The decision last week by the Drexel University board of trustees to bow out of a plan to manage the Allegheny University of the Health Sciences has sent Tenet Healthcare Corp. scrambling to find a new academic business partner.
Failure to do so could jeopardize Tenet's $345 million bid for Allegheny Health, Education and Research Foundation's bankrupt Philadelphia operations.
In addition to buying eight hospitals and physician practices employing more than 300 physicians, Tenet is buying the medical school as part of the deal. But the transaction hinges on finding an organization to manage the school.
At Tenet's request on Sept. 29, Drexel spent two weeks performing due diligence and analyzing a contract management arrangement for the university.
"While we share Tenet's confidence in Drexel's ability to providing effective academic management, after hard and careful study we have decided to respectfully decline Tenet's invitation," said a statement by C.R. Pennoni, chairman of Drexel's board.
After Drexel bowed out, Santa Barbara, Calif.-based Tenet reiterated that its deal, accepted last month in U.S. Bankruptcy Court in Pittsburgh, is contingent on finding an academic partner to run the AHERF medical and allied health schools.
"We have overcome many setbacks in this process, and we remain optimistic," said W. Randolph Smith, executive vice president for Tenet's Eastern operations.
Late last week, Tenet spokesman Lance Ignon said the company had no timetable for finding a new partner. Discussions with other institutions are under way, but he declined to name the groups.