Health Consolidation & Transformation Continues with University of Louisville Acquisition of Jewish Hospital

Aug 21, 2019 | Jewish Hospital, Kentucky, University of Louisville

Health Consolidation & Transformation Continues with University of Louisville Acquisition of Jewish Hospital

Research in the United States is a subset of the health sector, which continues to consolidate and transform at a steady pace evidenced by University of Louisville’s acquisition of Jewish Hospital in Kentucky. Jewish Hospital was on the verge of closure due to severe financial problems, including hundreds of millions in long-term debt, threatening not only vital community health resources but also impacting clinical research in Kentucky. The Bluegrass State is a beautiful place—home to a special corner of America—truly unique. It also represents the nexus of the health crisis of the nation.

Jewish Hospital has merged with “KentuckyOne Health,” one of the largest healthcare systems in Kentucky with some assets in southern Indiana.

Why did University of Louisville acquire Jewish Hospital?

Jewish Hospital—part of KentuckyOne, was on the verge of closure. For months, the future of KentuckyOne was a source of incredible anxiety in this region of the United States. The moral at both the hospital and the university was at an all-time low, reports the Courier-Journal. The future of prestigious clinical programs was uncertain and a vital safety net for community health care was threatened. Medical education and clinical research (including clinical trials) were in serious trouble.

Clinical Research Implications?

Yes. The university and the hospital need each other to thrive, and this partnership will be better preserved under academic leadership rather than private ownership. Many University of Louisville physicians practice medicine, train students, and do research at the hospital (including clinical trials), and this collaboration had led to pioneering work in the artificial heart program, hand and face transplants, and innovative research in neurology, cardiovascular medicine, liver diseases, diabetes and environmental health. This acquisition literally is saving critical clinical research programs.

What are Some of the Clinical Research Programs Involved?

The KentuckyOne Health Research program seeks to promote innovative research and has partnered not only with sponsors but also physician-led clinical trials and regional collaboration with other healthcare providers.  Moreover it has been active in a collaboration with CHI Institute for Research and Innovation (CIRI) connecting Catholic Health Initiatives Hospitals (owner of KentuckyOne) with system-wide initiatives dedicated to research and innovation.

The University of Louisville’s “Clinical Contracts Division” administers clinical trials contracts. They interface with both the internal University of Louisville “Clinical Trials Unit” as well as external entities, including Jewish Hospital (part of KentuckyOne).

What is University of Louisville’s Investigator Network or “InNet”

InNet is a community of clinical researchers. Its mission is to foster and facilitate collaborations among researchers and trainees by creating an environment that values and supports investigators with diverse research interests. The InNet team is creating a searchable database that will support rapid identification of the investigators of interest. Those interested, including sponsors, can register at this link.

Jewish Hospital Louisville Background

The hospital opened in 1905 with a mission to provide all patients with the highest quality care and a strong emphasis on research and education. Today, Jewish Hospital is a 462-bed internationally renowned, high-tech tertiary referral center in downtown Louisville, developing leading-edge advancements in a number of specialties and services.

They report on their website that many of their clinical programs have achieved national rankings for excellence. Noted medical firsts in Kentucky, the nation and world, Jewish Hospital is the site of the nation’s first four hand transplants, and the world’s first and second successful AbioCor™ Implantable Replacement Heart transplant. The hospital is federally designated to perform all five solid organ transplants—heart, lung, liver, kidney and pancreas.

Financial Decline

Undoubtedly, the decline of Jewish Hospital Louisville represented an unacceptable situation given the dependence on the hospital for primary health care, community care and clinical research. The university had to step in. Some have argued that the hospital operated profitably and didn’t begin its decline until its affiliation with the university in 2013. For example, a review by Morgan Haefner of Becker’s Hospital Review offers interesting insight including:

  • Jewish Hospital and its partner St Mary & Elizabeth were profitable during the period 2002 through 2011 according to IRS records cited by Insider Louisville. Its average annual profit during that period was $16 million and included a $41 million gain in 2011.
  • In the five years since the hospital inked an operating agreement deal with University of Louisville (and the ACA took effect) the hospital system lost $135 million.
  • During the same period, the University of Louisville University Medical Center improved a net loss of nearly $1 million for 2011-2012 and a yearly average profit of $40 million.

Peter Hasselbacher, MD, and emeritus professor of medicine at the University of Louisville was on record that “The agreement didn’t work out to anybody’s satisfaction.” Consequently, the University of Louisville and KentuckyOne (owner of Jewish) ended their joint operating agreement in the summer of 2017. Dr. Hasselbacher helped confirm that Jewish Hospital was in a disastrous financial situation accumulating hundreds of millions in long-term debt.

Since May 2017, KentuckyOne started attempting to sell off Jewish Hospital and its Louisville assets. University of Louisville earlier in 2019 approached KentuckyOne to bid for several hospitals and others assets from KentuckyOne health—and its parent company Englewood, Colorado-based Catholic Health Initiatives (CHI).  Blue Mountain Capital Management, a private equity firm, was also looking to gobble up Jewish and other assets

Food for Thought

The merger may be the right medicine. An integrated hospital system could offer economy of scale, especially when factoring operational components such as bargaining with vendors, suppliers, insurers, etc. A one-stop network of care facilities could very well cut costs for patients and payers via the integration of varying specialty as well as intelligent standardization across the different facilities. For example, a harmonized medical records system can be leveraged by all facilities and, if done correctly, offer incredible efficiencies and options for clinical researchers, not only for better population health but also clinical research and efficiency in clinical trials.

According to the Courier-Journal, Kentucky leads the nation in rates of heart disease, lung cancer, smoking, diabetes and obesity. Within Louisville itself, life expectancy can vary by 15 years depending upon zip code! A truly unacceptable situation for the Untied States. A new value-driven health care mission must emerge out of this whole transaction. New paradigms, centering on whole-person care and prevention not to mention health education emphasizing personal responsibility should propel Kentucky to be a leader in turning around America’s health care crisis. Now a network of hospitals has the scale and capabilities to make a material difference in Kentucky and beyond. On the clinical research side, competition intensifies between different clinical research sites for funding, deal making and ultimately health care impact. The players in Kentucky have a microcosm of challenges to apply clinical trials fostering true clinical research as care options. It takes vision, leadership, and ongoing execution.


Pin It on Pinterest