At What Cost?

Does the Good outweigh the Bad at UofL?

Today, I'm catching up on a few recent pieces that should be of interest to those following the series of messes at UofL. There's even some healthcare news at the end.

There is little doubt that the efforts of University of Louisville President James Ramsey to improve the physical environment and major athletics program of the Research 1 urban institution has been notable. But was that success built on shaky ethical grounds?

The way UofL does business first caught my attention during the Robert Felner disgrace. The university's response then is the same it always is. 'We were snookered. But we will shore up our accounting process. We won't let it happen again. In the meantime, look over here at all the other shiny objects...'

Fool me once...

This from the Washington Post: 

Another investigation into misuse of funds 

adds to University of Louisville’s recent turmoil

The University of Louisville placed two high-ranking officials on paid leave this month after local media reported that the FBI was investigating the officials for allegedly misappropriating federal grant money. The news followed a series of recent scandals and embarrassments at the university, including a string of criminal convictions of senior staff for financial crimes dating back to 2008.

David Dunn, 63, the executive vice president of health affairs at the university, and Priscilla Hancock, 59, a vice president and the university’s chief IT officer, have been placed on paid leave. The dollar amount of the allegedly misappropriated grant funds has not been released.

UofL President James Ramsey

“The allegations of potential misconduct were brought to the university’s attention in the summer of 2014,” President James Ramsey said in a recent email to university staff. “The University of Louisville Police Department began an extensive review. Midway through that review, the university determined that it would be prudent to seek assistance from the U.S. Attorney’s Office.”

Dunn and Hancock allegedly are targets of an FBI investigation, the Courier-Journal has reported. A third target of the investigation, Russell Bessette, 73, the former associate vice president for health affairs, resigned in January 2014.

The University of Louisville hired Dunn and Bessette in 2011 away from SUNY Buffalo, where they were partners in a medical information business. Upon Bessette’s resignation in 2014, Dunn said in a letter released by the university: “It is regrettable that we find ourselves at a juncture where there does not appear to be the best match between your considerable talents and the future demands of the Health Sciences Center.”

The FBI and U.S. Attorney’s Office in Louisville declined to comment and would not provide any additional details of the alleged misconduct, citing the ongoing investigation.

During the past decade, the University of Louisville has grown at an extraordinary rate, raising more than $1 billion in a capital campaign for the university foundation between 2006 and 2014, which has more than offset the steady cuts from state funding during the same time period. The private fundraising has allowed the university to invest more than $100 million in its main Belknap campus, increasing its dormitory capacity from about 1,850 beds to nearly 8,000 and transforming it from a commuter school to a thriving residential community, bolstered by the university’s successful athletics programs.

In addition to winning the 2013 NCAA National Basketball Championship, the Louisville Cardinals have developed a first-class football program that was a cornerstone of Louisville’s successful 2014 application to the Atlantic Coast Conference, where Louisville lags behind its peer institutions in a number of metrics. Louisville’s investments in athletics have gone beyond its revenue-generating sports to include a new natatorium and fields for soccer, baseball and softball, which have resulted in teams that have become national contenders and further strengthened residential campus life.

To develop the engineering programs at its Speed School, the university partnered with General Electric to create a makers space called First Build, and with UL (formerly Underwriters Laboratories) to create an additive manufacturing training center that specializes in 3-D printing.

At its health sciences campus downtown, which was run by Dunn until his paid leave began this month, the university has distinguished itself in cancer research, where patients at the James Graham Brown Cancer Center regularly surpass the national average survival rates, while other research has led to the discovery of a cervical cancer vaccine developed from tobacco plants.

But along with the advances and successes, the university remains dogged by public scandal, most recently accusations that a former assistant basketball coach paid a woman thousands of dollars to provide prostitutes to parties attended by players and recruits at an on-campus dormitory for student-athletes. The commonwealth’s attorney in Jefferson County has impaneled a grand jury in the matter, and the woman at the center of the allegations, Katina Powell, is cooperating with a parallel NCAA investigation, according to ESPN.

