There was a time – June 2019 to be exact – when the president of the University of Louisville Neeli Bendapudi believed that the continued purchase of the Jewish Kentucky One Health Hospital was too much risk. According to Mail JournalUofL officials said they “must do what is financially responsible” for the school. Bendapudi said, “Without a viable partner, we don’t have the resources to make the acquisition a reality.”
Fast forward to August 2019, UofL’s challenge of finding a “viable partner” to help finance the purchase was resolved when state leaders pledged to provide a $ 50 million loan guaranteed by taxpayers. Yet Bendapudi called that “The most difficult decision” she has ever faced and said the loan was “vital” in moving forward with the acquisition of failing hospital.
At least that’s what we told the public.
One of the most interesting (and curious) reporting nuggets from this period came from WDRB’s Chris Otts. In a story from September 2019, Otts revealed as the CEO of UofL Health Tom miller told a group of doctors that “the university can actually ‘succeed’ with the takeover even without the state government’s $ 50 million.” No doubt surprised that his personal thoughts on the loan were shared with WDRBMiller said UofL Health “was exploring several scenarios that would position us for success.”
Over the past year, the Bluegrass Institute’s Center for Open Government obtained more than a thousand pages of documents related to the UofL’s decision to buy the Jewish hospital. From these documents, we have reconstructed a scenario – called “fallback” in a document – envisaged by UofL officials involving a $ 30 million line of credit from PNC Bank.
The effort to secure a line of credit from private financial institutions was unfolding as Bendapudi and Miller told the public and members of the Kentucky General Assembly that the taxpayer loan was essential for the deal to work.
A timeline interweaving public statements from UofL with documents revealing what was going on under the radar is helpful in understanding the totality of the university’s activities to secure the taxpayer loan – and its back-up plan.
August 14, 2019. Louisville University ad its intention to acquire the assets of Kentucky One in Louisville. The mail journal reported that “university and state officials have spent the last few weeks figuring out how to give the university the financial support it needs to make such a massive acquisition on its own.” UofL documents shown the Kentucky Economic Development Finance Authority recommended a 20-year loan of $ 50 million with no principal repayment or accrued interest for the first five years.
September 9, 2019. Miller told the Medicaid Joint Oversight and Advisory Committee that the KentuckyOne takeover and the proposed $ 50 million state loan are vital to protecting jobs, the school’s medical school and the medical access in underserved areas of Louisville. (Louisville business first)
September 11, 2019. WDRB reports on a recording of Miller telling a group of doctors “whether (the state loan) happens or not, we have a plan associated with that on how to be successful.” Miller continued, “It’s great to have this as a backup; it’s just a great resource to have.
The history of the returned WDRB to comments made by Bendapudi when announcing the agreement. She called (the state loan) “vital” and said there was “no chance” that the university would have agreed to take over the properties of KentuckyOne Health without outside funding – mainly the state pledge of $ 50 million.
September 20, 2019. At a meeting of the Finance Committee of the Board of Directors of the University Medical Center (UMC), Chief Financial Officer (CFO) of UofL Health Michael douzuk “Summarized Conversations” with the CFO of the University of Louisville, Dan Durbin, which resulted in a request to “establish a relief line of credit for the UofL hospital”. The minutes of the meeting state that “members present agreed that even though the request was for $ 30 million, they support up to $ 50 million if deemed appropriate.”
September 24, 2019. At a meeting of the UMC board of directors, chaired by Bendapudi, Durbin reported that “the (finance committee) had, at his request, discussed opening a $ 30 million line of credit. dollars… to generate cash when needed. ” The UMC Board of Directors voted unanimously to authorize the solicitation of bids for the opening of a new line of credit.
October 18, 2019. Douzuk reported to the UMC Finance Committee that he had met with representatives of the Old National Bank, Republic Bank and PNC Bank regarding a $ 30 million line of credit. The committee, chaired by Durbin, voted unanimously “to authorize the CEO and CFO of UMC to finalize the terms of a line of credit.”
November 1, 2019. UofL concludes agreement to purchase Jewish hospital and other KentuckyOne healthcare assets in Louisville area. Bendapudi call him “An exciting and historic day for the University of Louisville.” Responding to a question about Miller’s claims that the state loan was not necessary, Bendapudi said, “I think maybe he wouldn’t have said it right … (he) was trying to make sure people weren’t panicking.” She also said, “We really, really need this loan; we really do. In addition, it was reported UofL CFO Dan Dubin “implored members of the board of directors of the university’s nonprofit foundation to ‘influence the right people’ to back the loan.”
November 8, 2019. Douzuk sent an email informing UofL Health CEO Tom Miller that he had “received three bank proposals for a $ 30.0 million line of credit for UMC.” Douzuk continued, “I recommend based on cost of borrowing and the absence of unreasonable operating conditions, PNC is my bank of choice.”
November 15, 2019. The pre-deposited version of HB 99 is introduced. On the same day, the minutes of the UMC finance committee meeting reveal that Douzuk informed the committee of the decision to obtain the line of credit, as authorized by the board of directors last month. . Durbin chaired the meeting.
November 19, 2019. At the November meeting of the UMC Board of Directors, Douzuk “reviewed the decision, after examining three proposals, to obtain a line of credit from PNC Bank”. The Council unanimously approved the recommendation. Bendapudi, the chairman of the board, was absent from the meeting.
January 7, 2020: UMC executes $ 30 million line of credit loan agreement with PNC Bank. Douzuk signs the agreement on behalf of UofL Health. The same day, HB 99 is classified and assigned to the House Appropriation and Revenue Committee.
By the end of the 2020 session, UofL had convinced the General Assembly to make taxpayers the “right partner” Bendapudi said his university needed to buy a Jewish hospital.
Behind the scenes – away from members of the legislature and the public – it appears that UofL’s so-called fallback plan was obtained much earlier than that.