Death of a Hospital Merger

Gov. Steve Beshear killed the proposed merger of University of Louisville Hospital with Jewish Hospital & St. Mary’s HealthCare and Saint Joseph Health System in Lexington, owned by Denver-based Catholic Health Initiative. Beshear’s long-awaited decision was announced this morning.

Beshear says no to hospital merger

It puts an end, presumably, to the talk of the merger which had been hailed for its potential to finance improvements and improve care. But the critics of the merger claimed the new entity, which would follow religious-based directives that restricted abortions and end-of-life procedures, would not fulfill the requirements of a public hospital.

Beshear’s blessing was necessary for the merger to move forward. Here’s his statement:

“For the last several months, I have consulted with Attorney General Jack Conway, State Auditor Crit Luallen, officials from the University of Louisville and the proposed merger partners, health care and finance experts, and concerned citizens from across the Commonwealth on a proposal to merge University Hospital and Jewish Hospital & St. Mary’s Healthcare in Louisville with those owned or controlled by Catholic Health Initiatives in Kentucky, in order to create a statewide network of health care facilities.

University Hospital provides high-quality health care services, and I greatly appreciate their efforts to improve those services, improve the health status of Kentuckians and find ways to grow and expand the mission of the University health care system.

Significant legal and policy concerns have been raised about this proposed merger, including constitutional and public policy questions about the influence of a religious entity on a publicly-owned institution, especially regarding reproductive issues. In addition, if for some reason in the future the merger partners were forced to separate, the potential costs of that unwind could be significant and have a detrimental impact not only on University Hospital, but also on the taxpayers of this state.

However, most troubling to me is the loss of control of a public asset. University Hospital is a public asset with an important public mission, and if this merger were allowed to happen, U of L and the public would have only indirect and minority influence over the new statewide network’s affairs and its use of state assets. Many of these issues have been raised and analyzed in a report from Attorney General Jack Conway, who recommends not going forward with the merger.

U of L and the other merger partners have worked hard to address the concerns that have been raised, and I appreciate those efforts.

However, after exhaustive discussions and research, I have determined that this proposed transaction is not in the best interest of the Commonwealth and therefore should not move forward. In my opinion the risks to the public outweigh the potential benefits.

I understand that the changing health care industry has caused significant challenges for both University and Jewish Hospital & St. Mary’s Healthcare. I am committed to assisting both facilities in reaching our shared goals of providing quality care, especially to our poorest and most vulnerable citizens, as well as finding ways to ensure both facilities remain on strong financial footing. These hospitals provide critical services, and we stand ready to help them fulfill their missions and succeed in a changing health care economy.”

Here’s a link to the Courier-Journal’s coverage. and to WFPL.

UPDATE: Here’s a statement from U of L, which is apparently not giving up:

We received the Attorney General’s report at 9:00 this morning and subsequent Governor’s decision. We are disappointed on behalf of patients across the Commonwealth who would be the greatest beneficiaries of the proposed merger, and who have the most to lose if the merger does not move forward. As recently noted by a respected independent health care expert engaged by the Jefferson County Attorney, this merger is crucial to the future of University of Louisville Hospital.

Each of the partners remains committed to working together to further the joint vision that has guided us over the last several months.  We firmly believe that a strong alignment between our organizations will have positive benefits for the communities we serve and the health care of Kentuckians across the state.

We will continue to work with the Governor’s office and other government officials to address the inaccuracies and noted concerns in the report.  We look forward to delivering a transaction in a form that the Governor would feel compelled to approve.