In October, Ramsey apologized for wearing a stereotypical Mexican costume — along with numerous members of university staff — during a Halloween party that came amid a national conversation about race and cultural sensitivity on U.S. college campuses.

The University of Louisville apologized after this Oct. 28 photo surfaced showing President James Ramsey, lower right, his wife and staffers dressed in stereotypical Mexican costumes at a Halloween party. (Scott Utterback/Courier-Journal via AP)

After the story — and a photograph of the party’s attendees — went viral online, Ramsey issued a statement at the time: “I want to personally apologize for the recent incident and any pain that it may have caused our students, faculty, staff and the community. We did not intend to cause harm or to be insensitive. I hope this doesn’t detract from the hard work we — the entire U of L community — have done and continue to do in building an inclusive, supportive, welcoming campus for all our university family. I pledge to work to ensure that we move forward as one university.”

On top of that, the university has been victimized by a series of financial criminals.

Robert Felner, the dean of Louisville’s school of education from 2003 to 2008, pleaded guilty to defrauding Louisville and the University of Rhode Island — his previous employer — of $2.3 million in federal grant funds meant for No Child Left Behind research.

Felner was a divisive figure at the school of education, drawing complaints that he was brash, rude and unprofessional — the faculty at one point took a vote of no confidence in him — but the administration routinely defended his leadership. The university ultimately looked into Felner’s handling of grant funds, and upon discovering criminal activity, reported him to federal authorities.

Felner was indicted in October 2008 on charges of mail fraud, conspiracy to commit money laundering, income tax evasion, and conspiracy to impede and impair the Internal Revenue Service. He pleaded guilty, and in May 2010, he was sentenced to 63 months in federal prison and was ordered to pay $510,000 in restitution to the University of Louisville and $1.64 million to the University of Rhode Island. He was released from prison in May 2014.

In April 2014, the sixth such indictment came against Perry Chadwick Vaughn, 36, the former executive director of the Department of Family and Geriatric Medicine at the University of Louisville’s School of Medicine. He was indicted for embezzling $2.8 million and failing to report nearly $2.5 million in income to the IRS.

The Courier-Journal has estimated that between 2008 and 2014, University of Louisville employees have been accused of mishandling at least $7.6 million. In March of this year, Vaughn was sentenced to 63 months in federal prison. At Vaughn’s sentencing hearing, Judge Charles Simpson III expressed hope that the case would result in a “teaching moment” for the university.

But by then, the university had begun to address it. In July 2013, the university hired a local accounting firm, Strothman and Company, to conduct a financial review of university operations.

One of the recommendations that came from that audit was for the university to hire a chief financial officer. The university then merged its business and financial offices into one unit and hired Harlan Sands in a newly created role of CFO/COO for the university. Sands is a former lieutenant commander in the Navy and a former public defender in Miami, according to his university bio. Before accepting his current job in Louisville, he held positions at Florida International University and the University of Alabama at Birmingham.

Upon the placement of Hancock on paid leave because she is a target of an ongoing FBI investigation, Ramsey said in his email to staff that her responsibilities, “day-to-day leadership over IT operations,” will be assumed by Harlan Sands.

On Wednesday afternoon, Ramsey released this statement:

“We recognize that there are challenges, but we’re facing them head on. We’re cooperating with the NCAA and FBI investigations, and we’re determined to find the truth. We’ve put safeguards in place to protect the university against employee misconduct. We make such wrongdoing public. We prosecute criminal behavior, and people have gone to jail as a result of their crimes. We welcome diversity, and we have a climate of inclusivity here. When we make mistakes, we acknowledge them and take steps to get better.

“Meanwhile, we’re attracting better students to U of L. We’ve seen a 60 percent increase in our graduation rate during my tenure. We’re also graduating more and better prepared students who are ready to enter the workforce and contribute to their communities. We’re doing groundbreaking research. We’re also engaged with our alumni and recently completed a $1 billion capital campaign. I don’t believe that the challenges we currently face in any way overshadow the tremendous accomplishments we make every day.”

Some in the community believe the university has been through too much in the past few years and that it is time for a change at the top.

“In my opinion, President Ramsey should resign. It’s time for a new beginning. There’s been too many scandals,” said Steve Wilson, a former member of the university’s Board of Trustees. “I think President Ramsey has been a great president over the years. His strength was in fundraising and bringing more funding into the university at the same time that the state has decreased funding, so he’s been able to bring that strength to the table. But the problems run the gamut in many areas. It boils down to leadership and accountability.”

Bob Hughes, an 11-year member of the university’s Board of Trustees and current chairman of the University of Louisville Foundation, the school’s private fundraising arm, strongly disagrees. Hughes, a graduate of the university’s medical school, said talk of removing Ramsey isn’t appropriate given his success at the university’s helm. “I don’t think [Wilson] has a deep understanding of the institution, and the direction we’re taking it in,” Hughes said. “When you make a request like that, it’s dramatic, but it doesn’t serve the university when you don’t understand its mission.”

And Ramsey retains strong support with others who have made significant investments in the university.

“What President Ramsey has done with that campus since he’s got there — it’s like two different schools. It’s been great. He has done a wonderful job,” said former trustee J.D. Nichols, who in 2014 committed to give $10 million to the University of Louisville Foundation. “But just like any business that expands rapidly, you’re going to make some mistakes. Is there criticism? Sure, but the good that has been done outweighs the bad.”

This from Tim Kelly in the Herald-Leader:

U of L trustees need to take notice

University of Louisville President Jim Ramsey’s “bumps in the road” op-ed last Sunday in The Courier-Journal and Monday in the Herald-Leader came off as a masterful attempt to deflect attention from the series of troubling incidents that have occurred on his watch.

Such as?

Embezzlement, self-dealing, hefty settlement payouts to departing high-level administrators, lawsuits, the Karen Sypher scandal, the rehiring of Bobby Petrino despite his very public fall from grace at Arkansas, the Mexican-themed Halloween costume fiasco and now investigations by both the NCAA and the FBI.

But it also appears to have been more than that — a pre-emptive strike at an unflattering piece that would appear Tuesday on the website Inside Higher Ed. More on that later.

I don’t know if there’s something rotten in Denmark, but something seems to be seriously amiss at U of L. Too much smoke for there not to be any fire.

It’s pretty telling when the head basketball coach during a 15-minute rant admits that “scurrilous things” have happened, ostensibly with prostitutes, all but throws a well-liked former player and assistant coach, Andre McGee, under the NCAA bus, then says he doesn’t care what people think. And it’s met with public silence from the athletics department and university administration.

It was even left to Rick Bozich and Pat Forde, both formerly of The Courier-Journal, to call out Rick Pitino about his desultory, juvenile behavior after the loss to the University of Kentucky — behavior hardly befitting anyone his age, let alone a Hall of Fame coach and the most visible face of the institution.

But that’s just sports.

Ramsey’s piece was followed, by one day, by a Courier-Journal story about another major U of L project — this one involving three business and research parks — being awarded by the U of L Foundation over only one other competitor to the company chaired by major U of L donor J.D. Nichols. Back in July, Nichols volunteered to “totally fund” incentive compensation for Ramsey and his top administrators. That last element wasn’t mentioned in the story, and Nichols’ donor status merited the barest of mentions.

Has this sort of stuff become so commonplace at U of L, and in Louisville, that nobody cares? Doesn’t anybody — especially the university’s Board of Trustees, most of whom have steadfastly stood behind Ramsey — see anything of concern in all this?

The Courier-Journal has reported episodically on the various issues that have arisen during Ramsey’s tenure, but its extended period without an editorial page editor or editorial writers has diminished an important layer of critical scrutiny of not just U of L but public life in general in Louisville and in Kentucky.

It also might be a very good thing for U of L that state Auditor Adam Edelen was defeated in November. Whether Edelen’s successor will pursue the office’s examination of the U of L Foundation with equal vigor, if at all, remains to be seen.

