Center for Open Government: Are CARES Act funds creating an appearance of profitability at Jewish Hospital?
The most recent reports provided to the June meeting of the UofL Health Board further suggest CARES Act funds are obscuring the true financial condition of Jewish Hospital.
Our March 2021 post linked to a UofL Health document showing Jewish Hospital lost $11.1 million during the first six months of the fiscal year. In a post two months ago, we detailed that a $19.4 million infusion of CARES Act funds into Jewish Hospital appeared to dramatically closed the gap between the YTD net loss ($2.3M) and the budgeted loss of ($17.9M).
We emailed UofL Health the following question:
The 12/31/20 unaudited financials / leadership reports reported Jewish Hospital's YTD net loss was $11.1 million. The March reports show the YTD net loss for Jewish to be $2.3 million against a budgeted net loss of $17.9 million. That is quite a swing, especially since hospital admissions appear to remain well below budget. Can UofL Health provide some insight on how Jewish's net loss closed so dramatically?
UofL Health responded “that in 3Q FY21, $13.4M of revenue related to cost and lost revenues associated with COVID-19 was recorded by Jewish Hospital.”
The CARES Act infusions “recorded by Jewish Hospital” seem to position the facility to appear profitable - at least on paper.
Here are some additional details provided within the documents from UofL Health’s June board meeting:
April YTD EBITDA for UofL Health’s hospitals was $126.3 million, which was $37.4 million in excess of the budget of $88.9 million - primarily due to the CARES Act income of $30.6 million for UMC, $1.5 million for Jewish and $21.4 million released from CARES Act reserves for Jewish. (Link)
For the month of April, Jewish Hospital EBITDA exceeded budget by $6.6 million, primarily due to CARES Act revenue of $8.0 million. Operating expenses were unfavorable to budget by $3.7 million. (Link)
UofL Health had $320.3 million in total cash reserves at the end of April. Their June 2021 cash forecast was redacted under the claim those figures were subject to review through their annual audit process and therefore “preliminary.” (That claim likely wouldn’t withstand scrutiny if we pushed the issue, which at this point we don’t intend to do).
Financial transparency is critical to ensuring policymakers and taxpayers have up-to-date facts on how this merger is going.
In June 2019, UofL President Neeli Bendapudi said acquiring Jewish Hospital without a partner was too big of a risk for the University of Louisville to undertake. UofL then embarked on a lobbying campaign in Frankfort to secure a taxpayer-backed loan to support their eventual purchase of the failing hospital.
The $35 million loan to UofL Health is financed through bonded debt. The debt service for the loan costs taxpayers $3.07 million annually. Up to half of the loan can be forgiven by the Cabinet for Economic Development beginning in 2025.
Jewish Hospital is a long way from being profitable and the federal funding propping it up on paper will eventually run out. The question will be how UofL Health presents these facts in their reports to the legislative committee providing oversight of the $35 million taxpayer-backed loan.