Philadelphia’s Public Health Management Corp. is cutting programs to improve its financial health

One of Philadelphia’s largest health and human services nonprofits has recently shuttered several long-running programs serving youth with behavioral problems and people in addiction.

Public Health Management Corp. is working through program closures at subsidiaries as part of a broad effort to eliminate units with chronic losses that threaten PHMC’s stability.

Last summer, PHMC closed a residential treatment program for youth with behavioral problems at Carson Valley Children’s Aid in Flourtown, as part of its sweeping changes there.

The Bridge, a Philadelphia mental health and substance abuse treatment center, closed on Oct. 30.

The Villa, a behavioral health facility in Ambler, will close Dec. 23, according to PHMC.

PHMC’s chief executive Michael Pearson in an interview said he did not have details on how many children were served by those programs. “The census was very low,” said Pearson, a former board member who became permanent CEO a year ago.

It’s not just that the residential programs were losing money, Pearson said. They were also out of step with the broadly accepted view that ”children are better served in their community, rather than housed in residential facilities,” he said.

» READ MORE: A PHMC subsidiary failed to regain its independence in 2017.

The moves reflect what Pearson described more broadly in a Nov. 7 email to employees as a public health landscape that is “not hospitable to providers like PHMC.”

PHMC also closed Visiting Nurse Association of Greater Philadelphia last month because it was losing too much money. For 138 years, its nurses had cared for patients in their homes, often during the end of life.

“Funding challenges and staffing shortages continue to push programs to breaking points,” Pearson said in the email. “We are holding ourselves accountable to evaluating our programs carefully, deploying our resources efficiently and expanding our capacity in areas where we’ve demonstrated strong results.”

The retrenchment at PHMC comes after the June 2023 retirement of former CEO Richard J. Cohen, who led the nonprofit for 42 years.

Cohen pursued a vision since at least the mid-1980s of assembling a collection of nonprofits through more than 20 acquisitions that would enable PHMC “to wrap services around people, families, and communities,” Cohen said in a 2018 interview with The Inquirer.

Since then, PHMC has completed at least four more acquisitions. These include two of the recently closed programs, Visiting Nurse and Carson Valley, both acquired in 2022.

» READ MORE: PHMC won a state emergency management contract in 2020.

Their closures show that PHMC no longer offers a safe harbor for financially troubled nonprofits.

In Cohen’s retirement announcement, PHMC said it had $500 million in revenue. The organization does not publish audited financial statements that combine the parent PHMC’s results and all of its subsidiaries. A spokesperson declined to provide consolidated financial results for fiscal 2024, which ended in June.

The latest available financial statement for PHMC, the corporate parent, shows that it had $293 million in annual revenue in the year ended June 30, 2023, down from $340 million the year before. Revenue from Philadelphia agencies plummeted to $110 million from $192 million.

PHMC has 3,000 employees.

The closures at PHMC are happening during a rough year for human services nonprofits in the Philadelphia region.

PHMC’s program closures have played out at its sprawling network of subsidiaries across the region. It announced on May 1 that the residential program at Carson Valley, founded in 1917 as Carson College for Orphaned Girls, would close at the end of June. That was two years after Carson Valley’s PHMC deal, which was expected to give the agency financial security.

Carson Valley was struggling financially for years before the acquisition, logging five straight years of operating losses. In some years, Carson Valley borrowed money from a beneficial trust to repay other debt or to meet operating expenses, according to audited financial statements.

In addition to closing the residential center, PHMC is now restructuring Carson Valley’s other services. A dozen of Carson Valley’s government-funded programs will be moved to other PHMC subsidiaries. A nursery school for the general community and another program will remain on Carson Valley’s Flourtown campus.

The PHMC subsidiaries receiving Carson Valley work include the National Nurse-Led Care Consortium and Turning Points for Children, which has its own troubles.

Turning Points — which traces its roots to an organization founded in 1882 — filed for bankruptcy protection in May, as it faced at least eight lawsuits alleging personal injury or negligence related to its work in the city’s child welfare system. Turning Points had stopped providing those services at the end of 2022.

As part of PHMC’s efforts to improve its finances, it has sold some property, including the former Turning Points offices at 419 S. 15th St. in Center City. That property sold for $2.75 million in June. PHMC sold Calcutta House, which provided housing and other supportive services to homeless men and women with HIV/AIDS, at 1601 W. Girard Ave. for $730,000 in September.

Despite its cutbacks, PHMC has areas of growth, Pearson said. In July, it started to manage hundreds of millions in annual state child-care subsidies. In bidding for the contract, it beat out Caring People Alliance, a former PHMC subsidiary that has managed the child-care subsidies for decades.

Pearson described that contract as an example of “how PHMC redeployed resources in terms of meeting our mission of making healthier communities.”