But U of L hasn’t escaped scrutiny totally, thanks in part to Inside Higher Ed, which has followed the C-J’s stories all along, and doing its own reporting. In the long and blistering piece on Tuesday, the first paragraph by Washington-based education reporter Kellie Woodhouse sets the tone: “How much has to go wrong at an institution before its top leaders are held accountable?”

The administration had to know that piece was coming because of the extensive interviewing that was done, and Ramsey himself had declined to comment for it. So the timing of his op-ed becomes not all that surprising.

Oh well, probably just another “bump in the road” on the Belknap Campus.

Or maybe it’s the jarring pothole that will finally get the attention of the people who drive the school bus: the board of trustees.

Tim Kelly is the past publisher of the Lexington Herald-Leader.

Read more here: http://www.kentucky.com/opinion/op-ed/article53796370.html#storylink=cpy

 

 

Accountable or Not?

A series of scandals in Louisville ask the question: 

At what point is a university president culpable?

This from Inside Higher Education:

How much has to go wrong at an institution before its top leaders are held accountable?
That’s what some at the University of Louisville are asking. The public university has weathered several high-profile incidents in the last year, including a prostitution scandal involving the men’s basketball team, the president and his staff donning racially insensitive Halloween costumes, and, revealed most recently, the ongoing investigation of an executive vice president and other high-level staffers for possibly misusing federal funds.

And these incidents follow other controversial events, such as widespread criticism of President James Ramsey's and some of his top staffers’ higher than average pay, several employees -- including a dean -- being convicted of embezzlement in the last few years, and the revelation that the institution’s alumni director misused funds in her former job.

“They are getting more frequent,” Nancy M. Theriot, chair of Louisville’s women's and gender studies department, said of the scandals that have rocked campus of late. “It’s almost like I don’t even want to open the paper in the morning because I’m afraid of what’s next.”

Theriot says Ramsey, who has been president of Louisville since 2002, is “ultimately” responsible for the problems facing the Kentucky institution. And Theriot is far from alone among faculty, many of whom are frustrated by the barrage of negative incidents on campus this last semester.

“These aren't problems that are occurring in one domain of the university, it’s across the university. At some point it all points to the president and to the leadership, who are responsible for insuring that these sorts of things don't happen,” said David Owen, chair of the university’s philosophy department. “One has to wonder what’s really going on here. Why is this OK? It’s really distressing. It’s really hurting morale for faculty and staff.”

Shortly after Ramsey posed for a photo in which he and his staff were dressed in stereotypical Mexican clothing and sombreros for Halloween, costumes that were widely decried as racially insensitive, more than 70 professors signed a letter saying that Louisville was facing a “crisis of accountability and a consequent lack of confidence in its leadership.” In the November letter, professors said, “This latest incident is only one in a drumbeat of crises that have embarrassed the university and made many embarrassed to be associated with it.”

While Louisville has pledged to do more on diversity, it was caught this year in an apparently illegal job ad that originally stated that white and Asian applicants need not apply.

The month before professors released the letter, a woman published a book claiming that she worked as an escort, stripping and offering sex, at nearly two dozen parties held at a campus dorm that houses athletes. Her claim that Louisville’s director of basketball operations, who is no longer with the university, arranged the parties and paid her for supplying dancers is now being investigated. Multiple basketball players have since come forward to back the author's claim.

And in the month after the letter was penned, a newly hired alumni director resigned after it was discovered she misused funds at her old job. Then last month news broke that Louisville’s Executive Vice President of Health Affairs David Dunn -- one of the university’s top administrators and a direct report to Ramsey -- was put on leave, as he is being investigated for allegedly misusing federal funds. Two other employees, a former associate vice president and the university’s chief information officer, are also under investigation.

Meanwhile, five years ago Louisville’s education dean was convicted of embezzling more than $2 million from the university. In fact, from 2008 to 2014, Louisville employees, in a number of incidents affecting different areas of the university, have embezzled or mishandled nearly $8 million, according to a report from The Courier-Journal.

