St. Christopher’s Hospital gets a $50 million lifeline from coalition of Philly health-care providers
The short-term funding will give Drexel University and Tower Health the chance to develop a long-term solution for the North Philly safety-net provider.
Drexel University and Tower Health, co-owners of St. Christopher’s Hospital for Children, announced Thursday that they had lined up more than $50 million in support over the next two years for the North Philadelphia institution they bought out of bankruptcy in 2019.
Children’s Hospital of Philadelphia, Thomas Jefferson University (owner of Jefferson Health and Einstein Healthcare Network), Temple Health, Philadelphia College of Osteopathic Medicine (PCOM), Independence Health Group, and private donors will contribute the money, which will ensure short-term financial stability for St. Chris, a provider of vital services for mostly poor children.
Tower expects St. Chris to post a $17.7 million operating loss for the fiscal year that ends Thursday, down from a $96.7 million loss in fiscal 2021, when St. Chris had $265 million in revenue.
The leaders of Drexel and Tower expressed gratitude to the Philadelphia institutions — some of whom were in a coalition that abandoned efforts to bid on St. Chris during the 2019 bankruptcy auction — for their support. Specific amounts by institution were not available.
“Their commitment will help to secure the future of this great hospital that is a unique civic treasure, an invaluable asset for medical education, and above all, a mission-driven institution that delivers outstanding pediatric care to families in North Philadelphia and across the region,” Drexel president John Fry said in a news release.
Tower Health chief executive P. Sue Perrotty said in an interview that Independence Health Group CEO Gregory E. Deavens deserved kudos for his leadership in bringing the consortium together. “He brought people to the table when we were having trouble getting them there,” she said.
The new financial support will remove some of the financial pressure of St. Chris’ losses on Tower, which is trying to recover from an expansion tear under former CEO Clint Matthews that resulted in a massive debt load and huge losses. Even though Tower owns St. Chris 50-50 with Drexel, Tower consolidates St. Chris’ financial results with the broader Tower system.
Both Drexel and Tower have extended until 2026 the separate $85 million lines of credit they provided for St. Chris when they bought it. The amount outstanding on each of them is $70.5 million. Tower’s has been frozen at that level, Perrotty said.
The $50 million gives Tower and Drexel more time to figure out a long-term solution for St. Chris, but it falls short of their goal of bringing on additional owners for St. Chris. “We have a number of prospective partners that we’re hoping to bring into the ownership group,” Perrotty said in April.
That remains a goal, Fry said in a joint interview Thursday with Perrotty.
“I would love to go from financial contributorship, which is terrific, to ownership,” Fry said. ”Some of it has to do with whether or not we’re able to garner permanent state support because it will de-risk the proposition a little bit.”
As it is, Drexel and Tower will continue as owners of St. Chris, which is an important site for training students in medical school and after graduation during residencies. Tower, as the managing partner, will gradually give St. Chris more independent management responsibilities.
Financial support from Philadelphia also fell short of what was requested. Drexel and Tower asked for $10 million for the fiscal year that starts Friday. The city budget passed last week included $5 million.
Longer-term, Drexel and Tower aim to build philanthropic support for St. Chris. Before Drexel and Tower bought St. Chris for $58 million in December 2019, not including the real estate, that was not possible because for-profits owned the hospital.
Tenet Healthcare Corp. owned St. Chris, at the intersection of North Front Street and East Erie Avenue, from 1998 to 2018, when Tenet sold it to Joel Freedman’s American Academic Health System. Freedman went bankrupt the next year, leading to the closure of Hahnemann University Hospital during the summer of 2019.