Interim Joint Committee on Health and Welfare

1. Interim Joint Committee on Health and Welfare August 17, 2011

2. Thank You Jewish Hospital & St. Mary’s HealthCare Saint Joseph Health System UMC Jewish Hospital HealthCare Services Catholic Health Initiatives University of Louisville

3. UofL Milestones 1970 – State system – “another mouth” 1997 – Watershed event for UofL – HB1 –public agenda • “Premier nationally recognized research university” • Build new economic clusters/replace lost manufacturing jobs • Work to improve healthcare in Kentucky This merger allows UofL to continue to achieve HB 1goals

4. Stark Reality! University of Louisville has experienced 11 Budget cuts in 11 years So, We (UofL) developed Seven Strategies to Achieve our legislative mandate: • Continuing re-engineering of processes and expense management • Aggressively improving balance sheet management, with an emphasis on converting underperforming assets • Increasing contract research and commercialization income • Creating private sector partnerships • Enhanced fund raising • Being creative in expanding the research mission through innovative financing tools like the tax increment financing plan • Increasing clinical income to support education and research

5. Why is Clinical Income Important To Our Teaching/Research Mission UofL School of Medicine Total Budget = $351 million $28 million of total SOM budget is state appropriation Generating clinical income is critical to supporting the teaching and research mission of UofL

6. While this merger is critical to UofL achieving the legislative mandate you have given us neither UofL nor the School of Medicine are merging!

7. Who is merging? • UMC • (dba University Hospital/JGBCC)

8. UMC with JHSMH & SJHS A Quick History 1970 – UofL joins state higher education system • 1970 – UofL joins state higher education system • 1970-1983 – Medical education programs at Louisville General Hospital • 1978 -- Construction of University Hospital begins • 1983 – University Hospital opens, E0-83-102/Humana management contract to operate University Hospital • 1993 – Humana – Galen – Columbia – HCA • 1995 – Mr. Scott announced move to Nashville • 1996 – UMC created (Jewish/Norton/UL) • Each member organization had veto authority over board action (e.g. January ‘07 – July ‘07) • 2007 – Norton/Jewish withdraw from UMC control hospital • 2008 – Community based board created to govern UMC

9. UMC 2008 – Strategic/financial 5 year plan • Conclusions • With large uninsured population (21%) UMC could not continue to operate in the future as it was • Cut uninsured care; and/or • Cut clinical support to UofL SOM (which would result in fewer services)

10. Options Considered by UMC Board • Go alone • Partnerships • Private hospital chain (give up academic control) • Norton • Jewish • Program areas (5) • Two way merger • Saint Joseph/CHI (Jan. 2010) • 73 hospitals/19 states • States with healthcare problems • Commitment to Kentucky

11. Vision Statement We are the premier, integrated comprehensive health system in the Commonwealth known for efficiently providing the highest quality care and service close to home; reducing the incidence of disease; and eliminating inequities in access throughout the communities we serve. With unmatched geographic reach, we are differentiated by our faith based and academic heritage, developing the best next generation of healthcare professionals, and for being the fastest in translating research from bench to bedside. Because we are the most vital nationally recognized health system, we are the go-to organization for any major health policy initiatives in the State. JHHS/JHSMH/SJHS/CHI/UL/UMC

12. Statewide Reach of Merged Hospital Systems

13. This is first and foremost about better healthcare for Kentucky(You know our healthcare statistics) • It is also a financial transaction that allows us to achieve mandate • Maintain current support • UMC • JHSMH • Other • $320M infusion of capital • $200M for investment in the UofL academic medical center • $120M for community and statewide program support • $100M investment in EMR/IT

14. What Happens If We Don’t Merge • UMC’s payor mix is unsustainable (21%) • UMC and JHSMH for years have sacrificed much needed capital reinvestment for facilities to fulfill their missions • Inability of UMC to compete in market • Neurosurgery • Trauma Center

