An Interesting Wrinkle in the Hahnemann University Hospital Bankruptcy

An Interesting Wrinkle in the Hahnemann University Hospital Bankruptcy Posted By:
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Hahnemann University Hospital has been an institution in downtown Philadelphia, seemingly forever. The level I trauma center, medical training facility, and public safety net hospital has been in continuous operation since 1848. Owned by Philadelphia Academic Health, Hahnemann filed for Chapter 11 bankruptcy shortly after announcing in late June 2019 that the 495-bed hospital in Center City would close by September 6, 2019. If you are not familiar with the facility, Hahnemann is also the main teaching hospital for Drexel University's College of Medicine, whose more than 570 residents and fellows will need to find new positions when the hospital closes. This also has the potential to impact Drexel's PA program clinical clerkships.

Hahnemann, Drexel, and Tower Health operate six hospitals in the Philadelphia area and in Reading, Pennsylvania. They have proposed shifting at least some of the hospital's teaching operations to Tower.

To my eye, what is particularly curious about this bankruptcy is the sale of one particular asset: the residency and fellowship slots. Tower is offering $7.5 million to Hahnemann for its national provider ID number and its Medicare provider number, along with the funding for residency training programs and the Pennsylvania Department of Health license to operate an acute care center and resident-training program. They anticipate selling this to the highest bidder, and the bidding is expected to conclude by August 5—if they are allowed to proceed at all by the bankruptcy court. You can only imagine the objections raised by a gamut of stakeholders.

First and foremost is the Department of Justice representing the Centers for Medicaid and Medicare Services, who claim this would be an illegal sale. While individual residency slots have been sold, they claim there is no precedent for the transfer of an entire residency. But it appears that if the purchaser accepts full liability associated with the residency program, that lack of precedent may be insufficient to block the sale. Yet that is but a single point of many objections by stakeholders.

Regardless, patients are being discharged; few, if any, new patients are being admitted; floors closed; units consolidated; and there soon will be no work for the employees, teaching faculty, residents, and students. Pandemonium is a good descriptor for the lives of those who had contracts that are now invalidated by the bankruptcy. And that speaks nothing of the patients who now will literally fall through what existed as their safety net.

Reference
  • Feldman N. Judge rules Hahnemann can sell its residency programs to highest bidder; closure plan delayed. whyy.org/articles/judge-rules-hahnemann-can-sell-its-residency-programs-to-highest-bidder-closure-plan-delayed/. Accessed July 22, 2019.

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