PEU Paladin to Close Philadelphia Safety Net Hospital

Philadelphia's employment situation will take a second private equity underwriter (PEU) hit with the announced closure of Hahnemann University Hospital and elimination of 2,500 jobs.  This follows Philadelphia Energy Solution's bankruptcy and plant closure with the loss of up to 1,000 jobs.   As more people in Philadelphia fall through the safety net there will be no hospital to care for them.

Hahnemann University Hospital entered bankruptcy after eighteen months of private equity ownership.  Paladin Healthcare and Paladin Capital purchased Hahnemann/St. Christopher's from Tenet Healthcare in January 2018.  A Tenet investor slide highlighted the deal.

Paladin Healthcare promised to be the long term solution for Hahnemann and its safety net clientele.

Tenet Healthcare owned and operated Hahnemann and St. Christopher's for the nineteen years.  For-profit hospitals invest in systems that provide reliable information on hospital finances.

Tenet's Chief Financial Officer's first CFO job within the company was at Hahnemann.

In early June 2019 Paladin asked for public dollars to keep Hahnemann going.  Contrast that development with lofty deal announcement language (just before Labor Day 2017).

"Paladin shares [Tenet's] commitment to providing compassionate, exemplary care and service, and we believe that entrusting the stewardship of these institutions to its affiliate AAHS will benefit the patients, employees, physicians and community for years to come," said Mike Halter, CEO for Tenet's Philadelphia division and CEO of Hahnemann University Hospital.

It never got to "years."  Hahnemann and fourteen fellow corporations entered bankruptcy June 30, 2019.  Center City Healthcare is the lead organization in Hahnemann's bankruptcy.

Hahnemann's 2,400 employees decried the hospital's planned closure, as did Philadelphia's Mayor and the Pennsylvania Governor.  Elected officials cited greed as a reason for Hahnemann's closure.

Paladin plans to break up the healthcare system and sell it in pieces. Modern Healthcare reported on aspects of the deal after it closed in January 2018.

American Academic and real estate investment firm Harrison Street Real Estate Capital, formed a joint venture to acquire a portfolio of four medical office buildings and a parking garage on the Hahnemann University Hospital campus, and the parking facilities at St. Christopher's Hospital for Children. American Academic has retained ownership of the hospital buildings, as well as one medical office building and two parking facilities.

It's not clear how much money Paladin pulled out of the Philadelphia healthcare system prior to bankruptcy.

The deal was financed with a $51 million loan from the investment firm Harrison Street Real Estate, and with a revolving line of credit from MidCap Financial, an affiliate of Apollo Global Management, one of the largest private equity firms in the country.

St. Christopher's was also paying monthly rent of $1.3 million to properties co-owned by Paladin's Freedman and Harrison Street.

Hopefully someone will garner that information in bankruptcy proceedings and share it with the public, especially if tax dollars are used to save the hospital.

Democratic Presidential candidate and Independent Congressman Bernie Sanders said about the closing:

“If you look at this thing objectively and you say that in the midst of a health care crisis, a hospital is being converted into a real estate opportunity in order to make some wealthy guy even more money, ignoring the health care needs of thousands of people, that is pretty crazy.”

Not in our PEU world where politicians Red and Blue love PEU.  It's standard practice.  CNN published information on the size and number of PEU healthcare deals.

Healthcare has been and is increasingly distorted by the greed and leverage boys.  The stories exist and many can be found on PEUReport (ManorCare, Lifecare, PPACA)..