Another buyer-this time a not-for-profit-is eyeing Allegheny Health, Research and Education Foundation's eight Philadelphia-area hospitals.
That revelation followed AHERF's acknowledgment early last week that its 1997 financial reports overstated hospital income (See related story, p. 6).
Philadelphia-based Jefferson Health System, which operates five acute-care hospitals in that market, is looking at the AHERF facilities and intends to submit a bid, according to Henry Nicholas, president of Local 1199C of the National Union of Hospital and Health Care Employees. Nicholas has a keen interest in the outcome of AHERF's Sept. 29 bankruptcy auction because his union represents 2,700 workers at four of the eight hospitals.
In July, AHERF filed for bankruptcy protection on behalf of the foundation, eight Philadelphia hospitals, medical practices employing nearly 600 doctors, and its medical and allied health schools in Philadelphia. Then, AHERF reported total debt of $1.3 billion and assets worth $1.6 billion.
In late July, Nashville-based Vanguard Health Systems submitted to U.S. Bankruptcy Court in Pittsburgh a $460 million bid for the facilities. On Aug. 12, Santa Barbara, Calif.-based Tenet Healthcare Corp. upped the ante, filing a $465 million offer for the eight hospitals.
Under the terms of the auction, bidders may seek the entire block of hospitals or bid for each individually.
Jefferson spokesman Jeffrey Adam Baxt would say only that system officials have an interest in AHERF facilities. He said no decisions have been made. "We're exploring all the options out there," he said.
A Jefferson bid creates another element of competition and may raise the price a successful buyer must pay. That would be good news for Armonk, N.Y.-based MBIA Insurance Corp., which insures $256 million of AHERF debt. The bond insurer is said to be working behind the scenes to drum up local interest in AHERF facilities.
Under one scenario, MBIA might join a consortium of not-for-profits that would take over one of two former AHERF hospitals, the Philadelphia Inquirer reported.
MBIA spokesman Joe Krakoviak would say only that the company is working with "all parties" to maximize the value of the assets to creditors.