Rehab Blue, an entity formed by the University of Kentucky, faces ongoing legal challenges regarding its proposed 60-bed inpatient rehabilitation facility in Lexington.
The University of Kentucky, through its entity Rehab Blue, is seeking to develop a 60-bed inpatient rehabilitation hospital at 2550 Winchester Road in Lexington. The project has been mired in litigation for over two years, primarily due to a Certificate of Need (CON) dispute with the existing 158-bed Cardinal Hill rehabilitation facility. While both parties acknowledged a need for additional inpatient rehabilitation services in Fayette County, Cardinal Hill has mounted a legal challenge, raising concerns over physician staffing overlap and the potential influence of private-equity-backed Lifepoint in the project's development.
Although the Cabinet for Health and Family Services initially approved the CON in December 2024, the Franklin Circuit Court reversed that decision in November 2025, citing a lack of complete evidence regarding the project's financial and operational agreements. Rehab Blue filed a notice of appeal in December 2025, and the matter remains under review. If eventually constructed, the facility would be situated on the same site where the University of Kentucky previously announced plans for a broader medical campus.
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