KentuckyOne Health (KOH) sent the following email to its physicians and employees on Nov 21. Most of the text is derived from promotional materials released at a press conference Nov 14. The text of the announcement itself is reprinted below. Two additional tables comparing the new agreement with the previous failed merger attempt are included in the PDF version downloadable here. Following the KOH notice, I add a few thoughts of my own. Please also read my current analysis of the Joint Operating Agreement and the Academic Affiliation Agreement for background.
“TO: KentuckyOne Health Physicians
KentuckyOne Health EmployeesFROM: Ruth W. Brinkley, President/CEO, KentuckyOne Health
DATE: November 21, 2012
RE: New partnership with University of Louisville, University Medical Center and James Graham Brown Cancer Center
We’ve had a whirlwind of activity as we worked with University of Louisville and the University Medical Center to announce that KentuckyOne Health was selected as their partner in a joint operating agreement (JOA). With the announcement behind us, Debbie Molnar will lead the integration effort, which is already under way. Full integration will occur March 1, 2013.
The request for proposal process was a 10-month undertaking conducted under the Commonwealth of Kentucky’s stringent procurement rules and procedures. KentuckyOne’s administration and Physician Leadership Council were actively involved in developing our proposal and in negotiations with the UofL, UMC and the state. The RRP process was competitive and involved one other bidder, Health Management Associates of Naples, Fla.
The future of health care is for providers to be part of regional networks of aligned and coordinated health care delivery systems that meet the demands — and improve the health — of the communities they serve. Our mission is built around audacious goals to improve health care in Kentucky; to partner with physicians to guide, govern and manage the system; and an unwavering commitment to a core belief of providing medical care for all of Kentucky’s citizens, regardless of their ability to pay.
We know all too well the health challenges that Kentucky faces, from a significant shortage of physicians to a high incidence of disease. To meet those challenges head on, and provide quality care for all Kentuckians, Kentucky needs a premier, integrated health system. We firmly believe that KentuckyOne — together with a thriving University Medical Center — will be that system.
On Wednesday, Nov. 14, I joined officials from UofL and UMC for the announcement that, after the extensive and exhaustive RFP process, they had selected KentuckyOne Health as the health care partner to help them grow and succeed in the future. Here you’ll find a fact sheet that outlines the terms of the JOA the parties have signed for a 20-year partnership. It is important to understand that the financial commitment that was made as part of the JOA is in addition to the commitment we have already made (and have begun implementing) when we announced the original KentuckyOne merger in January. That commitment has not changed.
According to UofL and UMC officials, KentuckyOne emerged as the preferred partner due to key strategic alignments in several key areas, including:
- Mission Alignment
- Shared commitment to meeting patient and community health care needs, furthering the potential of the UofL Health Sciences Center, proven commitment to innovation, and charity care
- Vision of Success
- Shared vision for statewide clinically integrated physician-led network
- Historical Collaborations
- 60-year history of academic and research partnership, including current partnerships in cardiovascular, transplant and physical medicine and rehab
- Culture
- Non-profit physician-led culture focused on high quality care and employee satisfaction
Governor Steve Beshear and Attorney General Jack Conway joined us at the announcement. They endorsed the partnership and expressed their support for the state-run RFP process that led to the partnership. They are clearly excited for what this partnership means for the future health of the Commonwealth’s citizens.
We heard and understood the concerns expressed during last year’s merger effort.
While retaining core financial elements from previous discussions, this JOA is a vastly different structural approach that addresses the previous concerns. This is not a merger. It protects the state’s ownership rights, preserves UMC’s autonomy, and keeps the Center of Women and Infants (CWI) and NICU under the exclusive oversight of UMC. The agreement provides an equitable unwind provision should that ever become necessary.
Above all, this collaboration will contribute to improving health care outcomes for the Louisville community and Kentucky through a shared mission focused on teaching and academics, charity care, and research and innovation. This partnership will create an integrated, comprehensive health system that will change health care for generations to come.
I look forward to sharing more information with you as the integration planning process gets under way, and to working with you to move ever closer to our shared vision of a healthier Kentucky.”
Comment:
Medical Staffs.
Some of the points made are understandably targeted specifically to doctors from Jewish and St. Mary’s Hospitals. For example, one of the tables claims that “medical staff at Jewish Hospital will remain independent from UMC medical staff.” Medical staff at Jewish Hospital went ballistic when they were told they would be reporting to department chairs and division chiefs of the University of Louisville. However the statement quoted above is confusing or misleading as written. The only UMC medical staff that will remain is that performing the prohibited procedures in the new carved-out hospital. Otherwise, every effort appears to have been made to specify that the medical staffs of the jointly run hospitals will have reciprocal privileges and follow the same set of policy and procedure guidelines– the religion infused rules of the Catholic Church. The senior clinical academic chiefs will have some special privileges at the former University Hospital but it is not clear to me how this will be arranged. I predict this is going to be a long-standing bone of contention because clearly the initial intention was to give University clinical faculty more control at Jewish Hospital.
Unwind costs.
One major concern about the previous failed merger agreement was about how expensive it would be for the state and university if the merger failed. The table attached to the announcement claims that the joint operating agreement now enables an equitable unwind. Alas, I could not find any such documentation. It still appears to me that the hospital and University, and therefore the Commonwealth, are taking on somebody else’s debt.
RFP Process.
Much was made about the rigorous RFP proposal process conducted under “stringent procurement rules and procedures.” I am sure that Jewish Hospital and the University would like to sweep under the rug the fact that their leadership continued to meet outside of the procurement rules to discuss among other things, how to structure a governance that would satisfy the Bishops, and how to set up primary care clinics to feed patients to hospitals. I am unaware that any penalty had to be paid for that violation of the sacred RFP rules. In my opinion, Health Management Associates would have had a justifiable reason to file a formal complaint. In any event, despite wide and hopeful speculation from people like myself, there did not seem to be much interest in partnering with the University of Louisville.
Who gets the money, how much and when?
Important to the audience of this communication is the announcement that substantial funds will be targeted to the former Jewish hospital facilities and the Saint Joseph’s Hospital facilities in Louisville, and in the rest of the state. I must say, that reading this announcement confirms my analysis of the Joint Operating Agreement that the University has much less say about how the so-called financial benefits will be applied, and that they will be directed more towards the strategic goals of KentuckyOne health than the University. For example, why should any of the University’s promised money be contingent on whether or not a Level-4 trauma center is established at St. Joseph’s Hospital in London?
It appears to me that everyone who hears about or reads the documents and promotional materials released so far in relationship to this partnership is seeing a different thing, perhaps only those things they want to see. Given the limited documents released and the obvious lack of implementation and facilities planning, this is not surprising. That no one seems to know what is going to happen is a real problem!
If there are readers who can share the reactions of Jewish, St. Mary’s, or University Hospital Medical Staff or Employees, I would love to hear from you
Peter Hasselbacher,MD
President, KHPI
Nov 23, 2012