Tenet Offers to Buy Allegheny Hospitals

Philadelphia Enquirer, 10/21/03

In what is hoped to mark the end of a long period of concern and upheaval for employees, patients and all residents of the Philadelphia area, Tenet Healthcare Corp. of Santa Barbara, California has today offered to purchase the bankrupt eastern Pennsylvania hospitals owned by Allegheny Health System. The deal includes the Allegheny University of the Health Sciences which, under the proposal, were scheduled to be managed by Drexel University following an immediate sixty million dollar cash infusion.Drexel has, however, since withdrawn their offer and a new manager is being sought.

Under the terms of the deal, which is still subject to final approval on October 21, 1998, by U.S. