The University of Louisville has reached an agreement to assume KentuckyOne Health’s Louisville-area assets. The agreement comes two months after initial negotiations ended when UofL could not find a suitable partner to help fund the acquisition. However, support from both the state and two local foundations revived the talks to save the struggling Jewish Hospital and other vital area medical facilities.
As part of the new agreement, UofL will pay $10 million to acquire the assets from KentuckyOne’s parent company, CommonSpirit Health, while CommonSpirit will forgive $19.7 million in outstanding promissory notes from University Medical Center Inc. Additionally, UofL will assume more than $76 million in accounts receivable from KentuckyOne, providing an immediate source of capital.
To help secure the purchase, Kentucky Governor Matt Bevin and Economic Development Cabinet Secretary Vivek Sarin have promised to support a $50 million, 20-year loan – half of which will be forgiven if the university meets certain criteria in areas of employment or service to underserved areas of the community and commonwealth. Kentucky Senate President Robert Stivers and Speaker of the House David Osborne also expressed support for the loan.
Further, the Jewish Heritage Fund for Excellence and the Jewish Hospital and St. Mary’s Foundation, are investing in the facilities, contributing $10 million and $40 million respectively, to be paid throughout four years.
These outside investments are vital to the agreement, as they help offset the significant financial risk such a purchase poses to the university, according to UofL President Neeli Bendapudi.
While acknowledging the risk, she stressed the upside of the acquisitions, noting the additional medical facilities will strengthen UofL’s academic medical center, providing more opportunity for residents and students at the university’s Health Sciences Center. The additional facilities and resources also will provide venues in which to conduct leading-edge research and entice more clinical trials, external funding and renowned faculty to the university.
“These medical facilities and the thousands of professionals who work there have for decades provided outstanding and important medical care to patients throughout our community and beyond,” said UofL President Neeli Bendapudi. “We are proud to protect that legacy and to ensure the continuation of that care as we acquire and enhance these facilities.”
Bevin added that the preservation of these healthcare programs, services and jobs are vital to UofL, the UofL Medical School, Metro Louisville and the entire Commonwealth.
“UofL’s acquisition of the KentuckyOne facilities will maintain more than 5,000 jobs in the healthcare sector and ensure that our healthcare delivery system in Metro Louisville is preserved,” he said. “I am confident that this acquisition will further the incredible medical research occurring at these facilities, while simultaneously meeting the growing demand for quality, cutting-edge health care services.”
The purchase includes:
- Jewish Hospital, including the Outpatient Center, Rudd Heart and Lung Center, offices and parking garages
- Frazier Rehab Institute
- Mary and Elizabeth Hospital
- Our Lady of Peace
- Jewish Hospital Shelbyville
- Jewish Medical Centers East, Northeast, South and Southwest
- Physicians groups affiliated with KentuckyOne
Services provided by UofL physicians at Jewish Hospital include organ transplantation, cardiovascular medicine and neurological surgery. The hospital is home to the only solid organ transplant facility in the region, and UofL’s renowned clinical care and research in cardiovascular medicine and spinal cord injury are conducted at Jewish and Frazier Rehab.
Approved by the UofL Board of Trustees at its meeting this morning, the sale is expected to close Nov. 1 pending regulatory approvals and the consent of the Catholic Church, which must approve the sale of Sts. Mary and Elizabeth and Our Lady of Peace. As part of the agreement, the facilities will be branded under the UofL Health umbrella.
Once the deal is closed, UofL will assume management of the facilities.
“This has been an arduous process, and it took an outstanding team and hard work to get us to this point,” Bendapudi said. “I want to thank our governmental leaders, our trustees, the foundations and, of course, our team led by Tom Miller, CEO of UofL Health, University Counsel Tom Hoy and Dan Durbin, UofL CFO, for their dogged efforts to make this happen. Tom Miller’s remarkable work in restoring the financial standing of UofL Hospital in less than a year gives us confidence that we can have similar success in turning around these assets.”