Temple University’s sale of the Fox Chase Cancer Center to Thomas Jefferson University has been called off, the two nonprofits said Tuesday.
“This transaction is the latest casualty of COVID-19,” said Stephen K. Klasko, president of Thomas Jefferson University. “Because of the tremendous impact that the virus has had on our operations, Jefferson must focus entirely on providing patient care and safety, student education and safety, and for the well-being of our dedicated employees."
The price had not been disclosed.
Some health systems have said they expect to lose hundreds of millions of dollars because of the coronavirus pandemic. Jefferson has not provided projections, but the losses are expected to be substantial. Temple has said it is losing $40 million a month. The University of Pennsylvania Health System said it expected to lose $450 million through June.
Health system losses are coming from the disappearance of revenue from surgeries and other care that is not urgent, lower payments for the care of COVID-19 patents, and extra costs for equipment and other related expenses.
“There is no question that but for the catastrophic economic impact of the virus, both institutions were prepared to move forward to complete this transaction," Temple president Richard M. Englert said. "We fully understand and accept this reality, and we look forward to identifying new ways for our institutions to work together in the future to better serve our community.”
Standard & Poor’s Global Ratings last month cut the credit outlook to negative on Temple University Health System and 38 other U.S. nonprofit health systems “because they already face challenging business conditions and have limited financial cushion to absorb a crisis such as the one we are experiencing.”
Ending the purchase of Fox Chase is another pothole in Klasko’s acquisition tear through the region. Jefferson, anchored by Thomas Jefferson University Hospital in Center City, has expanded from three hospitals in 2015 to 14 now. In February, the Federal Trade Commission sued to block Jefferson’s acquisition of Einstein Healthcare Network, alleging that the consolidation would lead to higher prices. That challenge is scheduled for trial in September.
Temple and Jefferson also had a preliminary agreement for Jefferson to buy Temple’s 50% stake in Health Partners Plans Inc., a nonprofit Medicaid insurer. The former Aria Health System, which Jefferson acquired in 2016, and Einstein are the other owners of Health Partners.
Completing the Einstein deal and acquiring Temple’s interest in the Health Partners would have given Jefferson complete control of the health insurer. Then it could have competed with Independence Blue Cross, the region’s largest insurer.
Neither Temple nor Jefferson would confirm that they had also ended talks on Health Partners. Both parties declined to comment beyond a joint statement.
It’s not clear what the end of the deal means for the future of Temple’s health system. The sale of Fox Chase, which Temple bought for $84 million in 2012 and decided to sell in 2018, was part of a restructuring that was supposed to strengthen the systems finances by reducing debt.
Stuart Fine, a professor in Temple University’s College of Public Health and the former CEO of a health system in Bucks County, predicted a bumpy ride in health care over the coming year, with further closures and consolidation inevitable.
“Jefferson will have to retrench,” Fine said in an email. “Temple Health and Einstein, respectively, are in the same tenuous condition that they’ve been in for a number of years, and can last only so long without major restructurings.”