15. Governance of Merged Entity Academic Medical Center Committee 11 Individuals 7 – UofL Merged Entity Governed by a Community Board 18 Individuals Diverse Board Strong Board Academic Affiliation Agreement Defines relationship for UofL SOM & Merged Entity

16. CURRENT UNIVERSITY OF LOUISVILLEACADEMIC AFFILIATION AGREEMENTS Our faculty/physicians practice medicine at many hospitals and clinics: • UMC • Norton Healthcare • Louisville VA Medical Center • JHSMH • Baptist Health • Kosair Children’s Hospital • Trover Clinic

17. Future University of LouisvilleAcademic Affiliation Agreements Will Be With… • Merged Entity • Norton Healthcare • Kosair Children’s Hospital • Louisville VA Medical Center • Baptist Health • Trover Clinic

18. Catholic Health Initiatives: Committed to Kentucky • Saint Joseph Hospital founded in 1877 • Providing health care to the people of Kentucky regardless of their ability to pay is at the heart of our mission • Appalachian Outreach Program

19. Catholic Health Initiatives: Committed to Kentucky • CHI is committed, with our partners, to • Increasing access to care • Expanding services • Enhancing clinical quality • Preparing providers for the future • CHI has invested nearly $1 BILLION in Kentucky health care • Includes $320 M in capital infusion in the merged entity • CHI National Office, Erlanger, KY since 2000

20. Innovative Partnerships • University of Louisville • Catholic Health Initiatives • Expansion of the Academic Medical Center • New health delivery system for the Commonwealth

22. COMMUNITY BENEFIT/CHARITY CARE • Serving patients unable to pay is a hallmark of each merging entity's mission • All partners remain strongly committed to this profound responsibility to the communities we serve • Without merger, the ability of University of Louisville Hospital and JHSMH to serve the indigent population will be severely jeopardized • Combined community benefit in 2009 was $270 millionamong University of Louisville Hospital, JHSMH and Saint Joseph Health System

23. WHAT ARE THE CLINICAL IMPLICATIONS OF MERGER? Sanctity of the doctor-patient relationship remains unchanged • The agreements ensure the physician will be able to discuss with patients the full array of clinical options to inform their decision making regardless of where services are provided Continued protection of academic freedom • Agreements protect academic freedom and do not limit content curriculum or location of university classes Continued provision of care • All institutions that are part of the merger will continue to provide care / expand access to all regardless of their ability to pay • All hospitals will continue to provide inpatient care as they do today, consistent with their missions and non-profit status. • UofL clinics not part of merger; will continue as they always have

24. THE FACTS ABOUT MERGER End of Life Care • Advance Directives • Physicians will continue to inform patients and families of all options available, including palliative care, terminal sedation and Hospice care • State law controls (KRS 311.621- 311.633); all hospitals will abide by these statutes • Can be honored consistent with ERDs with rare exceptions Organ Donation • No change – can be performed consistent with ERDs

25. THE FACTS ABOUT MERGER Reproductive Services • Miscarriage management • No change – treatment can be provided consistent with ERDs • Ectopic Pregnancy • No change- treatment can be provided consistent with ERDs • Abortion • Elective abortion • No change-not performed at University Hospital today • Medically indicated abortion • No change – treatment can be provided consistent with ERDs • Emergency Contraception • No change-treatment can be provided consistent with ERDs • Family Planning • No change- will continue as an office procedure

26. THE FACTS ABOUT MERGER Reproductive Services • Tubal Ligations • Tubal ligation as a sole procedure will be performed in hospital setting outside of merged entity • Vaginal delivery and tubal ligation will be performed in hospital setting outside of merged entity • C-section and tubal ligation at one anesthesia will be performed in hospital setting outside of merged entity Note: State law requires 24 hours’ written informed consent (KRS 212.347) • Vasectomy • No change - will continue as an office procedure • In Vitro Fertilization • No change - will continue as an office procedure

27. Questions?