital Shelbyville, Saint Joseph Martin and KentuckyOne Health Medical provider practices in Louisville and Martin.

The health system called the actions an “evolution of its structure for care in Kentucky” and said it would focus on a “smaller footprint centered in central and eastern Kentucky.”

“The great change and great uncertainty in the health care industry has strained our financial health,” President and CEO Ruth Brinkley said in the release. “Market forces have evolved to the point that change is needed to allow ongoing support for health and wellness in Kentucky.”

Jewish, a 462-bed hospital, and other KentuckyOne facilities have been plagued by financial struggles. Those difficulties were exacerbated by the system’s pending separation from the University of Louisville Hospital, which, according to Insider’s sources, has financially propped up KentuckyOne’s other facilities.

KentuckyOne Health was created by the merger of the former Jewish Hospital & St. Mary’s HealthCare and Saint Joseph Health System. Almost since its inception, the nonprofit health system struggled financially, racking up losses of about $300 million in fiscal years 2010 to 2014, according to IRS records.

In February of 2015, shortly after Brinkley said the nonprofit had to improve its performance by more than $200 million by the end of 2015, the organization announced layoffs.

Late last year, KentuckyOne and the university said they were ending their troubled joint operating agreement for University Hospital, for which KentuckyOne controlled 90 percent of income and loss. The agreement began in 2012, and officials said at the time that the health care industry had changed dramatically since then, and that it was best for all involved to dissolve the JOA.

The months before the announcement were filled with acrimony, with the university demanding more than $46 million in back payments and KentuckyOne accusing the university of failing to provide details on the allocation of tens of millions of dollars the system paid the university.

Last month, the system said it was cutting 150 jobs to cut costs, and another 100 employees transferred to University of Louisville hospital or took early retirement.

KentuckyOne’s parent, CHI, is in merger talks with San Francisco-based Dignity Health, which operates 400 care centers, including hospitals, in 22 states and employs 62,000, including more than 9,000 physicians. CHI operates 102 hospitals in 19 states and employs 95,000, including nearly 4,000 physicians. Combined, the two systems generate annual operating revenue of $27.5 billion.

KentuckyOne told Insider via email that about 4,000 people work at the facilities it is trying to sell. It could not provide a timeline for the planned sale, saying that the process had just begun.

“Work is underway to identify future owners who will be better equipped to continue the commitment to quality care, employee engagement and community support,” the system said in the release. “KentuckyOne Health will continue to deliver care and support services at all facilities and provider practices throughout this transition.”

Brinkley said, “We understand this will bring change and questions to our employees and community partners. We have an extensive transition program underway to ease the change and ensure focus on our priories to our patients and our partners.”

Jewish Hospital was founded in Louisville in 1903 under the guiding principle of tikkun olam, an ancient Hebrew phrase that means “healing of the world.” It’s a research and education-focused hospital. The hospital has been on the forefront of many medical innovations including being the site of the first four hand transplant surgeries and world’s first and second successful AbioCor Implantable Replacement Heart transplants.

The hospital is federally designated to perform all five solid organ transplants: heart, lung, liver, kidney and pancreas.

The hospital was a pioneer in serving the African-American community in the mid-1900s. In 1945 the hospital agreed to manage and staff the nursing needs of the local Red Cross, which served the black community in Louisville, and in the 1950s the hospital began hiring black physicians.

This post has been updated.



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