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Anne Law

Kentucky hospital merger still possible, despite governor’s objections

by Anne Law | Dun & Bradstreet Editor

January 5, 2012 | No Comments »

hospitals kentucky mergerThree major Kentucky hospital systems that had their merger hopes dashed when Governor Steve Beshear rejected their proposal last week have received a reprieve as state officials indicate an altered version of the agreement might be approved.

The governor’s primary objection to the proposed deal was that the University of Louisville Hospital would no longer be state-owned once it combined with two other Kentucky health systems, Jewish Hospital & St. Mary’s HealthCare (JHSMH) and the Saint Joseph Health System, both of which are affiliates of national hospital operator Catholic Health Initiatives (CHI).

Under the original merger terms, CHI would have ended up with a 70% stake in the combined system, which would become the largest health care system in the state. CHI planned to invest $320 million in the system as part of the deal.

However, the University Hospital operates as a regional “safety net” facility, meaning it sees a large volume of charity patients, and state Attorney General Jack Conway has raised concerns over how the facility’s services would change under a Catholic parent.

Despite these challenges, the three care providers have not given up on their affiliation plans, and the governor’s spokesperson has indicated that Beshear will continue to work with the systems to come up with a new, more acceptable version of the deal. A University of Louisville representative has confirmed that a meeting with the governor will take place this week.

Whatever form the new merger agreement might take, state officials are obviously aware that some sort of change is necessary to avail the woes of the University Hospital and the JHSMH facilities, which like many systems across the US are facing hard financial times due to a rise in uninsured patients, increased competition, and other economic and market conditions.

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