Federal judge stays Hahnemann residency sale; St. Chris auction pushed to Thursday
If the sale of Hahnemann's residency programs falls apart, it could open the door the purchase of the hospital by a company that wants to operate it.
A U.S. District Court judge in Wilmington on Monday temporarily blocked the bankruptcy sale of Hahnemann University Hospital’s residency programs pending an appeal by the Centers for Medicare and Medicaid Services (CMS). There was no indication how long that might take.
In an emergency motion last week appealing a bankruptcy judge’s approval of the unprecedented sale, federal regulators said the $55 million sale “would violate Medicare law and regulations” and threaten “CMS’s ability to carry out its statutory mandate to administer the Medicare program.”
In a separate filing to the Third Circuit Court of Appeals, CMS said the bankruptcy order approving the sale “gravely misconceives the nature of Medicare funding,” and argued that “Medicare-funded medical residencies are not a hospital’s property to be sold to the highest bidder.”
It’s not clear what a delay or a cancellation of the sale will mean for the bankruptcy of Hahnemann and St. Christopher’s Hospital for Children. It could force Hahnemann’s parent company to consider bids from other interested parties. During a hearing the first week of September, KPC Global, a California hospital company, had offered $60 million for Hahnemann, with the intention of reopening it.
During a Sept. 4 hearing on the sale, U.S. Bankruptcy Judge Kevin Gross urged Hahnemann officials and federal regulators to reach a deal. “If you win, this bankruptcy fails,” Gross told Marc S. Sacks, a U.S. Department of Justice attorney arguing for CMS at a Sept. 4 hearing.
A spokesperson for the tentative buyer of the residency programs, Thomas Jefferson University Hospitals Inc., had no comment on the stay issued by Judge Maryellen Noreika.
Separately, the parent company of St. Christopher’s Hospital for Children extended the deadline to submit initial bids for the North Philadelphia safety-net facility from Monday at 4 p.m. to Wednesday at 2 p.m.
The bankruptcy auction was pushed back by one day, until Thursday, according to a U.S. Bankruptcy Court filing.
One of the two parties expected to participate in the auction asked for more time, according to J. Scott Victor, the investment banker for the parent company of Hahnemann and St. Christopher’s.
Expected bidders are a consortium led by Jefferson Health and Tower Health, backed by Drexel University, the University of Pennsylvania Health System, and Independence Health Group. The winner would have to be approved by the bankruptcy judge.