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Catholic Health Initiatives: Ky. sale should help bottom line

May 25, 2017
  • In its report for the third quarter of FY 2017, Catholic Health Initiatives (CHI) said that divesting KentuckyOne facilities should bring in $534.9 million.
  • KentuckyOne hospitals lost $12.7 million in the third quarter, compared to $23.8 million in the same quarter of the previous fiscal year, according to CHI.
  • CHI, one of the biggest nonprofit health systems in the country, reported a quarterly $40.1 million operating loss overall, which is a significant improvement over the $81.6 million lost in the same quarter last fiscal year.

In announcing the numbers, CHI suggested that the system would have done better without KentuckyOne’s Louisville facilities and expects a better outcome once it divests them.

KentuckyOne CEO Ruth Brinkley, who has since resigned, said earlier this month that the system plans to sell the 462-bed Jewish Hospital, and other mostly Louisville-based facilities.

KentuckyOne plans to focus on the Lexington and eastern Kentucky markets. There is no named buyer yet, but KentuckyOne said earlier this month that “work is underway to ensure the transition process is deliberate while moving quickly to secure a decision on the future owners and operators of these facilities.”

CHI had a rough 2016 when it suffered $483 million in operating losses. It is also in affiliation talks with Dignity Health in San Francisco. CHI also recently eliminated 620 positions in Texas.

Earlier this year, Moody’s Investor Service downgraded CHI’s rating on long-term debt and variable rate demand bonds. Moody’s said it downgraded the rating because of poor operating performance since 2012 and a relatively low level of liquid assets. Moody’s warned that further downgrades could occur unless CHI improves its operating performance.

In addition to selling Jewish Hospital, CHI hopes to divest Frazier Rehab Institute, Sts. Mary & Elizabeth Hospital, Medical Centers Jewish East, South, Southwest and Northeast, Jewish Hospital Shelbyville, Saint Joseph Martin and KentuckyOne Health Medical Group provider practices in Louisville and Martin, KY.

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