LOUISVILLE -- University of Louisville trustees approved a deal Wednesday to have the school purchase financially ailing Jewish Hospital in a transaction that officials said will benefit the region's health care and the school's medical training and research programs.
State leaders stepped up to assist the university by pledging a $50 million loan -- half of which would be forgivable if certain conditions are met. Gov. Matt Bevin and House Speaker David Osborne applauded the deal at a campus press conference shortly after trustees gave their unanimous consent.
Under the agreement, UofL will pay $10 million to acquire the Louisville-area assets of KentuckyOne Health from its parent organization, CommonSpirit Health. Those assets include other hospitals and physician groups affiliated with KentuckyOne.
The deal will significantly increase UofL's footprint in the medical sector of Kentucky's largest city. UofL President Neeli Bendapudi -- widely credited for helping achieve the deal -- acknowledged that it comes with risks in taking on a hospital that has been bleeding money.
But the school was compelled to act amid signs that Jewish Hospital's closure could be imminent, she said.
"Jewish Hospital is just too important to this community for us not to act," Bendapudi said.
Bevin called the deal a "calculated risk" that will yield long-term benefits for the university and community. He said the acquisition will maintain more than 5,000 healthcare-related jobs.
Bendapudi told the Courier Journal that adding Jewish and other KentuckyOne assets to UofL Health, which already oversees the university hospital, would turn it into a "$1.5 billion enterprise with no debt."
Jewish Hospital receives more than 3,000 patient visits to its emergency room each year, university officials said. The governor questioned how the area's other hospitals could absorb so many patients now treated by Jewish.
A couple of months ago, Bendapudi had announced that UofL was backing away from negotiations to acquire KentuckyOne's local properties after failing to line up a partner to provide financial backing.
But the urgency of keeping Jewish Hospital open stirred renewed efforts to put together an acquisition plan. Bevin's administration worked with UofL administrators on the plan.
Bendapudi also said adding more medical facilities will strengthen UofL's academic medical center, providing more opportunities for residents and students at the university's Health Sciences Center. It also will provide more venues for research, creating more opportunities to attract more clinical trials, research funding and top-notch faculty, she said.
As part of the agreement, CommonSpirit will forgive $19.7 million in outstanding promissory notes. UofL will receive an influx of more than $76 million of working capital to meet future operating expenses.
Two local foundations will contribute millions of dollars, paid over four years, to support the venture.
Under the deal, University Medical Center Inc., owned by UofL, will acquire Jewish Hospital and the other Louisville-area KentuckyOne Health assets and integrate them into the UofL system, the governor's office said.
Besides Jewish Hospital, the purchase includes Frazier Rehab Institute, Sts. Mary & Elizabeth Hospital, Our Lady of Peace hospital, Jewish Hospital Shelbyville, Jewish Medical Centers East, Northeast, South and Southwest and physician groups affiliated with KentuckyOne.
The sale is expected to close Nov. 1, officials said.
The state is to provide a $50 million, 20-year loan. Half the loan will be forgiven if the university meets conditions for job retention and medical service to underserved areas of the community and state.
The state's role in the transaction will require action by the state legislature next year. A bill being prepared for the 2020 legislative session would appropriate funding to the state Cabinet for Economic Development to provide the loan to UofL, the governor's office said. Osborne said he will sign on as a sponsor of the bill, and he predicted it will receive strong bipartisan support.
State Senate President Robert Stivers expressed support for the plan in a press release issued by the governor's office.
The agreement culminates long-running efforts by UofL to save Jewish Hospital, which has been losing money for years and is the largest of several local facilities under the KentuckyOne Health banner. KentuckyOne's parent company put Jewish Hospital and other assets up for sale in 2017 but struggled to find a buyer.