Judge: Tower Health must stick to Brandywine and Jennersville Hospitals sales agreement

A Chester County judge ruled Monday that Tower Health was wrong when in December it unilaterally canceled the sale of Brandywine and Jennersville Hospitals to Canyon Atlantic Partners.

Tower then closed Jennersville on Dec. 31 and Brandywine on Jan. 31.

Court of Common Pleas Judge Edward Griffith, effectively reinstating the sale agreement, ordered Tower to maintain the shuttered hospitals in their current condition and gave Canyon 90 days to figure out what it and Tower need to do to complete the transaction. Closing can happen after the 90 days, the judge said in an order first reported by the West Chester Daily Local.

In granting a preliminary injunction against Tower, Griffith showed little patience for Tower’s objections. “Tower Health finds itself in the position it is in because of its own conduct. Given this history, Tower cannot now be heard to say that an injunction against it is unjust,” Griffith wrote.

What’s clear is that it will cost Canyon a lot more money to reopen the hospitals than it would have to buy them while they were still in business. The hospitals have to go through a costly relicensing process. Hiring a new staff is far more expensive than assuming one that is already in place. If it gets to the point of reopening, it’s not clear who would be responsible for that extra cost, Canyon or Tower.

Health care experts say it is rare for hospitals to reopen. Now it would be even harder, given the widespread labor shortages in health care. The facilities employed hundreds.

» READ MORE: Some background on Canyon Atlantic, the firm seeking to take over Jennersville and Brandywine hospitals

The order represents another twist in the saga of Brandywine and Jennersville Hospitals, which Tower acquired in 2017 as part of a $423 million purchase of five hospitals from Community Health Systems Inc.

The communities that depend on those hospitals, particularly the emergency departments, braced for closure, only to be relieved that Tower found a buyer. Then the hospitals closed anyway.

Tower, whose main operation is Reading Hospital, said in a statement: “We are reviewing the judge’s ruling and will not have any additional comment until that process is complete.”

» READ MORE: Tower Health’s plans were small before expanding big-time into the Philly area

Canyon Atlantic Partners, a hospital management firm based in Austin, Texas, could not immediately be reached for comment.

The sales agreement called for Canyon to pay $1 million at closing and up to $16.5 million in total for the hospitals.

Under the Nov. 17 agreement, there were two possible paths to its termination: Canyon and Tower mutually agreed to end it or there was a regulatory or legal ruling preventing the deal from closing.

Tower canceled the sale on Dec. 8. because, according to a Tower statement at the time, Canyon neither showed “the necessary regulatory and operational preparedness, nor validated its financial ability, to complete this transaction and operate these hospitals.”

The problem was, the sale agreement did not require Canyon to prove any of those things, the judge found.

Under cross-examination, Dan Ahern, Tower’s executive vice president for strategy and business development, conceded “that nothing in the agreement justified Tower’s insistence on compliance with non-existent deadlines and benchmarks,” Griffith wrote.

What’s more, Griffith continued, “Ahern could not identify any provision of the agreement that Canyon had violated.”