Tenet Healthcare Corp. has complained to the bankruptcy trustee supervising the sale of Allegheny Health, Education and Research Foundation's remaining hospitals that excluding for-profits as bidders is unfair and may keep the richest offers off the table.
Bids for AHERF's four Pittsburgh-area hospitals, including 569-bed Allegheny General, were due Jan. 15.
Late Friday, AHERF confirmed speculation that Pittsburgh's 455-bed Western Pennsylvania Hospital, with financial backing from Highmark Blue Cross and Blue Shield, and Catholic Health East of Newtown Square, Pa., both submitted proposals. AHERF and the potential suitors declined to discuss bid details, citing confidentiality agreements.
AHERF said it has extended the deadline for approving one of the proposals to Feb. 10 from Jan. 25.
Santa Barbara, Calif.-based Tenet has publicly objected to its exclusion from the sale. David Mayeux, Tenet executive vice president for acquisitions and development, wrote to AHERF's bankruptcy trustee, William Scharffenberger, that Tenet might be interested in buying the western hospitals, but is unable to do so under existing bid rules. In a Jan. 12 letter , Mayeux wrote that "without access to financial and other key information" about the hospitals that was shared with not-for-profit bidders, Tenet can't determine whether to bid and how much to offer.
AHERF declined to discuss Tenet's objection. But a person familiar with the situation said that doctors, who are concerned that a for-profit takeover could jeopardize the charitable and educational missions of the institutions, were prime movers behind the bid rules.
Beyond the issue of fair play, Tenet said that a lack of for-profit bids could mean the hospitals would fetch less than top dollar. Temple University Health System in Philadelphia, the only not-for-profit to bid in the auction for AHERF's Philadelphia hospitals, offered a "paltry" $12 million for 183-bed St. Christopher's Hospital for Children, Mayeux wrote. Tenet, by contrast, won the September 1998 auction for all eight hospitals with a $345 million offer.
Although AHERF's remaining four hospitals were not part of its bankruptcy filing last July, creditors see their sale as the best chance to receive at least some compensation for AHERF's nearly $1.5 billion in debt.
Scharffenberger may decide as early as this week whether to change the bidding process.