Governor rejects UofL hospital merger as 'not in the best interest' of Kentucky

12/30/2011 10:29 AM

Saying he was troubled by the prospect of the state losing control over one of its assets, Gov. Steve Beshear announced Friday that the proposed merger of the University of Louisville Hospital with Catholic Health Initiatives and Jewish Hospital should not go through.

“If this merger were allowed to happen, UofL and the public would have only indirect and minority influence over the new statewide network’s affairs and its use of public assets,” Beshear said in an audio statement. “Therefore after exhaustive discussions and research, I’ve determined that this proposed transaction is not in the best interest of the commonwealth and therefore should not move forward.”

Beshear added that “the risk to the public outweigh the potential benefits.”

Catholic Health Initiatives would have controlled the board of the new hospital entity. And some in the Louisville community expressed strong concerns that Catholic directives would prevent the network — including the university hospital — from offering certain reproductive health procedures. Indigent care coverage, which has been a mission of the UofL hospital also would have been affected by the merger.

Beshear made the decision after long discussions with many officials, including Attorney General Jack Conway who formally recommended that the merger be stopped. Read Conway’s report here: Conway_Report_on_Merger.pdf

And you can listen to Beshear’s statement here: Beshear_Audio_Statement.mp3

The governor also went on to say in a lengthy statement Friday morning:

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.

Louisville Mayor Greg Fischer told Pure Politics last week that he still had concerns about details of the merger.

He said Friday that he now wants to understand how Beshear’s decision will affect the three hospital entities that play crucial roles in Louisville.

“With the coming changes in health care reform, coupled with the pressures facing Jewish & St. Mary’s and University, we must work together as all options are explored to ensure that there is a strong health care system that works for all people in Louisville,” Fischer said in a statement. “University and Jewish & St Mary’s have long traditions of providing excellent health care and medical research, and it’s important for Louisville’s future that those legacies continue.”

UofL President James Ramsey said in a June interview on Pure Politics that the university and the two private hospital entities were trying to work out ways to maintain the teaching hospital aspect and keep up the public responsibilities of indigent care while also respecting the religious directives Catholic Health Initiatives adheres to.

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