Norton Healthcare, University of Louisville finalize Kosair Children's Hospital deal

Tuesday, December 22, 2015

Norton Healthcare and the University of Louisville today announced they have reached agreements which end more than five years of negotiations and more than two years of litigation. The University of Louisville Physicians group and the Commonwealth of Kentucky are also parties to the agreements.

“This is great news for the Louisville community and the Commonwealth,” said Donald H. Robinson, chair of the Norton Healthcare board of trustees. “The agreements clear up critical land lease and ownership issues as well as bringing operational security to Norton while assuring stable financial support to the UofL School of Medicine in pediatrics. The real winners here are the families who depend on our children’s hospital for their child’s care.”

“We reached fair and mutually beneficial agreements that extend our long-time relationship for providing the highest level of pediatric care to the children of the Commonwealth and beyond,” said Larry Benz, chair of the UofL board of trustees. “Both organizations are passionate about fulfilling their missions in this regard. We are now focused on how our organizations will combine our strengths to make Kosair Children’s Hospital a top tier pediatric hospital in the United States.”

The agreements include an amendment to the 1981 land lease between Norton and the Commonwealth for the children’s hospital property which results in a permanent solution, one that secures Norton’s ownership and control of the hospital, confirmed by the Commonwealth and UofL. It also makes it possible for Norton to continue plans for more than $35 million in additional capital improvements to its children’s hospital over the next five years. Those plans had been held up due to the litigation.

An amendment to the 2008 academic affiliation agreement currently in place between Norton and UofL sets an initial eight-year term with automatic annual renewals thereafter. UofL will be Norton’s primary academic partner for pediatrics with at least 90 percent of the Norton’s residency positions at the children’s hospital being made available to UofL.

UofL guarantees that its pediatric residents will utilize the children’s hospital as UofL’s primary hospital training site and that the majority of its pediatric hospital admissions will be made to the children’s hospital. Both Norton and UofL will appoint three representatives each to a new Pediatric Academic Medical Center Committee (PAMCC), charged with overseeing and making recommendations for the affiliation relationship. Norton can still pursue other third party relationships and programs, such as the previously announced intent to collaborate with UK Children’s Hospital, as long as its commitments to UofL are fulfilled. UofL agrees to participate in collaborative pediatric care joint programs with Norton and UK and/or others.

Under the terms of the agreement, UofL will receive $272 million over eight years. Norton has extended its current total of $30 million in annual funding (through separate individual contracts as is currently done) for UofL academic support and physician services over the next eight years, with an additional $3 million annually for additional pediatric care investments. Those investments are to be recommended by the PAMCC and approved by Norton. UofL will participate in independent audits to facilitate full transparency regarding how Norton’s financial support is used. UofL also will receive a one-time payment of $8 million to resolve any and all financial disputes from the past.

“We thank the administration of Gov. Bevin for its leadership in finalizing the land lease amendments and assuring we can move forward with our planned $35 million additional investments by Norton in our Children’s Hospital,” said Stephen A. Williams, CEO, Norton Healthcare. “We also sincerely thank UofL Board Chairman Larry Benz for his great leadership in helping accomplish these agreements. The combined agreements stabilize the relationship between Norton and UofL in pediatrics and facilitate additional investments in pediatric care, while also allowing for appropriate collaboration with UK and other providers across the state to advance pediatric care in Kentucky.”

“This agreement allows both organizations to continue fulfilling their missions of caring for the children of the Commonwealth; UofL through the education and training of future health care providers and conducting cutting-edge research and Norton as the primary site for the provision of the highest levels of health care possible,” said Dr. James Ramsey, president of the University of Louisville. “The Bevin administration’s quick attention and assistance is a demonstration of his desire for ensuring the future of the Commonwealth.”

All three of the agreements were effective immediately upon ratification over the last few days by the boards of Norton, University of Louisville, University of Louisville Physicians, and the Commonwealth.

 

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