A photo of the Jewish Hospital exterior
Local health care experts said they are worried about the future of Jewish Hospital now that UofL has decided to abandon its attempt to find a partner to save the facility. | Photo by Tony Pacheco

Local health care experts said they are worried about the future of Jewish Hospital now that UofL has decided to abandon its attempt to find a partner to save the facility.

“Gut punch,” one source described his reaction to the university’s decision.

“I don’t know how long (the owner) will keep Jewish afloat,” said another.

“You can’t lose a million a week and stay in business,” said a third.

KentuckyOne Health has been trying to sell Jewish Hospital and eight other facilities for more than two years. Jewish and Sts. Mary & Elizabeth hospitals have been incurring operating losses of more than $1 million per week.

The health system, which is owned by Chicago-based CommonSpirit Health, in late 2017 had identified New York-based alternative asset management firm BlueMountain Capital Management as its exclusive negotiating partner. Those talks took longer than the system’s leaders expected, and about a year later, the University of Louisville said it would try to find a partner to buy the facilities, some of which serve as a staging area for School of Medicine-related functions, including organ transplantation.

However, the university abandoned that effort last Wednesday. UofL President Neeli Bendapudi said negotiations with three prospective partners revealed that a deal would have required so much money that it would have put the university’s financial health in jeopardy.

While Bendapudi said that the hospital would not close in the short term, and KentuckyOne said it has “no current plans” to close the facility, their comments cast doubt about the facility’s future in the long run.

Bendapudi said last Thursday that the university and KentuckyOne were “committed to an orderly transition” while Louisville Mayor Greg Fischer said the parties “will continue to work for a smooth transition.”

A transition to what wasn’t exactly clear.

Bendapudi said that university officials thought their chance of success in trying to find a buyer was a “toss-up,” but they had to try nonetheless, primarily to save Jewish Hospital.

“The reason we got in was, is there a way that we could acquire the whole system so that we protect those downtown assets,” she said. “… So our interest was, can we find a way to keep the downtown assets going?”

Although the effort failed, the university president repeatedly tried to assuage fears about the facility’s future.

“I don’t anticipate anything in the short run,” she said. “What is (the) long run? I don’t know.”

Warning signs

A portrait of Dr. Peter Hasselbacher
Dr. Peter Hasselbacher

Dr. Peter Hasselbacher, emeritus professor of medicine at the University of Louisville, said he was disappointed in the university’s decision to walk away, but not surprised.

Many potential suitors have looked at the facilities in the last few years and walked away, he said, so the university’s attempt was always a long-shot.

The hospital’s owner, KentuckyOne, told Insider via email that it continues to “have conversations with two other interested organizations,” including BlueMountain, but how a change of ownership would affect the hospital is unclear.

KentuckyOne would not comment on whether the still-interested parties plan to operate the hospital as a medical facility, even with reduced capacity. And BlueMountain declined to answer Insider’s question about whether, if its acquisition succeeded, it planned to use Jewish Hospital as a medical facility.

Hasselbacher said he’s not seeing any signs that instill confidence in the facility’s future.

“All I see are warning signs that the community should be prepared to take up the slack to take up the medical needs of urban Louisville,” he told Insider.

“I’d love to be more optimistic,” he said, “but I can’t be. I see us slowly circling the (drain.)”

Two other sources told Insider that they, too, worry about Jewish Hospital’s future. The sources asked to remain anonymous because they work in the local health care field and feared backlash for speaking publicly. Neither is directly involved in the negotiations.

“My guess is that the hospital will downsize and specialize in just a few areas of care,” one source said, suggesting that KentuckyOne would sell assets, some to other local health systems.

“I don’t know how long (CommonSpirit) will keep Jewish afloat,” the source said.

Another source told Insider that while he wants to believe that the university’s intervention and KentuckyOne’s continued negotiations are “part of a grand plan, (he was) getting less optimistic.”

Health care experts have told Insider that potential buyers may have an interest in delaying a purchase for as long as possible because as KentuckyOne loses more money from the health facilities’ operations, its incentive to sell the hospitals increases, which may reduce their purchase price.

