Hahnemann starts releasing stranded residents; St. Chris auction could see competitive bidding

Hahnemann University Hospital announced Wednesday that over the next two weeks it will “release” the more than 583 residents and fellows whose training has been disrupted by the pending closure of the Center City institution.

The staggered releases will start Monday and continue through Aug. 6, allowing residents to move to new programs along with the federal money that pays their salaries and benefits. Hahnemann will continue paying the residents and fellows though Aug. 25 or until they start their new program, Hahnemann management said in a statement.

“Helping our residents and fellows continue their training and launch their careers with a minimum of disruption has been a top priority of our closure plan,” said Ron Dreskin, interim system chief executive for Philadelphia Academic Health System, which filed for bankruptcy protection on June 30. The company also owns St. Christopher’s Hospital for Children in North Philadelphia.

Hahnemann receives more than $100,000 a year from Medicare per resident to pay the person and fund training, though not all of that money will transfer to the new hospital.

One internal medicine resident called the announcement bittersweet.

“It’s a relief, but it’s also sad because now it’s officially real and we have to come to terms with the fact that we’re not going to see a lot of these people again other than on social media,” said Riken Kumar, a third-year resident who is moving to a hospital in Morristown, N.J., closer to his home.

Many residents are expected to stay closer to Philadelphia.

Temple University Health System said Tuesday that 79 Hahnemann residents had agreed to move to Temple. Penn Medicine has made more than 60 offers to Hahnemann residents, more than 90 percent of which have been accepted, a spokesperson said. Jefferson Health said it had made 130 offers at Abington and Thomas Jefferson University Hospital and 70 have been accepted.

Other Philadelphia-area health systems have said they plan to take on Hahnemann residents, but none provided details.

It’s not clear whether the release of the residents from their contracts will affect Hahnemann’s proposed sale of its Medicare provider agreement, which includes the right to employ residents, to Tower Health for $7.5 million. If competing bidders emerge, an auction is scheduled for Aug. 7, the day after the last of Hahnemann’s residency programs would end.

Under Tower’s proposal, the residency positions would switch to the West Reading health system after the current residents complete their training. Under murky federal rules, it’s not clear that would happen if the residents left Hahnemann before the sale. Tower said Wednesday that it was certain that the buyer would ultimately obtain the residency positions.

The next bankruptcy hearing, on the process for bidding on St. Christopher’s Hospital for Children, among other matters, is scheduled for Friday, in Wilmington.

A consortium of Einstein Healthcare Network, Jefferson Health, Philadelphia College of Osteopathic Medicine, and Temple University Health System has already expressed interest in buying the 188-bed teaching hospital out of bankruptcy.

A bankruptcy document filed on July 16 said that preliminary talks had occurred with two additional potential buyers. One of them is likely a partnership that includes Tower and Drexel, several sources said.

A spokesperson for Drexel said Tuesday she could not confirm that the two were contemplating a bid for the North Philadelphia safety-net hospital, which had pre-tax income of $54 million in 2018, according to a bankruptcy document.

Tower provided this statement: “Tower Health shares in the concerns of ensuring that the health-care needs of the children served by St. Christopher’s Hospital are met. Like other health systems, Tower Health continually evaluates opportunities to determine if they align with our strategic goals of enhancing our services to the community. We are able to comment only when we have definitive information that can be shared with the public.”

A successful bidder for St. Christopher’s will gain not just the opportunity to continue the institution’s 143-year legacy, but also access to 125 pediatric residency slots, a vital asset for medical schools.

As is the case at Hahnemann, the St. Christopher’s real estate is not part of the bankruptcy. Harrison Street Real Estate, of Chicago, owns the parking garage at St. Christopher’s. The remainder of the real estate at the children’s hospital is separately owned by entities controlled by Joel Freedman, a California investment banker who early last year bought the two hospitals from Tenet Healthcare Corp. for $170 million.