Kentucky Governor Steve Beshear has rejected the pending merger between University of Louisville Hospital, Jewish/St. Mary's Health System and Catholic Health Initiatives.The deal would've put University Hospital under a contract inspired by Catholic doctrine, though the institution would remain secular. It blocked certain reproductive health procedures and would change employee benefits, beginning 2013.Critics of the merger say it would create an unwelcome entanglement between church and state. The merging partners argued that University Hospital is not a public entity. But in his statement rejecting the merger, Beshear sided with the critics.“If this merger were allowed to happen, U of L and the public would have only indirect and minority influence over the new statewide network's affairs and its use of public assets,” he said.Attorney General Jack Conway also ruled that the hospital was a public entity, though the merging partners challenged his decision.But the merger's critics are celebrating.Criticism of the merger picked up this year as details emerged about the role Catholic doctrine would play in the deal. After merging with Jewish/St. Mary's Health System and Catholic Health Initiatives, U of L Hospital would stop performing certain procedures banned by the Catholic Church. That included tube tying and distributing birth control. Also, employee health benefits would change in 2013, possibly to exclude coverage for same-sex partners.Leading merger critic Honi Goldman welcomed Beshear's decision."Obviously he realized both the financial repercussions that this merger would take on the Commonwealth as well as to the healthcare of the citizens of Kentucky," she said.The University of Louisville Hospital sent out a statement reacting with disappointment to the decision."Each of the partners remains committed to working together to further the joint vision that has guided us over the last several months," it said. "We firmly believe that a strong alignment between our organizations will have positive benefits for the communities we serve and the health care of Kentuckians across the state."In a statement, Mayor Greg Fischer says the hospitals' financial states must be studied now that the merger has failed.Click here to see the full merger report from Attorney General Jack Conway.Here is the governor's full statement: “For the last several months, I have consulted with Attorney General Jack Conway, State Auditor Crit Luallen, officials from the University of Louisville and the proposed merger partners, health care and finance experts, and concerned citizens from across the Commonwealth on a proposal to merge University Hospital and Jewish Hospital & St. Mary’s Healthcare in Louisville with those owned or controlled by Catholic Health Initiatives in Kentucky, in order to create a statewide network of health care facilities. University Hospital provides high-quality health care services, and I greatly appreciate their efforts to improve those services, improve the health status of Kentuckians and find ways to grow and expand the mission of the University health care system. Significant legal and policy concerns have been raised about this proposed merger, including constitutional and public policy questions about the influence of a religious entity on a publicly-owned institution, especially regarding reproductive issues. In addition, if for some reason in the future the merger partners were forced to separate, the potential costs of that unwind could be significant and have a detrimental impact not only on University Hospital, but also on the taxpayers of this state. However, most troubling to me is the loss of control of a public asset. University Hospital is a public asset with an important public mission, and if this merger were allowed to happen, U of L and the public would have only indirect and minority influence over the new statewide network’s affairs and its use of state assets. Many of these issues have been raised and analyzed in a report from Attorney General Jack Conway, who recommends not going forward with the merger. U of L and the other merger partners have worked hard to address the concerns that have been raised, and I appreciate those efforts. However, after exhaustive discussions and research, I have determined that this proposed transaction is not in the best interest of the Commonwealth and therefore should not move forward. In my opinion the risks to the public outweigh the potential benefits. I understand that the changing health care industry has caused significant challenges for both University and Jewish Hospital & St. Mary’s Healthcare. I am committed to assisting both facilities in reaching our shared goals of providing quality care, especially to our poorest and most vulnerable citizens, as well as finding ways to ensure both facilities remain on strong financial footing. These hospitals provide critical services, and we stand ready to help them fulfill their missions and succeed in a changing health care economy."