In a special meeting of the university’s Board of Trustees, executive committee members approved a private partnership with King’s Daughter Health Systems in Ashland, Kentucky.

The partnership is a “significant deal” covering $500 million in revenue, 3,500 employees and more than 150 physicians, said Mark Newman, executive vice president of health affairs for UK Healthcare.

“I want to emphasize that this is a deal with two strong partners. Even with COVID-19, King’s Daughters is looking stronger and more resilient than when we began our discussions almost a year ago,” Newman said. “We are not coming into this as a white knight, we are coming to work together to keep them strong and to secure our future.”

According to UK administrators, the deal consists of a management agreement where UKHC through its corporation Beyond Blue will be responsible for maintaining facilities.

The year-long planning for this venture project included a financial review, facilities inspection, cybersecurity quality and more than 60 people looking into supply chain risk management.

“This venture envisions King’s Daughters and UK to come together to form a new, not-for profit-corporation to operate and grow King’s Daughters operations and market presence in their tri-state area through a management agreement,” Newman said. “UK Healthcare will be held accountable for driving high quality care and strong financial results in this agreement.”

UK Healthcare sees the partnership as a way to expand into neighboring states and enable subspecialty work, such as solid organ transplantation and bone marrow transplantation, in Lexington.

“We see a tremendous opportunity in Ohio and West Virginia to continue to advance and provide care to people who need it from the standpoint of our missions in education and research,” Newman said. “We also see opportunities for growth and for our trainees in this partnership. There are amazing community experiences to be had in collaboration with Kings Daughters position and their leadership team.”

Kristie Whitlach, CEO of King’s Daughters, began working with UK a year ago after seeing an opportunity with the closure of Our Lady of Bellefonte hospital.

“She wanted to go to hardware with a proposal on how to partner to generate new dollars for both parties facing declining margins, but more importantly, the closure of your competition. Usually that’s good. In this case Kristie was smart enough to know that to protect access to care, she would need to employ, many of the Our Lady of Bellefonte physicians and their clinics,” Newman said.

Whitlach said she is excited to partner with UK.

“I think it’ll be a great thing, not only for people who need health care because they’re ill, but to really work together to improve the healthcare and region and the health of our citizens,” Whitlach said in a Friday morning press conference.

Bill Thro, general counsel for UK, explained that the partnership how the partnership will operate legally.

UK’s existing affiliated corporation, Beyond Blue, will oversee facility and quality metrics.

The deal will create a joint company where one member is Beyond Blue and the other is King’s Daughters parent corporation.

“These two entities will come together in a new limited liability corporation called Royal Blue Health, which will contain all of the assets of King’s Daughters as well as intangibles that the university is is contributing. This new entity will be a partnership.”

As a private, not-for-profit partnership, the university will not have sovereign immunity for Royal Blue Health. It will not be a constitutional actor and will not be subject to the Open Meetings Act or the open Records Act, according to Thro.

Administrators expect operational details to be announced in early April.

Newman said the partnership is another way to ensure UK’s “essentiality” to the Commonwealth.

“We have a lot of challenges in the tri-state with COVID that the pandemic has made it even more challenging, and UK has been a great partner throughout this handling of the public health emergency,” Whitlach said. “I think we have a lot of opportunities, a lot of issues, economically, social determinants of care, healthcare that we can work on together.”

The proposal for the joint venture was passed by UK’s Board of Trustees with no objection or discussion. 

The executive committee is authorized, in times between board meetings, to act on behalf of the entire board.