And over the summer there was faculty outcry when The Courier-Journal reported that Ramsey’s pay totaled nearly $1.6 million in 2014, which was vastly more than fellow presidents at peer institutions in the Atlantic Coast Conference earned. Nearly $1 million of that pay was awarded in the form of deferred compensation and much of it was funded by the university’s foundation, an organization chaired by the president. Ramsey’s pay reached seven digits in 2013 and 2012 as well. Also over the summer, the Louisville Board of Trustees approved a 3 percent raise and a bonus equal to 25 percent of his base salary. Ramsey’s high pay was criticized by faculty, who have gone several years in the past decade without significant raises.

Serious Hits

Ricky Jones, chair of the university’s Pan-African studies department, says he supports Ramsey, but that the university needs to “recalibrate” as it faces a mounting image problem.

“We've taken some serious public hits. There's this idea among some people that it's just this kind of lawless environment with people running amok,” he said. In recalibrating, there’s the question of where accountability lies. There are some who say it lies squarely with Ramsey, and others who aren’t so sure.

“Don’t believe there’s any uniformity in faculty and staff approaches to the president,” Jones said.

“The president is on the hot seat and as this plays out there are some people, like myself, who have not given up on him to date,” he continued. “There are other people who believe he’s absolutely incapable of guiding us through what we're going through right now …. Some people say his leadership has been so poor it has created space for these incidents to occur.”

The 20-member Board of Trustees, which includes a faculty, staff and student representative, has largely supported Ramsey throughout each incident. (The number of board members has been revised here to correct an error.) The board chair said last month that the president has the board’s full support.

Chair Larry Benz told The Courier-Journal that recent incidents are not connected and that he does not consider the investigation into Dunn a scandal. In a statement to Inside Higher Ed, Benz said the board “will never let outlier events define the University of Louisville.”

Ramsey declined to comment for this article. In October he issued an apology for the insensitivity of his Halloween costume. In November Ramsey spoke at a diversity forum, saying, “I’ve hurt the very people that I’m here to serve, and that is our students,” and promising to put more effort behind inclusiveness. In December Ramsey issued a statement about the Dunn investigation, saying that it began in 2014 and urging people to “reserve judgment until the investigators have concluded their work.”

Jones said many faculty members and students were unsatisfied with Ramsey’s initial response to campus outcries over his Halloween costume, perceiving it as weak and insincere (at first, his chief of staff issued a statement on behalf of the president).

“There was a failure of judgment and then, in the aftermath of it, you did have a failure of leadership in responding. He has to carry that,” Jones said. But he added that many on campus felt the November diversity forum did a lot to rebuild bridges between the president, faculty and students. In fact Jones, during the forum, gave the following directive to Ramsey: “Don’t you think about resigning.” Jones said people are now watching Ramsey to see if there’s action behind some of the promises he’s made in regards to diversity.

“All of us are waiting to see in these multiple situations how they’re handled from central administration,” he said. “The failure in this is to do nothing, to give lip service to the issues and then function like the status quo. Let’s hope that doesn’t happen.”

Trustees credit Ramsey with raising the profile of Louisville, which his supporters say has transformed from a commuter college to a thriving residential institution under his leadership. Ramsey is also credited with moving the university from the Big East Conference to the more prestigious Atlantic Coast Conference, a move that netted more visibility and revenue for the university. He’s also praised as strong fund-raiser: Louisville’s endowment is $877 million, nearly quadruple its level when Ramsey took office in 2002. Ramsey has also aimed to strengthen Louisville's research portfolio.

Yet several faculty members say the president, if he is going to take credit for successes in all areas of the university, must also assume responsibility for its problems. Owen said that ever since the education dean was convicted of embezzling, the university has been tightening its financial processes and insisting that administrators and chairs, like himself, have heightened accountability for the finances, scholarship and teaching occurring in their departments. That same accountability, he says, should be expected of top administrators.

