Hahnemann University Hospital gets higher bid from California firm
The bid could trigger changes in the bankruptcy strategy being pursued by the parent company of Hahnemann University Hospital and St. Christopher's Hospital for Children.
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A California company that wants to reopen Hahnemann University Hospital, but did not win last week’s auction of the hospital’s residency program, said Wednesday that it would increase its bid to $60 million if bidding for the bankrupt Center City institution were reopened.
The move by KPC Global, of Santa Ana, could lead to a twist in the June 30 bankruptcy, which also includes St. Christopher’s Hospital for Children and other operations.
A coalition of six Philadelphia-area health systems won the Aug. 8 auction with a surprisingly large bid of $55 million, topping bids by Tower Health and KPC, which operates seven hospitals in Southern California.
Federal regulators at the Centers for Medicare and Medicaid Services (CMS) have maintained their opposition to the unprecedented sale of the residency program, which has more than 550 doctors in training, declaring that the proposed deal to be illegal. Normally, when a teaching hospital closes, CMS redistributes the residency positions to other hospitals. Under that scenario, the residency positions could leave the Philadelphia region.
The CMS opposition means the sale to Christiana Care Health System, Cooper University Health Care, Einstein Healthcare Network, Main Line Health, Jefferson Health, and Temple University Health System may never go through. One goal of the local health systems is to keep the residency positions in the region.
The residency program, which is paid for largely by CMS, fetched a significantly higher price than expected, and its sale would bring a significant amount of money into the bankruptcy that could be used to pay lenders and other creditors.
“What we’re really doing is signaling to everybody who we think are the important stakeholders in this case that there is an alternative to trying to beat CMS into submission. The alternative is to revisit the subject of selling the hospital,” Gary E. Klausner, a lawyer for KPC Global, said in an interview Wednesday.
A lawyer for the parent company of Hahnemann and St. Christopher’s did not respond to request for comment. A lawyer for the unsecured creditors committee also did not respond to a request for comment.
Hahnemann has 496 beds and employed 2,500, but discharged its last inpatient on July 26. The 189-bed St. Christopher’s is still operating and is scheduled to be auctioned next month.
Klausner said KPC Global, which is owned by Kali P. Chaudhuri, would also be interested in buying St. Christopher’s.
A bankruptcy court hearing on the sale of the Hahnemann residency program is scheduled for Monday.
Klausner said he was unable to evaluate the political pressure on CMS. “Is the pressure on CMS to adhere to its policies in which it wants to stay in control of the residents slots and not have them sold like taxi cab medallions, or is the pressure brought on them to back off of their objection so that money can be put into the bankruptcy estate?"
A union that represented 800 registered nurses at Hahnemann hopes CMS does not budge.
“We believe that the sale of the residency program needs to be conditioned upon a commitment to continue operations of the hospital," said Samir Sonti, a spokesperson for the Pennsylvania Association of Staff Nurses and Allied Professionals. "It appears that there is such a bid on the table, so we hope CMS will stand by their current objection.”