KentuckyOne Health will no longer manage U of L hospital; executive that helped do the deal gets $1.5 million to go away

The University of Louisville and KentuckyOne Health are ending the joint operating agreement under which KentuckyOne has managed the University Hospital and the James Graham Brown Cancer Center.

“The decision ended a 3-year-old arrangement that was created to stabilize the faltering teaching hospital’s finances and give KentuckyOne, a system made up of the former Jewish Hospital & St. Mary’s HealthCare and St. Joseph Health System, a top-notch hospital,” reports Joseph Gerth of The Courier-Journal. “The plan was for KentuckyOne to sink more than $1.4 billion into the hospital over 20 years But KentuckyOne, beset by financial troubles of its own, faltered in operating the hospital. It laid off several top executives in September, and in 2014 laid off 500 employees statewide while eliminating another 200 unfilled positions.”

“Following a state investigation this summer showing that staffing shortages at UofL Hospital were compromising patient safety and care, KentuckyOne and UofL traded barbs in the press in October, as the university demanded more than $46 million in back payments from KentuckyOne Health,” notes Joe Sonka of Insider Louisville. “The company countered with a lengthy response questioning UofL’s commitment to their joint operating agreement and the university’s transparency regarding how much of KentuckyOne’s $524 million in financial contributions have been invested.”

Dr. Gregory Postel, U of L’s interim executive vice president of health affairs, said the university and KentuckyOne would redefine their “academic affiliation agreement” to clarify KentuckyOne’s role and faculty involvement at Jewish Hospital and the Frazier Rehabilitation Center. “The goal here is not to end the relationship, but to change it,” Postel said.

Gerth reports, “He said what is happening is not a ‘divorce’ but that the management arrangement is being unwound.”

David Dunn

Also on Tuesday, U of L health executive David Dunn, “whom the FBI investigated for alleged misuse of funds, will receive $1.15 million from the institution to relinquish his tenured position,” Insider Louisville reports. Dunn helped design the deal with KentuckyOne, “according to Dr. Peter Hasselbacher, emeritus professor of medicine at UofL and president of the Kentucky Health Policy Institute,” which first reported Dunn’s departure.

“Dunn had been on paid leave for more than a year, since The Courier-Journal reported that the FBI was looking into allegations that he and two others had misspent federal grant money,” Gerth reports. “The school did not negotiate a ‘clawback’ provision that would allow U of L to take back the money in the event that Dunn is found to have violated the law during his tenure there.” Dunn made $809,000 a year, reports Kate Howard of the Kentucky Center for Investigative Reporting.

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