I’d like to call your attention to an important update regarding our request for financial support from the Commonwealth of Kentucky. After extensive planning and review of the hospitals’ current financial situation, we are reducing our request to reflect better results on cost savings and revenues than initially projected.
Read the full message from UofL President, Neeli Bendapudi, below.
Chief Executive Officer
Happy New Year! Last year was truly defining for the health care mission of the University of Louisville, and I look forward to building on that positive momentum in 2020.
I wanted to launch the new year with a bit of great news.
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. 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.
As we have shared time and again, this loan is critical to our success 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 UofL Health system during our two- to three-year turnaround plan. Along with the state’s commitment of over $100 million annually passed last year in HB320 to enhance federal pass-through funding of rural hospitals, this loan signals strong bipartisan support for health care throughout Kentucky.
We have stressed from Day One that we will be careful and frugal stewards of these funds.
Careful consideration of several factors led to our decision to lower the requested loan amount. I am happy to report that we have been more successful than we had anticipated we would be at both cost savings and increasing revenues. 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. 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. Also, our improved payer contracts have led to increased billing rates for physicians.
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. Their commitment will enable our dedicated team of health care professionals to do what they do best: provide world-class care to patients from Louisville and throughout the commonwealth.