PHMC won a management contract for state childcare subsidies over a former subsidiary

Public Health Management Corp., a large Philadelphia nonprofit that already operates dozens of health-care and social services programs in the city, could add another line of work in July.

PHMC won a state contract to manage more than $300 million in state childcare subsidies. It beat out Caring People Alliance, a former subsidiary that has managed the childcare subsidies for decades. PHMC was an unsuccessful bidder for the contract in 2018.

Recent high-profile moves include PHMC’s 2021 acquisition of the former Mercy Philadelphia Hospital in West Philadelphia. PHMC acquired the property for $10 million using money that the University of Pennsylvania Health System had prepaid on its lease there, now home to a satellite location of the Hospital of the University of Pennsylvania.

PHMC has steadily expanded into new businesses in recent decades through about two dozen acquisitions of nonprofits that conduct research, manage government benefits, and provide hands-on care. It even won a contract for health-care emergency management in 2020 away from the Hospital & Healthsystem Association of Pennsylvania.

Caring People is appealing the contract loss in Commonwealth Court. In the meantime, Caring People filed notice with the Pa. Department of Labor that 123 employees are expected to lose their jobs at the end of next month. The loss will also impact another 25 or so contract workers.

PHMC — which has grown steadily through acquisitions since the 1980s — declined to comment on whether it would hire Caring People staff, who currently help 18,212 Philadelphia families with 30,470 children receiving the subsidies.

While the childcare subsidy contract overall is worth more than $300 million, most of that money is passed through to childcare providers. Caring People’s share covered $13.85 million in staff costs and other expenses for the year ending June 30, according to Jerry Macdonald, the organization’s CEO.

Caring People said its three Boys & Girls Clubs in North, South, and West Philadelphia are not affected by the contract loss.

Caring People is one of several nonprofits acquired by PHMC that went on to regain their independence. About a decade ago, Caring People became part of PHMC, but less than a year later, its board exercised an option to leave. “It really wasn’t going well for us,” Macdonald said.

Others who have left PHMC are La Comunidad Hispana, now known as LCH Health and Community Services, in Kennett Square, and Clarifi, a Philadelphia nonprofit consumer credit counseling agency. Another group, the National Nurse-Led Care Consortium tried in 2017 to regain its independence, but PHMC blocked it in court.

PHMC’s most recent acquisition was Carson Valley Children’s Aid in 2022. Carson Valley provides child welfare, behavioral health, and education services to children, youth, and families in Philadelphia, Montgomery, and Chester Counties.

It’s hard to get a handle on PHMC’s overall financial performance because it does not publicly report consolidated financial results including all of its subsidiaries.

Between 1985 and 2022, PHMC acquired at least 25 other nonprofits, mainly under former CEO Richard Cohen. A longtime board member, Michael Pearson, succeeded Cohen last year.

One of PHMC’s subsidiaries, Turning Points for Children, filed for bankruptcy protection on May 1. Four Turning Points subsidiaries performed child welfare casework under contracts with the Philadelphia Department of Human Services until last year.

Turning Points told the city in 2022 that it could not continue the business because it couldn’t afford insurance, according to a bankruptcy court document. Turning Points expanded its child welfare operations in 2018, when it acquired Wordsworth Academy units out of bankruptcy.

The bankruptcy was prompted by at least eight pending lawsuits against Turning Points, alleging injuries or negligence claims on behalf of children under its care, Seth S. Jones, managing director for finance at the nonprofit, said in a legal statement explaining the bankruptcy.