“Senior leadership, especially here at U of L, want to take credit for all the great things we do here. They also need to take responsibility when things go wrong,” he said, then speaking specifically of the Dunn investigation, he added that since Dunn reports directly to the president, “accountability is a key question -- there’s no way to sidestep that.”

Susan Resneck Pierce, a presidential consultant and former university president, says presidents are responsible for setting the campus culture and responding to incidents swiftly and strongly.

“The reality is that presidents are accountable for the health and integrity of their institution in all its aspects,” she said. “Just as the board is responsible for providing oversight for the president, presidents are responsible for providing oversight, particularly for the people who report to them directly, and for insisting on behavior that has integrity to it.”

Dunn earns $809,000, and when Ramsey recruited him to Louisville in 2011, Dunn’s wife was given a lucrative university job, according to a Courier Journal article.

Kent Chabotar, the former president of Guilford College who now teaches with Harvard’s New President’s Seminar, said the vast nature of Louisville’s campus -- which has a sprawling research enterprise and health system and an undergraduate enrollment of around 23,000 students -- means that the president is not involved in much of the day-to-day operations of the university. And many of the scandals of late are unrelated, and not necessarily a sign of a systemic problem, Chabotar said; although he did add that it is troublesome when an employee who reports directly to the president is under investigation for misusing funds.

“At Louisville it’s all over the place, in different arenas. I’m not sure the president is responsible for a control system for all those arenas. When you do hold the president accountable is when he or she should have done something but didn’t,” Chabotar said. Yet the accumulation of incidents is likely causing concern among trustees, he said: “These things are building up. You’ve got a sombrero incident here, you’ve got a chief medical VP here, you’ve got an alumni director here. And as they build up, trustees have to be asking tough questions about the control system and the president’s oversight.”

And finally, here is Peter Hasselbacher’s summary of the settlement in the Norton-U of L case and the status of the Norton-Kosair Charities case. It’s well worth reading and sharing. The Kosair Charities case is set for trial later in 2016.

This from the Kentucky Health Policy Institute:

Details of Settlement Between University of Louisville and Norton Healthcare

Congratulations are in order!

Last December 17, representatives of the University of Louisville, Norton Healthcare, and the Commonwealth of Kentucky signed a set of agreements that, for the next eight years at least, settle disputes over the physical, programmatic, and financial control of the currently named Kosair Children’s Hospital.  Both principal parties pledge a new beginning and promise to work together for the benefit of our community.  I congratulate them.  All of us should take them at their word, and help in whatever way we can to honor their promises to each other and to us.  After all, Children’s Hospital is a unique and vital resource for our community.  This and related litigation has not been helpful for it.

In a series of articles in these pages beginning over two years ago, I made available to the public as many documents relevant to the dispute as possible to allow readers to form opinions of their own about the dispute. In this spirit, and in what I trust will be the last installment of the series, I publish in their entirety the settlement documents which were kindly provided to me by the University.

In brief summary, it appears to me that both parties got most of what they initially declared was most important to them. Norton receives adequate protection against the threat of eviction from their hospital.  The Hospital’s medical staff remains open to all credentialed physicians in the community and Norton retains the ability to cooperate academically and clinically with the University of Kentucky.  The University is declared to be the sole academic sponsor of the graduate medical education program at the hospital and is assured of a predictable and generous flow of financial support – albeit with a greater degree of accountability attached.  One might reasonably ask then, why did it take so long to come to agreement? What changed in the recalcitrant endgame?  I will venture a few thoughts on this question at the end of this article.  In the meantime, here are the four documents with a few comments about each.

1. Amendment to the Land Lease.
A change or clarification to the lease of the land under the Hospital was a critical part of the settlement and which required the agreement of the Commonwealth (as the Lessor). For its part, Norton agrees to make $35 million of capital improvements and repairs to the hospital over the next 5 years (which it probably would have done anyway.)  All other past, present, and future financial obligations in the lease are otherwise declared satisfied. It is also made clear that only the Commonwealth, and not the University, may assert a claim for breach or default.  Additionally, “Norton shall not be in default … if UofL unilaterally determines not to continue its affiliation in pediatrics at Kosair Children’s Hospital.” Presumably this new language and other provisions in the settlement provided Norton the confidence they needed to move ahead in the face of the University’s earlier pledge to turn its pediatric service to KentuckyOne Health.

