Center for Open Government: Louisville Business First raises important questions about UofL Health's finances
Louisville Business First (LBF) has raised some important questions about UofL Health’s finances as well as their resistance to follow Kentucky’s open records statutes. The Center for Open Government has written previously about the importance of monitoring UofL Health given the $35 million taxpayer-backed loan approved by the General Assembly in 2020.
On 10/20/20 we wrote:
The Center for Open Government believes transparency is crucial during the implementation of this massive health care merger. The merger is another intervention into the private sector where Kentucky lawmakers have put taxpayers in the terrible position of financially underwriting a public-private partnership but without any authority to oversee it.
Chris Larson’s reporting is a welcome addition in providing the public with a clearer understanding of how UofL Health operates. From his article:
On Nov. 16, UofL President Neeli Bendapudi and UofL Health CEO Tom Miller said in a video conference with reporters that the organization was able to accomplish most of a three-point, three-year improvement plan in just one year. But the financial picture might be less positive than university officials have indicated publicly.
LBF first compared what UofL Health was publicly touting against their audited financials:
UofL Health said it had “revenues of more than $1.8 billion” after beginning operations Nov. 1, 2019, the date when the university merged its legacy organizations, University Medical Center and University of Louisville Physicians, into the KentuckyOne Health assets. Its fiscal year ended June 2020.
UofL Health’s audited financial statements for fiscal 2020 state the system generated $1.11 billion in operating revenue. That’s a roughly $690 million discrepancy between what UofL Health told reporters and what its financial statements show.
LBF utilized the state’s open records laws to dig in. Larson’s reporting continues:
As a publication date for this story loomed in late December, the UofL Health records custodian produced a new record that spelled out in one document the revenue of the UofL Health assets and the UofL legacy assets. That document confirms LBF's previous open records work and shows that the UofL Health and the legacy assets produced about $1.38 billion in revenue.
These combined actual revenue numbers are about $417.6 million off from $1.8 billion and about $281.7 million off from the $1.66 billion annualized number.
As important as peeling back the layers of UofL Health’s true financial condition, LBF documents the health care system’s resistance to complying with open records requirements:
UofL Health twice denied Louisville Business First’s requests for unaudited, year-to-date financial records for fiscal 2020 — on July 1 and Oct. 8. The organization cited an exemption to the Kentucky Open Records Act that protects preliminary memos and another that protects preliminary recommendations or opinions from state agencies' leaders.
The article quotes Michael Abate, a partner with Kaplan Johnson Abate & Bird and a leading open records law expert:
“(An) institution with a multibillion-dollar budget that recently sought and obtained a multimillion-dollar forgivable loan from taxpayers, the public has a compelling need to know how its finances are being managed."
The Center for Open Government agrees. We encourage Mr. Larson and LBF to continue digging.