Four Philadelphia-based academic health systems have partnered to purchase St. Christopher's Hospital for Children, the institutions announced Wednesday.
Jefferson Health, Temple Health, Einstein Healthcare Network and Philadelphia College of Osteopathic Medicine plan to submit a letter of intent to acquire the 188-bed teaching hospital that was included in a Chapter 11 bankruptcy restructuring by parent company Philadelphia Academic Health System. The urban hospital—which has one of the country's busiest pediatric emergency departments, largely serves low-income families and employs 1,900 people—stopped accepting Level 1 and 2 trauma patients shortly after Philadelphia Academic Health System filed for bankruptcy protection June 30.
"St. Christopher's Hospital for Children is an essential provider of healthcare services for the children in the Philadelphia region," said Barry Freedman, president and CEO of Einstein, which is pursuing a merger with Jefferson. "We understand the significance of their presence in an area of Philadelphia that already has limited access to quality healthcare services for children. It is Einstein's obligation to step forward, along with our colleagues at Temple, Jefferson and PCOM to save this precious asset."
Each of the four institutions have academic affiliations with St. Christopher's, either for training physicians, nurses or other health professions.
Philadelphia Academic Health System includes St. Christopher's and Hahnemann University Hospital. Hahnemann, a 496-bed academic hospital with a Level 1 trauma center, is set to close in September after months of unsuccessful attempts to raise funds for the hospital, Allen Wilen, chief restructuring officer for PAHS, said in a news release following the bankruptcy filing. Hahnemann's pretax losses have exceeded $69 million since the acquisition, according to court filings, and the hospital would jeopardize St. Christopher's if it remains open.
St. Christopher's has been recording significant operating losses since at least 2014, racking up a $13.4 million operating loss in 2018, according to Modern Healthcare Metrics data.
Philadelphia Academic Health System could not turn things around when it acquired the hospitals from Tenet Healthcare Corp. in early January, with funding from several real estate investment firms. The companies entered a two-year agreement as Tenet committed to providing IT support. They also worked out a deal to use Tenet's Conifer Revenue Cycle Solutions software.
The hospitals and related operations lost more than $6 million during their first full operational month in February 2018, according to court filings, and PAHS claimed that Tenet did not pay about $21 million owed related to a "net working capital adjustment." PAHS sued Tenet in September and the lawsuit is ongoing.
The organizations also disputed an alleged outdated IT platform that has impaired care and PAHS claimed that Conifer's poor performance has led to downgrades and denials by payers. Tenet also allegedly misrepresented the viability of the hospitals, PAHS argued.
"In a time of difficult transition for healthcare in Philadelphia, four healthcare organizations stepping up to do what's right by St. Christopher's patients is truly emblematic of neighbors helping neighbors," Dr. Achintya Moulick, chief medical officer at St. Christopher's, said in prepared remarks.