Tenet HealthSystem Pennsylvania, part of Tenet Healthcare Corp., will sell MCP Hospital in Philadelphia for $1, Pennsylvania Gov. Edward G. Rendell and Tenet have announced.
Reuters/Yahoo! July 30, 2004
MCP Hospital to stay open - as a nonprofit
By Josh Goldstein and Karl Stark
Inquirer Staff Writers
A group of doctors, hastily assembled seven months ago to keep Tenet Healthcare Corp. from closing MCP Hospital, struck a deal yesterday to run the troubled hospital starting Aug. 31.
In a last-minute agreement brokered by Gov. Rendell, Tenet, which owns MCP, agreed to keep the hospital open through August and then sell it for $1 to a nonprofit corporation formed by the state.
"I call this the miracle of the year," said cardiologist Nancy Pickering, who led the Association to Save MCP Hospital and assembled the hospital's new management team.
But health-care analysts questioned whether a group of doctors could succeed in turning around MCP when the nation's second-largest for-profit hospital operator failed.
"If Tenet couldn't make it work, then it seems just impossible for the doctors to run it successfully," said Alan Zuckerman, director of Health Strategies & Solutions in Philadelphia. "We have watched these rescue attempts occur at the eleventh hour in other places, and they never work."
Rendell acknowledged that a lot of work remained to save the Medical College of Pennsylvania Hospital, but said: "I am very optimistic that it will get done."
While some experts consider MCP a failed institution that should be closed, residents in the East Falls community it serves - who include Rendell and U.S. Sen. Arlen Specter - see the hospital, which used to employ 1,000 people, as a vital economic and health-care anchor.
Under the deal, a nonprofit organization - East Falls Hospital System - would lease space and contract with a management team to run the hospital.
Leo P. D'Orazio, a managing director at the consulting firm Withum Smith & Brown in New Brunswick, N.J., will be the hospital's chief executive officer, and James K. Edler of the Horsham health-care-supply management firm McFaul & Lyons Group will serve as chief financial officer.
Pickering said she had $45 million in private financing to revitalize the hospital.
Limited state role
"There is no commitment and no intention of any kind of state financial assistance other than what any other hospital would get," said Susan Anderson, who headed the governor's team that negotiated the deal.
Among the many challenges facing Pickering's group are rebuilding the hospital's medical staff and its patient base.
On Wednesday, the hospital had only 25 patients in beds, compared with 150 or more a day just a few years ago.
Many of its doctors have fled, citing the uncertainty created by Tenet's announcement in December that it would close the hospital. The closure, first scheduled for March, was most recently scheduled for July 31.
Pickering said that MCP would again become a fully staffed hospital, but acknowledged: "We have a few holes we have to fill... . I don't think it will take us very long. We have a lot of people waiting in the wings, praying that this thing was going to come through."
Tenet will transfer most of the medical equipment - including a $5 million gamma knife for neurosurgery - to Pickering's nonprofit group. It, in turn, will have to spend about $1 million to get the equipment back in operation.
"I already know of some neurosurgeons who are interested in coming in and doing surgery," said Anderson, of the governor's Office of Health Care Reform. "We have the makings of something that may bring people back and new people in."
More uninsured patients
But it will be a long journey back to financial stability for MCP, which has been contending with rising levels of uninsured patients and losses of as much as $5 million a month under Tenet.
"The reported losses were so substantial that you just can't implement marginal change and expect it to work," said Dan Grauman, president of DGA Partners, a health-care consulting group in Bala Cynwyd.
The deal includes an agreement that Drexel University's College of Medicine will continue to train medical residents at MCP, said Manuel N. Stamatakis, chairman of the medical school's board.
Pickering said Drexel had committed to place up to 40 residents at the hospital.
Some see the deal as showing a broader commitment by Tenet to the Philadelphia market, where the company owns five other hospitals: Hahnemann, Graduate, St. Christopher's Hospital for Children, Roxborough Memorial, and Warminster, in Bucks County.
"The fact that Tenet has taken an asset and provided it to the state for $1 is an extraordinary gesture," said Andrew Wigglesworth, president of the Delaware Valley Healthcare Council, which represents area hospitals. "It is perhaps a reflection of Tenet's desire to remain in this area."
Tenet said it had invested millions in MCP but was unable to make it succeed. It will account for the transfer of the hospital in its next quarterly earnings report on Tuesday, said spokeswoman Margaret Shiver.
"We gave what we thought for MCP to be successful, and it just didn't work out for us," said Steve Corbeil, head of Tenet's Central Northeast-Southern States Region. "We think we are leaving the facility as a functioning... hospital, and hopefully the new operators can be successful."
Contact staff writer Josh Goldstein at 215-854-4733 or jgoldstein@phillynews.com.
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