A 1981 agreement contemporary with the initial lease allowed for a representative of UofL to sit on Norton’s Board of Directors and attend its Executive Committee meetings. In less competitive times, that practice may have acceptable, but given the University’s new and nearly exclusive partnership with KentuckyOne, it became unreasonable if not inappropriate.  These requirements are dropped.  Instead, Norton will now “permit a representative of the University to present annually to the board of Norton.”

2. Settlement Agreement.
The first 6 of the 10 pages contain the meat of the agreement as well as a brief chronology of the claims and counter-claims. Since they catalog the principle concerns of the parties, I urge readers to review them.  Principle clauses include financial commitments to the University accompanied by increased accountability for expenditures to Norton. In terms of pediatric medical training,  University clinicians promise to use Children’s hospital, for at least half of their inpatient admissions and Norton promises to make at least 90% of its inpatient resident slots available to UofL. It is made clear that physicians other than UofL faculty may admit and treat their own patients. Important for the University, it “shall have the right to be the sole sponsoring institution for pediatric residency at Kosair Children’s Hospital” but Norton is allowed to implement its letter of intent of Aug 23, 2013 with the University of Kentucky to cooperate over pediatric cardiology and other initiatives.

Money.
The amount of money now in play is considerable. For the next 8 years, Norton promises to pay $30 million yearly in “Annual Support Payments” for use of the Department of Pediatrics.  This amount is intended to cover all of a large existing array of current contracts and payments. In addition, in a pool of funding termed “Additional Financial Support,” Norton agrees to pay the University $24 million in aggregate over the eight year term of the settlement.  The use of these latter funds, as well as unspent money from the former Annual Support Payments are subject to recommendations of a new joint hospital governance committee and ultimately approval by both Norton and the University.  As a final sweetener, Norton agrees to pay UofL a one-time lump sum of $8 million to settle all outstanding additional claims related to expenses incurred by the Department of Pediatrics for services provided at the Hospital.  It is not obvious to outsiders how much of the money specified in the settlement is “new” money. What is clear are stipulations of accountability and how the money may be spent. For example, Norton is permitted to audit the use of the funding.

Exclusivity.
The partnership of UofL with KentuckyOne was obviously a touchy subject for the negotiators.  Accordingly, the University agrees not to participate with other organizations in providing pediatric services within a core set of counties termed the “Greater Louisville Region.” The right to collaborate outside the core counties is maintained.

Specialty Physicians.
If Norton identifies a need for a pediatric specialist, it agrees to give the University the first right to recruit an acceptable individual, but retains the right make such a hire itself if UofL cannot do so in a timely manner.  Norton agrees to encourage its current employed physicians to accept faculty status.

3. Amendment to Master Academic Affiliation Agreement.
Difficulty in negotiating an update to the earlier agreement of 2008 was an early indicator of difficulties between the two parties.  As part of the settlement, a way forward is agreed to.  With respect to   the training programs for students and residents, the University has full authority.  However, with respect to clinical programs and operations at Children’s Hospital there are considerable changes including shared responsibility.  Chief among these is the formation of a new system of Governance and Leadership under the auspices of a Pediatric Academic Medical Center Committee (PAMCC). This new committee is made up of three representatives each from the University and Norton and which must act by majority vote. The PAMCC shall make recommendations with respect to the following at Children’s Hospital:  relationship management, access and quality of care, negotiating additional contracts, ensuring accountability and transparency, changes and expansions of services, approving a Medical Director and Chief of Staff, and defining the scope and responsibilities of these two latter officers.  What else is there left to oversee? This is a powerful body that must work together for the hospital and the Department of Pediatrics to succeed! It will be telling to see who is appointed to the committee.

