Temple University Health System revealed in a conference call that it has agreed to pay $83.8 million for the Fox Chase Cancer Center and immediately invest $30.9 million to expand Fox Chase into Temple's neighboring Jeanes Hospital.
Health system president and chief executive Larry Kaiser, who arrived less than a year ago, has high expectations from the deal, announced in December, saying that his vision was for revenue at Fox Chase to reach $1 billion in five years, from $350 million in the year ended June 30. Temple had $994 million in revenue during the same period.
Officials on the Thursday call did not say when they expected the deal to close, but Temple will sell bonds in June to pay for it. "We were able to negotiate with the banks to take out their debt," Kaiser said.
According to draft financial statements, Fox Chase had $126.5 million in long-term debt on June 30, 2011. Because of a shortage of cash, the cancer center had skipped numerous debt payments owed to Citizens, TD, and Wells Fargo Banks. J.P. Morgan holds some bonds.
After three years in which it lost $20.8 million, Fox Chase earned $3.7 million in fiscal 2011, thanks to operating improvements aided by a consulting firm, Kaiser said.
Acquisition of Fox Chase is a key component of Kaiser's plan to expand Temple's footprint outside North Philadelphia, where it faces huge financial challenges as "the de facto public hospital in the largest city in the country without a public hospital," he said.
Temple also plans to expand into the suburbs with a series of urgent-care and ambulatory-care centers, such as the one that opened in Oaks in October and has exceeded expectations, Kaiser said.