Healthcare Business News

Ky. deal forms with just two

By Ashok Selvam
Posted: January 9, 2012 - 12:01 am ET

Catholic Health Initiatives waited only a week after Kentucky Gov. Steve Beshear rejected a proposed merger with the University of Louisville Hospital to form a new network combining the other two parties involved in the proposed three-way deal.

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Jewish Hospital & St. Mary's HealthCare in Louisville and St. Joseph Health System in Lexington, Ky., formed KentuckyOne Health, and Englewood, Colo.-based CHI pledged a $320 million investment toward an integrated electronic health-record system and other capital improvements.

The merger is retroactive to Jan. 1, and CHI already has all the required approvals, having gained them during the process with the University of Louisville. The participation of 318-bed University of Louisville Hospital, deemed a public facility by Kentucky Attorney General Jack Conway, required the governor's approval. KentuckyOne includes 2,500 staff doctors at more than 80 locations plus more than 13,000 employees, CHI officials said.

A KentuckyOne spokesman said executives hope the University of Louisville Hospital could eventually be included. “We will always leave the door open if the situation changes.” Officials had both the KentuckyOne name and a new logo ready to unveil whether or not Beshear allowed the inclusion of University of Louisville on Dec. 30.

University of Louisville Hospital officials echoed CHI officials in a prepared statement, and said they'll work to win over Beshear. “We are hopeful that the partners of KentuckyOne Health will keep the door open for University Hospital (and) James Graham Brown Cancer Center should the governor offer his approval early next week.”

When Beshear will respond to the hospital's suggestions is unclear. “The university presented some options to the governor yesterday, which he will be reviewing and he will get back to them soon,” a spokeswoman for the governor said, referring to a Jan. 5 meeting.

KentuckyOne/CHI officials weren't on hand for that meeting with Beshear, who concluded a week earlier that the merger would force the state to cede too much control over the University of Louisville Hospital, which he considers a Kentucky asset. “We had a productive meeting in which we discussed the various issues raised by the attorney general's report and the university's ideas for addressing them,” Beshear said in a statement, referring to an analysis of the deal by Conway.

A familiar name in Catholic healthcare will be at the top of the new system. CHI named Ruth Brinkley as president and CEO of KentuckyOne. Brinkley, 59, is the former CEO and president of Carondelet Health Network, a four-hospital Ascension Health division in Tucson, Ariz. Three months ago Ascension relocated Brinkley to Washington, D.C., where she assumed the title “executive in residence.” Ascension called the move a promotion for Brinkley, named in 2010 to Modern Healthcare's Top 25 Minority Executives in Healthcare.

“The organizations have come together as KentuckyOne Health because they recognize that continuing to function as we have is not going to solve the issues,” Brinkley said in a news release.

University of Louisville Hospital officials argued that the safety net facility needs an investor to continue. Combining a public hospital and a Catholic facility, though, is never easy, and Conway noted this was the first proposed transaction of its kind in Kentucky.

Steve Weiner, an attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo in Boston, recalled a failed merger 20 years ago between Quincy (Mass.) Medical Center and Carney Hospital in Boston. Weiner said there's still a chance the Kentucky deal could end up a success: “I suppose it's possible to think some very creative ways to reconfigure the relationship. It's just more complicated.”

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