Center for Open Government: Transparency crucial to the implementation of the UofL-Jewish Hospital merger

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Frankfort’s lousy track record backing public-private partnerships wasn’t enough to deter the 2020 General Assembly from providing a $35 million taxpayer-financed loan to the University of Louisville (UofL) to acquire Jewish Hospital. Jewish Hospital racked up tens of millions in operating losses over the past several years. It was also given a failing grade on operational safety at the end of 2019.

UofL’s Board of Trustees approved moving forward with the acquisition in August 2019. The transaction closed in November of last year.  UofL prioritized securing the taxpayer-backed loan during the 2020 legislative session. The General Assembly moved HB 99 in February and March and the bill was signed by Governor Beshear on March 25th.

Relatively few strings were attached to the loan. UofL isn’t required to begin payment on the twenty-year loan for five years.  Up to fifty percent of the loan is forgivable.

After HB 99 passed the House, Senate leadership assigned the bill to the Senate Education Committee. The Bluegrass Institute testified against the legislation in committee.

Senator Chris McDaniel, chairman of the Senate Appropriations and Revenue Committee (the committee usually tasked with appropriating state funds), voted against the measure on the Senate floor. Throughout the process, McDaniel wisely pointed out that Frankfort has saddled Kentucky’s taxpayers with hundreds of millions in debt from other state-backed public-private partnerships (e.g. Kentucky Wired and the Yum Center). Kentucky Wired is an unmitigated disaster and, although the Yum Center has turned a corner towards sustainability, the Louisville arena has required much more than the original $75 million project champions claimed would be needed from state government.

UofL incorporated UofL Health Inc., a non-profit corporation, to oversee the university’s multi-billion health care business. The non-profit was originally incorporated with three Board members, including UofL President Neeli Benapudi. The Board has since been expanded to eleven members, most with strong ties to UofL.

The Bluegrass Institute’s Center for Open Government believes transparency is crucial during the implementation of this massive health care merger. It 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. HB 99 requires an annual report to the Interim Joint Appropriations and Revenue Committee. In our opinion, that isn’t good enough.

Thankfully, the Kentucky Open Records Act provides the public with powerful tools to monitor UofL Health’s activities. The Center for Open Government intends to do just that. While this effort won’t provide the public with a seat at the table to engage on critical issues, it will provide taxpayers - who the General Assembly has essentially made equity investors in the deal - with frequent updates on UofL Health’s activities.

Lawmakers need to pay close attention. State government shouldn’t have become involved in this health care acquisition in the first place. But now that it is, transparency provides the best chance to keep it from joining the other expensive public-private blunders Frankfort has gotten Kentucky into.