4. Agreed Order of Dismissal.
This one-pager is a joint request to the court by the three parties to dismiss the case, with each party to bear its own costs. Thus endeth the litigation.

Other Comments:

Is this an enduring fix?
The settlement’s term runs for the next eight years. That ought to be long enough to heal the wounds that have been festering for more than two decades. If all goes as is promised, and the pediatric partnership flourishes as we all want it to, then renewal in to the future should be no problem.  The settlement makes it clear however, that there remains a basic disagreement about who is responsible for funding an academic medical center in pediatrics. UofL will have to learn how to work successfully with more than a single clinical partner – which in my opinion would be a desirable goal – but its parallel relationship with KentuckyOne will always be there as a complicating factor.

Aside from local healthcare and academic politics, the born-again Norton-University partnership will have to survive the tidal wave of national change in a healthcare system that is testing and changing everything that has gone on before.

Kosair Charities vs. Norton Healthcare?
While Norton was grappling with the University, in the other corner waiting for the tag was Kosair Charities which was actively switching its financial support from the hospital that bore its name to the University’s research activities.  The last I heard, this litigation was proceeding apace.

In my opinion, Norton does not need Kosair. In fact, I believe Norton would have more credibility at present if Kosair Charities was out of the Louisville hospital picture altogether. To my mind, Kosair Charity’s overblown claims about misuse of its donated funding blew away like so much smoke. With its new and better-integrated relationship with the Department of Pediatrics, a Norton Children’s Hospital can do just fine without Kosair stirring the pot.  Admittedly, there would continue to be some awkwardness for the University if it affiliates with the Kosair name on its research buildings and outpatient clinics but not on its hospital and other major clinical facilities.

My personal advice to Kosair Charities is this. If you want to continue to be able to raise money in the name of the hospital, that you swallow your pride and pony up what you have been withholding. Norton and the University have pledged to work together for their mutual benefit and that of the children of our community. Follow their lead.  Either withdraw gracefully, or be perceived as trying to make even more trouble for a Children’s hospital whose reputation has been injured by the troubles of these past few years and in which you played a role.  If you want to stay in the Children’s Hospital game – and if Norton will still have you – be a better partner by making a bigger financial contribution more commensurate with the naming rights of the hospital, and stop throwing mud on the enterprise.

How did this come to pass?
Norton and the University appeared to come close to agreement numerous times over the past three years only to have things blow up at the last minute.  It made no difference whether the negotiations were held independently, or under the supervision of court-ordered mediations. You can form your own opinion if any blame need be assigned. It is clear to me that movement on the dispute only occurred when the UofL Board of Trustees became active in the process, and that only occurred because the executive leadership of the University was crumbling.

Will anyone else rise to sabotage the settlement?
The Board as a whole had voted some time earlier to allow its Executive Committee to act on its behalf as the litigation proceeded.  In the meantime, Dr. David Dunn, the University’s chief strategist and negotiator in the dispute with Norton, was put on leave while he is under FBI investigation, and President James Ramsey was distracted by his sombrero episode and losing the support of both his Board and community. The Teflon had worn off.  A mere handful of days after Dr. Dunn left the picture, Board Chair Larry Benz brokered and announced a comprehensive settlement that appears to give both sides what they claim to have wanted all along!  Is there any reason to doubt why President Ramsey has joined with Governor Bevin to remove Mr. Benz and other Trustees from the Board?

I do not personally believe that Dr. Dunn can return to his former position and I believe that President Ramsey’s useful time at the University has long passed. He has become an embattled President. I cannot personally imagine that either of these two men could be constructive in closing the gap that emerged between the two long-time allies – Norton Healthcare and the University of Louisville.  The settlement sits in a precarious position, but the rank-and-file staff and professionals at Children’s Hospital have continued to work effectively together throughout. They deserve the support of the community and protection from those who will rise to sabotage the settlement.  We as a community must not let that happen.

If I have made an error of fact, help me correct it.

Peter Hasselbacher, MD
President, KHPI
Emeritus Professor of Medicine, UofL
26 Jan 2016