Bankrupt North Philadelphia Health System could continue running Girard Medical Center

Philadelphia has ended negotiations with NHS Human Services on a contract under which NHS would have run drug-treatment and behavioral-health operations at Girard Medical Center and the associated Goldman Clinic, a methadone center. Both are part of the bankrupt North Philadelphia Health System.

"We have had a change in strategy as of the last few days, when we realized that NHS wasn't going to be able to give us a date at which point they could begin operations at the site," Eva Gladstein, the city's deputy managing director for health and human services, said Thursday.

Girard and the Goldman Clinic treat more than 1,000 patients a day, including more than 200 as inpatients, according to a bankruptcy filing.

Gladstein said the city still intends to sign a one-year lease on the Girard Medical Center with Iron Stone Real Estate Partners, which won an August bankruptcy auction for the campus, agreeing to pay $8.5 million in cash. A condition of that deal was that NHS would step in as operator.

After a couple delays, the real estate sale is expected to close Nov. 30, Gladstein and an Iron Stone representative both said.

NHS, a Lafayette Hill nonprofit that is a major provider of behavioral health and other human services in Pennsylvania, said it appreciated the city's interest in working with it.

"It is disappointing that we could not reach agreement on the sublease, especially since both sides worked hard to get it done, but NHS respects the city's decision to move forward with an alternative plan for Girard Medical Center," NHS said in an emailed statement.

With NHS out of the picture, the city will begin talking to what remains of North Philadelphia Health System about a sublease that would keep a remnant of that bankrupt nonprofit in charge at the 801 W. Girard Ave. facility, at least in the short term, Gladstein said.

"We may be looking a little bit down the road at increasing the effectiveness of the space with a broader array of services and/or providers," she said. She declined to say anything about other providers that might be interested in operating there.

Allowing North Philadelphia Health System to continue operating the facility provides stability for the site's 570 or so employees, which was one of the city's goals, Gladstein said. Several hundred Girard employees had received conditional job offers, with physicals scheduled for Wednesday. They were abruptly canceled, an employee said.

As part of the August auction, Community Behavioral Health, a city affiliate that manages mental-health Medicaid benefits in Philadelphia, agreed to waive its bankruptcy claim of $3.8 million and to subsidize losses at Girard Medical Center. Those subsidies totaled $1.18 million in September and October. The city said no decision has been made regarding how future losses will be covered.

A caveat, Gladstein said, is that U.S. Bankruptcy Court will have to approve the new arrangement, even though the sale to Iron Stone can still go through.