There’s a new twist in the Jewish Hospital saga: The University of Louisville appears to want to buy it with the help of a partner.
In an email obtained by Insider, University President and University Medical Center Board Chair Neeli Bendapudi wrote that the institution had submitted a non-binding letter of intent to Catholic Health Initiatives, the Denver-based parent of KentuckyOne Health, to acquire its Louisville-based assets.
“This will allow us to do detailed due diligence and vet potential partners,” Bendapudi wrote.
Of course, KentuckyOne Health for more than a year has been in exclusive negotiations to sell Jewish Hospital and other Louisville assets to New York-based alternative asset management firm BlueMountain Capital Management.
University officials declined to elaborate on the letter of intent.
“I’m not going to confirm or deny anything. The university is still talking to various partners about next steps,” a university spokesman, John Drees, told Insider by phone.
It also was unclear whether the university’s letter of intent meant that the negotiations between KentuckyOne and BlueMountain are no longer exclusive.
A spokesman for BlueMountain told Insider via email, “Negotiations continue to advance and BlueMountain is working collaboratively with stakeholders to reach a successful transaction.” And a spokesman for KentuckyOne Health told Insider via email that it was continuing its “confidential negotiations” with BlueMountain and the university.
The deadline for concluding BlueMountain’s planned acquisition has been delayed repeatedly because of the deal’s complexity, the parties have said — although sources have told Insider that the deal is in trouble and some of the parties involved were preparing for the hospital’s closure.
Local health care experts have said that the closing of the hospital would have far-reaching consequences for many parts of the Louisville community because the 462-bed downtown facility employs thousands of highly skilled and highly paid health care professionals. It also takes care of tens of thousands of patients, many of them on Medicare and Medicaid.
KentuckyOne has been trying to shed the Louisville assets since May of 2017, citing significant challenges in the health care industry. Jewish Hospital especially has been struggling financially, racking up operating losses, together with Sts. Mary & Elizabeth Hospital, of nearly $1.5 million per month, according to reports from CHI.
Until summer 2017, the Louisville operations of KentuckyOne had been propped up financially by the profitable University Hospital, which KentuckyOne managed. However, the University Hospital’s management — and profit — have reverted to the university, leaving Jewish in a more precarious financial situation and its owner with greater incentives to sell it.
Jewish Hospital and other KentuckyOne facilities are vital to the university and its medical school as they provide a home for programs including cardiology, cardiovascular and thoracic surgery, motility/gastroenterology, neurosurgery, physical medicine and rehabilitation and solid organ transplants.
Bendapudi in November had said that because of the uncertainty around Jewish Hospital, the university had begun “a process of transitioning service lines to University of Louisville Hospital and elsewhere” — though university officials later said the institution was merely making contingency plans because of the pending end of the academic affiliation agreement between the university and KentuckyOne. That agreement was to end Dec. 31, but has been extended until June 30.
As part of that agreement, KOH agreed to give UofL at least $35.6 million through Dec. 31 to pay for, among other items, 51 full-time resident positions at Jewish Hospital. The terms of the agreement through June 30 are unknown, as the university and KentuckyOne have declined to provide copies. Insider has filed an open records request, but the university has not responded.
Dr. Peter Hasselbacher, emeritus professor of medicine at the University of Louisville, who writes on the local health care industry through the Kentucky Health Policy Institute, has suggested to Insider that the university should take over parts of KentuckyOne’s Louisville operations. However, one of the sources familiar with the matter wondered whether the educational institution could manage such an acquisition given its financial situation, especially without support from the governor’s office, which seems unlikely.
Bendapudi in November had traveled to Frankfort to seek help from state officials with challenges related to the struggling Jewish Hospital but was rebuffed, sources have told Insider. It was unclear whether she sought help with an acquisition of KentuckyOne’s assets.
Whatever assets the university oversees will be managed by a new CEO. The university announced Wednesday that as of Jan. 7, Tom Miller will serve as CEO of the University of Louisville Health system, which means he will oversee University Hospital and the James Graham Brown Cancer Center, among other facilities. Miller has more than 30 years of experience in the health care industry and most recently was CEO of Nashville-based Quorum Health until May. He is taking over for Greg Marshall, who will become chief operating officer.
One source in the health care industry was “bullish” on the university’s possible acquisition of KentuckyOne assets as it would help shore up downtown medical facilities and provide room for expansions.
Joe Sonka contributed to this report.
CORRECTION: This post was updated to correct which university official sent the email.