Kentucky Gov. Steven Beshear rejected the merger that would have united the University of Louisville's hospital with two Kentucky affiliates of Englewood, Colo.-based Catholic Health Initiatives.
Ky. governor rejects proposed hospital merger
"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," Beshear said in an e-mailed news release. "In my opinion, the risks to the public outweigh the potential benefits."
The $620 million proposal would have created a 15-hospital system along with Jewish Hospital & St Mary's HealthCare in Louisville and St. Joseph Health System in Lexington, Ky. A University Hospital spokesman said officials were disappointed and that the merger was crucial for the facility's future. They said they were committed to alignment. "We look forward to delivering a transaction in a form that the governor would feel compelled to approve," the spokesman said in a statement.
The deal required the governor's approval. Kentucky Attorney General Jack Conway penned a report (PDF) on the merger sent to Beshear on Thursday. The report stated that the merger would leave the University of Louisville with only an "indirect and minority influence" over the hospital. Conway also expressed concerns in the report that the university could be compelled to buy assets to retake control over the hospital in the event of unwinding.
Under the proposed deal, CHI would invest at least $200 million into University Hospital and commit $11 million a year to the facility, as well as $6 million annually in lease payments to the university.
Some local opponents questioned whether University Hospital would uphold its commitment to charity care after the merger and worried that reproductive services would be limited in the community with the hospital operating under Roman Catholic doctrine, although the hospital did make arrangements to offer those services off-site.
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