KentuckyOne “must be desperate to shed their losses at Jewish Hospital,” Hasselbacher said.

“It’s going to be a fire sale,” one of the other sources told Insider, “and someone’s getting a bargain.”

Public health crisis

Hasselbacher said whatever transactions occur will not address one of the underlying drivers that has brought Jewish Hospital to the precipice.

Local health care experts have said that the loss of the hospital would have far-reaching consequences for many parts of the Louisville community in part because it takes care of tens of thousands of patients.

Hasselbacher said that if Jewish Hospital closes or reduces its services, he wonders what would happen to the patients, given other facilities’ limited capacity to take on more cases.

According to recent filings, Jewish and Sts. Mary & Elizabeth hospitals have a combined 78,000 annual emergency room visits, compared to 65,000 at nearby university’s hospital. Bendapudi said the university’s hospital is “at capacity” and Norton Healthcare’s downtown hospital, too, sometimes has to divert patients to other facilities.

A map of downtown Louisville hospitals
A map showing the proximity of Jewish, Norton and University hospitals. Local health care experts said they are worried about the future of Jewish Hospital. | Courtesy of Google Maps.

Hasselbacher said that Jewish Hospital is in trouble partially because it provides care to a greater share of people without insurance or on government insurance plans, which generally pay hospitals less than it costs to provide the care.

Data provided by the hospital systems helps explain some of the challenges: About three-quarters of patients at Jewish, Sts. Mary & Elizabeth and Our Lady of Peace hospitals are on Medicare or Medicaid, compared to just over half at the university’s hospital and less than half for local Norton Healthcare and Baptist Health systems.

While the KentuckyOne facilities are losing money, the university’s hospital is profitable, according to Bendapudi. Meanwhile, the much larger Norton and Baptist systems in each of the last two years have generated a surplus of more than $200 million each.

Hasselbacher said that if some of the KentuckyOne facilities closed, their patients still would need care, which would mean some of the financial strains that have weakened KentuckyOne may be transmitted to other local health care systems.

“The same forces that have handicapped Jewish Hospital … are really threats to downtown Norton and university (hospitals,)” Hasselbacher said.

Regardless of what happens to the KentuckyOne facilities, he said, the city will have to get serious about making sure that medical care is available to its citizens, especially the most vulnerable.

“I’m seeing challenges … to the city and state that they are going to be very reluctant to (address,)” Hasselbacher said.

The office of Mayor Greg Fischer has said that the university’s withdrawal from a partner search was “disappointing” and that the mayor’s priority remains “continuing high-quality patient access and care throughout the Louisville community.”

Fischer said his administration “stands ready to help ensure those things happen in any way possible.”

However, that appears to exclude financial help.

Bendapudi said that she requested no money from the city and the state to help with a potential acquisition, and she said neither offered any.

The city is dealing with a budget crunch, which the mayor has blamed on state government mandating the city to rapidly increase pension payments for local workers. Metro Louisville is trying to cut $25 million in spending for its next fiscal year.

A spokeswoman for Fischer declined to answer Insider’s question about specific steps the administration has taken in support of the downtown health care facilities.

“It is premature to speculate about loss of jobs or services,” the mayor’s office told Insider via email. “Louisville Metro Government will continue to work with our partners to ensure a smooth transition.”

Boris Ladwig
Boris Ladwig is a reporter with more than 20 years of experience and has won awards from multiple journalism organizations in Indiana and Kentucky for feature series, news, First Amendment/community affairs, nondeadline news, criminal justice, business and investigative reporting. As part of The (Columbus, Indiana) Republic’s staff, he also won the Kent Cooper award, the top honor given by the Associated Press Managing Editors for the best overall news writing in the state. A graduate of Indiana State University, he is a soccer aficionado (Borussia Dortmund and 1. FC Köln), singer and travel enthusiast who has visited countries on five continents. He speaks fluent German, rudimentary French and bits of Spanish, Italian, Khmer and Mandarin.