By Matthew Keck —
In August 2019, the University of Louisville announced it would be buying KentuckyOne Health’s Louisville assets. To make that purchase possible, the university asked the state of Kentucky to provide a $50 million dollar loan.
On Jan. 9, President Neeli Bendapudi announced U of L would only be requesting a $35 million loan now.
“As you know, last fall we received a commitment from the elected leadership of Kentucky for a $50 million partially forgivable loan to help with the acquisition of the former KentuckyOne Health properties, including Jewish Hospital,” she said. “After just over two months since we acquired the facilities, I was happy to tell Governor Beshear, Senate President Stivers and House Speaker Osborne that we are reducing our loan request from $50 million to $35 million with the previously agreed upon forgiveness and repayment terms.”
U of L will still pay half of the state loan back over a 20-year period. With this new restructured loan from the state, U of L will only receive a total of $61 million in support for future expenses.
Bendapudi said there were several reasons for lowering the requested amount of the loan. “For example, we are anticipating a procurement savings of more than $7 million annually, and we will make operational reductions of nearly $10 million after Year 1,” she said. “On the revenue side, Enhanced Medicaid intergovernmental transfer payments from the federal government should be higher given that more facilities will qualify for this funding more quickly than we originally expected.”
She also said that improved payer contracts have led to increased billing rates for physicians, which is another reason that led to a reduction of the loan.
In addition to these loans, the state will contribute more than $100 million annually thanks to HB320 being passed last year. This bill allows for the state to enhance federal pass-through funding for rural hospitals.
“As we have shared time and again, this loan is critical to our success,” said Bendapudi. “As it will help us address immediate cash flow and other financial needs as we continue to make important changes in the operations and infrastructure of the expanded U of L Health system during our two- to three-year turnaround plan.”
The approval of this loan is still pending as the 2020 legislative season started last week.
U of L finalized the purchase of the KentuckyOne assets last November. In this deal, U of L acquired five hospitals, one outpatient center and physician groups affiliated with KentuckyOne.
“I am so appreciative that our elected leadership is working with us in a bipartisan manner to preserve and enhance these vital health care facilities and services,” said Bendapudi.
File Photo // The Louisville Cardinal