As Hahnemann empties out, owner seeks bids for St. Christopher’s

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St. Christopher's Hospital for Children in Philadelphia (Google maps)

St. Christopher's Hospital for Children in Philadelphia (Google maps)

Hahnemann University Hospital has “zero patients’’ but its emergency room remains open as it moves forward with plans to close, the hospital’s attorney said during a bankruptcy hearing Friday.

“We continue to make progress,’’ said Mark Minuti, who represents the financially failing and underutilized hospital’s corporate owner, Philadelphia Academic Health System, LLC.

Minuti told U.S. Bankruptcy Court Judge Kevin Gross during the hearing in Wilmington, Delaware that productive discussions are ongoing with city and state health regulators and that a detailed plan should be submitted soon so a closure hearing could be held.

That hearing had been scheduled for Friday but Minuti said a little more time is needed before creditors and other parties agree to a plan.

When the hospital filed for Chapter 11 protection from creditors on July 1, officials sought to completely cease operations on Sept. 6 at the 221-year-old Hahnemann, known as a “safety net” hospital for Philadelphia’s poor. Hahnemann has 498 beds but in recent months it’s been at most half full, court filings show.

Friday’s two-hour hearing centered instead on establishing a bidding process for profitable St. Christopher’s Hospital for Children in North Philadelphia, which is also included in the bankruptcy filing.

Four local hospital systems have joined forces to make an offer for 188-bed St. Christopher’s. The group includes Temple Health, Jefferson Health, Einstein and Philadelphia College of Osteopathic Medicine.

Neither the real estate for St. Christopher’s, on Erie Avenue, nor Hahnemann, at Broad and Vine streets, is included in the bankruptcy filing. Sale of those properties will be negotiated separately.

‘Exceptional event for the city’

The one issue that arose Friday was the city of Philadelphia’s bid to be a “consultation party” to the bidding process and sale.

A group that represents contract physicians to St. Christopher’s also sought that status, which has been provided to other parties, including the Official Committee of Unsecured Creditors.

Megan Harper, deputy Philadelphia solicitor, was joined in court by Thomas Farley, the city’s health commissioner.

Harper said the city’s focus and concern is “continuity of care’’ and it has an obligation to protect residents from any burden or “damage” from the sale.

“This is an exceptional event for the city of Philadelphia,’’ said Harper, adding that government health officials “have a duty to our citizens.”

Harper added that city officials “realize nobody wants us to be a consulting party” but “we want to be fully informed, without violating any confidences, without getting involved in negotiations’’ so the city isn’t “put on our heels.”

Minuti said the hospital’s owners are sympathetic to the city’s concerns and “understand there will be an impact on the city, no question about that.”

But he said the process lets the city object formally once a deal is reached and to express any concerns that would be taken into consideration.

The bidding process would involve nine different occasions when the owners would have to meet with consulting parties, he said. Adding the city, as well as the physicians group, “makes no sense” and would cause “the process to grind to a halt.”

Gross denied the bid by the physician’s group, but said the city has legitimate concerns, such as the prospective bidders saying they would close the pediatric cardiac care unit.

Harper noted that the hospital provides indigent services for children too.

“These are the things at risk and why we need to be more than a regular creditor,’’ she said.

Minuti eventually agreed to inform the city of the identity of all qualified bidders and notify the city if they learned of any plans that would negatively impact residents.

“If there is something that’s going to discontinue, we will commit to disclose that,’’ Minuti said.

The city and other affected parties can also object formally to the court once a tentative deal is reached.

Judge Gross must approve any sale.

‘Not like a boat or any other asset’

City health commissioner Farley did not testify, but outside court he told WHYY that the city, which provides taxpayer dollars to the hospital, must protect its children.

“A hospital is not like a boat or any other asset,’’ Farley said. “A hospital is a community resource that the people of Philadelphia depend on. And we have a strong interest in making sure the hospital continues to operate and serve the needy people of North Philadelphia.

“We just want to get as much opportunity as we really can to make sure it’s delivered in the hands of a safe operator so people continue to have good services in the future,” he said.

Farley singled out outpatient services provided by the hospital’s Center for the Urban Child.

“That might not necessarily be a lucrative service line from the perspective of a for-profit business, but it’s extremely important for the health of the children of North Philadelphia … If they don’t provide those services I’m not sure who will. There is a shortage of primary care services in North Philadelphia and we wouldn’t want the hospital to abandon them.”

The sale of St. Christopher’s will be advertised in the Philadelphia Inquirer and either USA Today or the Wall Street Journal. Qualified bidders will be invited to an auction on Sept. 18, Minuti said. A hearing was tentatively scheduled for Sept. 23 on the proposed sale.

Hahnemann has about $87 million in unsecured trade debt, according to court filings. It owes $58 million to MidCap Financial, the hospital’s post-Chapter 11 petition lender, allowing the hospital to pay its bills as it winds down operations.

The hospital’s former owner, Tenet Healthcare, said it’s owed $41 million in unpaid information technology and bill payment services that were included in a transition contract signed when the ownership shifted in early 2018.

Drexel’s medical school says it is owed $13 million in claims.

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