Jewish Hospital and St. Mary’s Healthcare recorded operating losses of $17.7 million in the quarter ended Sept. 30, which was slightly better than the period a year earlier, when operating losses exceeded $20 million.
Nonetheless, losses in for the most recent quarter were at nearly $1.5 million per week, which is worse than the average weekly losses from the whole of last year, according to a new report filed by Denver-based Catholic Health Initiatives, the nonprofit that includes KentuckyOne Health, which runs Jewish Hospital.
CHI also said that it continued to expect the proposed sale of Louisville assets, including Jewish Hospital, to be completed by June 30 of next year — though sources have told Insider that the deal is in trouble and that some parties are planning for the facility’s closure.
Financial difficulties, including net losses exceeding $350 million for 2014 and 2015, prompted KentuckyOne officials in May 2017 to put up Jewish Hospital and other Louisville facilities for sale. About a year ago, the health system said that it had entered exclusive negotiations with New York-based alternative asset management firm BlueMountain Capital Management.
Spokesmen for both KOH and BMC told Insider via email Friday that the parties remained in productive discussions and continued to expect that they would reach an agreement by June 30.
They declined to answer Insider’s questions, including whether BMC wants to acquire all of the assets — or whether it is trying to carve out Jewish Hospital.
KOH also wouldn’t provide additional details on the performance of Jewish Hospital. CHI’s report provides only the performance of Jewish Hospital combined with St. Mary’s Healthcare, as a unit called JHSMH. It’s unclear from the report whether both are losing money, or whether, for example, a profitable St. Mary’s Healthcare is, at least to some degree, offsetting the operating losses at Jewish.
CHI also said in the new quarterly report that its balance sheet includes “JHSMH total assets held for sale of $19.9 million and total liabilities held for sale of $77.3 million.” In other words, Jewish Hospital and St. Mary’s Healthcare hold a value of about $20 million, but carry a debt load that is about four times as high.
KOH CEO Chuck Neumann, who will retire next month, has said that negotiations with BMC are taking longer than initially expected because of the transaction’s complexity and that the health system has no plans to close Jewish Hospital.
However, sources have told Insider that the deal is in trouble and that affected parties are preparing for the facility’s closure. Most of the sources have asked to remain anonymous, in part to avoid backlash for speaking about the situation publicly.
Sources also have told Insider that University of Louisville President Neeli Bendapudi recently traveled to Frankfort to seek help from state officials with challenges related to Jewish Hospital but was rebuffed. Just days after that trip, Bendapudi publicly cited “the current uncertainty around Jewish Hospital” as the impetus for the university having “begun a process of transitioning service lines to University of Louisville Hospital and elsewhere.” A university spokesman later said that the institution merely was making contingency plans because of the impending end of an academic affiliation agreement the university has with KOH.
That agreement, which was amended in February, calls for KOH 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. However, that agreement is scheduled to end on Dec. 31, meaning the payments will stop.
KOH has told Insider that the parties “remain in productive discussions … regarding the future of services at Jewish Hospital that are in partnership with UofL.” And UofL has said that the university “is committed to both the residents and their programs in the foreseeable future regardless.”
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.
JHSMH generated operating revenue of $180 million in the quarter ended Sept. 30, down less than 1 percent from a year earlier, indicating that, at least so far, demand for the hospital’s services is continuing virtually unabated.
CHI said that overall, it incurred a third-quarter loss of operations of $73.4 million, narrowing the loss it suffered a year earlier by $4.5 million. However, the health system’s net income, at $75 million, fell by more than 44 percent, as slightly higher revenues were offset by a $64.8 million declined in nonoperating revenue, “due primarily to lower investment income.”