Center for Open Government: Emails reveal UofL's efforts to hasten taxpayer loan for Jewish Hospital purchase

COG LOGO

The University of Louisville (UofL) initiated negotiations on the terms of a $35 million taxpayer-backed loan to purchase Jewish Hospital almost six weeks before the legislation authorizing the program was signed into law, according to emails obtained by the Center for Open Government through the Kentucky's Open Records Act . The emails provide the public with a window into the cozy relationship between a powerful, well-connected institution and a bureaucracy that, in theory, represents the taxpayers funding the loan.

The legislation authorizing the loan, HB 99, passed the House of Representatives on February 12. Two days later, UofL's Chief Financial Officer, Dan Durbin, emailed Economic Development Commissioner Katie Smith, asking for "guidance on how to begin the loan process." Durbin's email to Smith was sent only one day after the legislation was received in the Senate and six days before the bill was assigned to a Senate committee.

Smith's email reply connected Durbin to a member of her staff who would manage the back and forth between the Cabinet, UofL and UofL Health. Durbin forwarded Smith's email to UofL Health's CEO Tom Miller and Thomas Hoy, University of Louisville's general counsel, with the message, "We need to begin the application process for the loan so the dollars can flow faster."

What followed was six weeks of negotiations on the loan terms between the University of Louisville, UofL Health and the Cabinet for Economic Development (CED). The legislation authorized CED to set the terms and conditions of the loan and monitor UofL Health's compliance with them.

Defenders of the taxpayer-backed loan will point to HB 99's provision that "the loan shall be finalized with funds distributed by April 1." Therefore, they'll likely argue, UofL had to get the loan application process started well before the bill finished going through the legislative process.

With Senate leadership behind the effort in the upper chamber, UofL was confident in the eventual passage of the loan program. That confidence, however, appears deeply disrespectful towards Senate members who were skeptical of whether state government should involve itself in UofL's acquisition of the failing Jewish Hospital system.

Senator Stephen Meredith raised questions about UofL President Neeli Bendapudi's assertions that jobs would be lost if UofL didn't purchase Jewish Hospital. Meredith, a former hospital CEO, believed Louisville's large health care market provided plenty of career opportunities to experienced medical personnel. Senator Chris McDaniel, the Chairman of the Senate Appropriations and Revenue Committee, voiced concerns the loan program was putting taxpayers on the hook for another risky public-private partnership, referencing Kentucky Wired and the Louisville Yum Center as examples.

UofL did prevail.

HB 99 passed the Senate on March 17. It was signed by Governor Andy Beshear on March 25. Ten members of the State Senate voted against the loan program.

Six days later, Commissioner Smith emailed attorneys for UofL Health, "We have the money in our account and have provided the wiring instructions to the bank for tomorrow's disbursement...Thank you to everyone's efforts on making this project a success!"

The following day, April 1, the $35 million was received by UofL.

UofL must have been pleased. The $35 million flowed plenty fast from the taxpayers to their bank account.

Despite CED officials labeling the project a success, Kentucky is a long way from knowing how this health care merger will turn out.