Trinity Health will not buy Chestnut Hill Hospital
Tower Health said closure is not an option for Chestnut Hill Hospital, as it was for Jennersville and Brandywine Hospitals when their sale was cancelled.
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Trinity Health Mid-Atlantic, which signed a preliminary agreement to buy Tower Health’s Chestnut Hill Hospital in September, will not complete the deal, leaving the facility to continue operating under a cloud of uncertainty.
“Trinity Health Mid-Atlantic determined that it could not identify enough synergies that would result in substantial benefits for patients and the community,” Tower CEO P. Sue Perrotty wrote in a memo to employees Thursday.
Tower said it does not plan to close Chestnut Hill, which has been packed with COVID-19 patients during the current surge, and will continue exploring a sale. The hospital and others in the Tower system have been up for sale since the fall of 2020.
The failure to sell Chestnut Hill to Trinity is another bad outcome for Tower, which has been reeling from a financially disastrous expansion away from Tower’s Berks County base at Reading Hospital.
Last month, Tower announced the closure of two Chester County hospitals — Jennersville and Brandywine — after a proposed sale to an unproven for-profit, Canyon Atlantic, fell through. Jennersville, in West Grove, closed Dec. 31. Brandywine, near Coatesville, is slated to close Jan. 31.
Trinity, which owns hospitals in Darby, Northeast Philadelphia, Langhorne, and Wilmington, did not say why it chose to drop its pursuit of Chestnut Hill. Trinity also has not said publicly what it offered to pay for Chestnut Hill, which has 148 licensed beds. Trinity was formed in 2013 by the merger of two Catholic health systems, Trinity Health and Catholic Health East.
During the three months ended Sept. 30, Chestnut Hill alone was slightly profitable on a cash-flow basis among the five community hospitals Tower bought for $426 million in 2017 at the beginning of an expansion binge.
Overall, Tower had an operating loss of $16.75 million from July through September. The health system has had hundreds of millions in operating losses in the last four years and seen its cash reserves dwindle due to the ill-considered expansion.
Complicating Tower’s attempts to sell hospitals is the decision by former chief executive Clint Matthews to raise about $200 million in cash early in the pandemic by entering sale-leaseback agreements with a private equity real estate firm. That deal included $19 million for a medical office building at Chestnut Hill Hospital.
Those leases, which run through at least 2035 and are effectively debt that a buyer must assume, have been a sticking point for some potential acquirers of Tower hospitals.