Legislator questions state loan of $50 million to U of L for Jewish Hospital, notes at-risk rural hospitals don't get similar support

U of L Health CEO Tom Miller spoke
at the meeting. (Photo by Melissa Patrick )

By Melissa Patrick
Kentucky Health News

Kentucky lawmakers asked a University of Louisville official why the state should loan U of L $50 million to help it buy financially distressed Jewish Hospital, suggesting the state was picking "winners and losers" since many rural hospitals are in the red and the state isn't helping them out.

At the Sept. 9 Medicaid Oversight and Advisory Committee meeting, Sen. Stephen Meredith, R-Leitchfield, the co-chair, called the state loan "precedent setting." Meredith said he appreciated the desire to maintain the safety-net hospital, but some rural hospitals are experiencing similar plights.

He pointed to Pineville Community Healthcare in Bell County, which recently sold in a bankruptcy auction.

"Are we picking winners and losers when we participate in these kind of efforts?" he asked. "I guess very simply: Why should we spend $50 million for Jewish, but we're not going to do anything for Pineville Community?"

Meredith (WKYT-TV image)

Meredith might have picked any one of several Kentucky rural hospitals as an example.

A report by Navigant Consulting in February found that 16 of Kentucky's rural hospitals, one-fourth of the total, are at high risk of closing unless their financial situations improve. The hospitals are not listed by name. And since 2009, Kentucky has had five rural hospitals close, according to The Cecil G. Sheps Center for Health Services Research at the University of North Carolina.

U of L Health CEO Tom Miller said he couldn't speak to issues related to Pineville hospital, but said U of L wouldn't have moved forward without a partnership with the state and two foundations.

"We believed at the time and we still believe today that there is no one who can take care of these patients" if Jewish closes, he said, stressing that it is not just a Louisville hospital, but a regional facility. He said a third of its in-patient visits are from outside Jefferson County and over 40 percent of its physician visits are by patients from other counties. It also has Jewish Hospital Shelbyville.

Miller said Jewish sees 35,000 emergency patients a year and has between 200 and 250 in-patients a day, and if its heart-transplant program closed, heart patients, many of them very poor, would have to travel either to Lexington, Indianapolis or Nashville for a transplant.

Last month, U of L announced it would buy Jewish and its associated facilities, collectively known as KentuckyOne Health, with help from the state and two foundations. The state's committed portion is $50 million, through a first-of-its-kind loan from the Kentucky Economic Development Finance Authority. The loan must still be approved by the legislature.

Senate Minority Leader Morgan McGarvey, D-Louisville, voiced concerns that the loan far exceeds the existing KEDFA loan limit of $500,000 and doesn't meet the usual requirement to create jobs.

"This loan obliterates every single criteria of being a KEDFA loan," McGarvey said. "What happens if that's challenged and you all are not actually allowed to get the money from KEDFA?"

Miller said U of L is scheduled to close on the deal Nov. 1, even if the state doesn't furnish the $50 million loan. However, he said without the funding it would have to shift resources and cut back on capital improvements at Jewish.

After the meeting, Miller told reporters U of L will have to spend about $40 million a year to maintain the hospital, Morgan Watkins reports for the Louisville Courier Journal.

McGarvey referred to a secretly recorded transcript from a private meeting between Miller and KentuckyOne Health physicians. Chris Otts reported for WDRB that Miller told the doctors that U of L Health could "be successful" with the takeover even without the $50 million loan from the state.

The meeting included a discussion about a plan to expand U of L Hospital. "How are we supposed to think that this isn't just a way of financing a new expansion of U of L Hospital down the road, and you're going to close down Jewish Hospital and sell off the assets?" asked McGarvey.

Miller said the transcript was from an unreliable source. He said there was a discussion about a separate plan to expand the university medical center with the physicians at Jewish "if we didn't go forward with KentuckyOne and those plans have been put on hold."

Meredith cut off McGarvey's pointed questioning, but said the topic would be discussed again. "We've got some serious issues and reservations about this," he said. The leaders of the Republican majorities in the House and Senate have voiced support for the loan, favored by Gov. Matt Bevin.