Hospital Merger Partners Discuss Transparency, Employee Benefits, Care Changes and Religious Doctrine

by Gabe Bullard on November 30, 2011

The principal players in a pending hospital merger say they’ve been as open as they can be with the public about the potentially multi-billion dollar deal.

The consolidation of University of Louisville Hospital, Jewish/St. Mary’s Healthcare and Catholic Health Initiatives will result in a statewide care network and a $320 million cash infusion to the struggling University Medical Center (which includes U of L Hospital and the James Graham Brown Cancer Center) and Jewish/St. Mary’s. It will also lead to changes in certain reproductive care at U of L, the city’s hospital of last resort. The deal has many residents worried about the future of other procedures the Catholic Church frowns upon.

The exact details of which procedures will and will not be allowed and the exact structure of the final merged entity are still being discussed. Documents related to the merger have been kept private, and that’s led to two legal battles. One is a challenge to Attorney General Jack Conway’s ruling that the UMC is a public institution and subject to open records requests. The other is a records request filed by Jefferson County Attorney Mike O’Connell, who has been denied specific documents about the consolidation.

In a WFPL News special, U of L Hospital CEO Jim Taylor said UMC meets all the criteria of a private nonprofit entity. He declined to say which documents the organization is keeping private. Saint Joseph Health System—a division of Catholic Health Initiatives—Chief Medical Officer Dr. Dan Varga says the merging partners have to act as competitors during merger talks, and as such, cannot release certain operational information.

“If we had, we would have run the risk of not only putting the potential merger in jeopardy but also tripping some adverse events that none of us would have wanted to trip,” he says. “To a larger extent, much of our operational planning has only gotten started come July of this year.”

Some of the documents that have been released indicate that the partners were planning to have the necessary state and church approval for the merger by the end of the year. But the partners say there’s no specific target date for the merger.

“We are prepared to have that first day whenever the governor signs and we can close the deal,” says Taylor. “Whether that’s January 1st, February 1st or March 1st.”

Taylor adds that the documents will be made public once the university acts on them.

Managing care

The most controversial information that hasn’t been made public relates to which procedures will not be allowed at University Hospital after the merger. Rather than follow Catholic Ethical and Religious Directives—as St. Joseph’s and other religious hospitals do—UMC will adhere to a contract. The contract will block the merged entity from being in “a position of scandal” with the Catholic Church, but will not stop all procedures banned by the church.

At a public forum this fall, the partners outlined how UMC would handle procedures banned by the Catholic Church:

  • Tubal ligations and any cesarean sections that precede a planned tubal ligation will be moved to Baptist Hospital East;
  • Miscarriage management will not change;
  • Elective abortions are not performed at University Hospital and will not be performed after the merger;
  • Medically indicated abortions (when the life of mother is threatened or the fetus has a lethal anomaly) will be performed at University Hospital;
  • Emergency contraception (the morning after pill) will still be offered. “At this point in time it will remain the same,” said Dr. Makhija.;
  • Family Planning is usually done in outpatient centers and will not change;
  • Vasectomies are out of office procedures and will not change;
  • In vitro fertilization will remain an out of office procedure;
  • Contraception counseling and prescriptions will be available, but the hospital will no longer fill prescriptions for contraceptives.

The contract has not been made public, but the partners say it respects the religious and academic heritages of each institution. It is not a religious document, but University Hospital CEO James Taylor says it is inspired by religious doctrine.

“So is it being inspired by the academic needs. So is it being inspired by the Jewish heritage of one of the partners. So I think it’s not fair to only pick out one. It’s, as Dr. Varga pointed out, respecting the heritages of each organization,” he says.

When asked if the contract means any practices will change at St. Joseph’s, Chief Medical Officer Dan Varga said no.

Hospital officials have said moving tubal ligations to Baptist Hospital East will not create an undue travel burden on patients, since many women who request the procedure live close to the hospital already. Critics, however, say the facility is too far away from lower-income parts of the city. Varga says about 300 women request tubal ligations each year, and the merger will benefit more than 300 patients when other services expand.

Effects on employees

In addition to changes in care, the merger will also bring about changes in insurance for employees. In 2013, the benefits package for UMC workers will change. Same-sex partners of hospital employees will no longer be offered benefits. Instead, each employee will have a “plus one” plan that allows them to add coverage to another person, be they partner, spouse or relative. But Taylor could not say whether the plus one benefits would be provided at the same cost same-sex partner benefits are provided now.

“That’s one of those things that isn’t totally priced out yet,” says Taylor. “Our motivation of course is to do that because we’re in a highly competitive market for the skilled people who work at hospitals.”

Hospital finances

The executives are most comfortable discussing the need for the merger, rather than the effects. Taylor says UMC could have difficulty meeting its requirements for indigent care if the merger didn’t go through. Further, the Affordable Care Act will create additional costs for administration and record keeping, which neither UMC nor Jewish/St. Mary’s could afford.

“Our operations are solvent just as the University Medical Center is,” says Jewish/St. Mary’s CEO David Laird. “However, when one looks at funding the IT requirements for the Affordable Care Act, it’s going to require a substantial amount of money. And we don’t have the cash reserves nor the ability to borrow the money required to sink into the information technology.”

UMC and Jewish discussed merging independently of CHI at first, but Taylor says CHI approached the two hospitals and proposed creating a statewide network. The millions of dollars CHI will pump into the merger will come out of the company’s cash reserves, according to Dr. Varga. The executives do not have specific plans for the money yet, but they say it will be spent “carefully.”

Oversight

After studying the merger, the Louisville Metro Board of Health released a report. It questioned “whether the impetus for merger is truly to preserve and expand continued access to care versus pursuing arrangements that are financially advantageous to the merging organizations.”

It appears the merger will do both, but Taylor insists that post-merger UMC will stand by its obligations to serve the entire community.

The board also recommended that a mechanism be put in place to make sure the merged entity fulfills its obligations and follows through on its promises to preserve care equity and access.

“We are already accountable as individual organizations for the care we provide to the underserved,” says Taylor, referring to the regular reports hospitals must file about care. “So I don’t see any reason why, going forward, the new organization wouldn’t be subject to the same.”

When asked whether the merging partners could agree to the specific type of oversight the board recommended, Taylor said he would need more details. The board has sent its recommendations to the governor and attorney general, who would have to create the necessary oversight mechanisms.

Listen to the entire news special here:

Audio MP3


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