KPC Global Last-ditch Effort to Reopen Hahnemann

A California-based hospital management company is planning to be in Wilmington Wednesday, hoping to provide an alternative option to selling Hahnemann University Hospital’s residents program assets to a group of area health systems for $55 million.

KPC Global, which wants to buy and reopen Hahnemann University Hospital, filed a notice last week of its intention to participate in Wednesday’s bankruptcy court hearing on the proposed asset sale.

Based in Santa Ana, Calif., KPC operates seven hospitals in Southern California. The company also owns and operates independent physicians associations, medical groups, urgent care facilities, and a variety of multi-specialty medical facilities on the West Coast. It was founded by orthopedic surgeon and entrepreneur Dr. Kali Chaudhuri, who serves as the company’s chairman.

The bankruptcy court filing submitted Thursday by KPC and its affiliate Strategic Group Management states, “KPC understands that there has been a substantial amount of community opposition to the closing of Hahnemann Hospital, all of which is consistent with KPC’s view that Hahnemann Hospital can be a viable and thriving facility, which will provide much needed health care to the community and continued employment for the doctors, nurses and other employees of Hahnemann Hospital; and continue as a first rate teaching hospital.”

According to the filing, KPC wants to purchase all of the assets of Hahnemann and St. Christopher’s Hospital for Children — should the residents program sale not be approved or consummated. KPC said its is prepared to offer $60 million for Hahnemann’s assets and would make an offer for St. Christopher’s within two-to-four weeks, unless the residents program sale is approved.

“KPC believes it is in the interest of all parties to be ready to pivot promptly to reopen and expand the sale process to include substantially all assets of Hahnemann Hospital,” the company stated in its filing.

Both Hahnemann and St. Christopher Hospital for Children’s are owned by American Academic Health System (AAHS) of California. AAHS acquired the medical centers from Tenet Healthcare Corp. for $170 million in early 2018. AAHS subsidiary Philadelphia Academic Health System, the parent organization for the two hospitals, and the two hospitals all filed for bankruptcy court protection at the end of June. The move came shortly after AAHS announced plans to close Hahnemann, because of mounting financial losses averaging nearly $5 million a month. AAHS also said at the time it wanted to find a new owner to operate St. Christopher’s.

KPC officials were not available to further comment on their interest in Hahnemann and St. Christopher’s.

Hahnemann, which had employed about 2,500 workers, shutdown late last month.

In mid-July four Philadelphia-based academic health care organizations — Einstein Healthcare Network, Jefferson Health, Philadelphia College of Osteopathic Medicine and Temple Health — created a consortium to collectively negotiate with AAHS for the potential purchase of the 188-bed St. Christopher’s Hospital for Children and its assets. No other entities have publicly expressed an interest in buying St. Christopher’s.

Last month, another coalition of local health systems emerged as the winner in an auction for Hahnemann University’s Hospital’s residents program assets with a bid of $55 million. Reading-based Tower Health, prior to the auction, had entered into a deal to buy the assets for $7.5 million and permanently redistribute the residency slots among coalition members. The assets consist of the more than 550 resident residency slots for training doctors. Hospitals are reimbursed for the costs of training residents by the Centers for Medicare and Medicaid Services (CMS). The health systems in the coalition have already hired hundreds of former Hahnemann employees and provided a temporary home for more than 250 displaced Hahnemann residents.

Other objections were filed by the state of Pennsylvania, which said the proposed sale and bidding procedures failed to appropriately take into account state laws and regulations regarding the licensing of hospitals in the state and the Pennsylvania Department of Health’s authority and obligation to oversee hospital licensing. MidCap Property Trust, an affiliate of MidCap Financial, also filed an objection. MidCap is owed $58.6 million for loans it provided to PAHC and its related entities. MidCap said it would object to any sale that does not involve payment of the sale’s proceeds to MidCap at the closing.

Another limited objection was filed by The Association of American Medical Colleges and the Philadelphia-based Educational Commission for Foreign Medical Graduates, which raised concerns about the proposed agreement’s absence of details on insurance coverage for continuing residents and details about the retention of residents’ program records that provide information related to their training and the patients they treated while at Hahnemann. Temple University Health System also filed a limited objection stating it is owed about $850,000 — a debt not covered in the proposed sales agreement — under the terms of an academic affiliation agreement it signed in 2007 with Tenet related to training activities at St. Christopher’s Hospital for Children.