Tower Health lost millions on its urgent care centers and says its $29 million stake in St. Chris has no value

Five years ago, Tower Health paid $24 million for 19 urgent care centers, mostly in Southeastern Pennsylvania, as part of its expansion from Berks County into the Philadelphia region.

Last month, Tower sold nine of them for $200,000.

An additional seven were closed over the last year, as leases expired.

The nonprofit based in West Reading, Pa., still operates three of the 19 centers it had acquired from Premier Urgent Care — Douglassville, Limerick, and Oaks.

Those locations are in markets where Tower also still operates acute-care hospitals for adults: Phoenixville, Pottstown, and Reading.

The problem with the acquisition was that many of the sites were outside the areas served by Tower hospitals, according to local industry experts. That became an even bigger problem after the closure or sale of three of the five hospitals it bought from Community Health Systems in 2017 for $423 million.

Tower closed Jennersville Hospital at the end of 2021 and Brandywine Hospital in early 2022. It sold Chestnut Hill Hospital for $28 million to a partnership involving Temple University Health System, Philadelphia College of Osteopathic Medicine, and Redeemer Health at the beginning of this year.

Some former Tower hospital locations are now finding new uses. ChristianaCare bought Jennersville for $8 million in July 2022 and plans to reopen the emergency department and operate a small number of inpatient beds. The University of Pennsylvania has a tentative agreement to acquire Brandywine for an undisclosed price.

Tower’s audited financial statements for the year that ended June 30, which it released last Wednesday, also showed that Tower has agreements to sell two parcels of land near Reading. The 108 acres in total are selling for $29 million. Tower had purchased the land in the early 2000s for potential expansion.

At the end of 2019, Drexel University and Tower Health each paid $29.1 million to acquire 50% of St. Christopher’s Hospital for Children, not including the real estate. The real estate was sold separately, and is now under a long-term lease to St. Chris.

As part of a change in the way it accounts for its St. Chris stake, Tower said in the audit that the $29 million investment now has no value.

In another sign of financial fragility at St. Chris, Tower said it doubts St. Chris will be able to repay $40 million of the $70.5 million line of credit Tower provided to the children’s safety-net hospital.

Last year, a group of major Philadelphia health-care institutions and private donors agreed to give St. Chris $54 million over two years to help stabilize it financially. The $27 million the hospital received in the year ended June 30 helped St. Chris to trim its annual loss to $534,000 from $10 million in fiscal 2022.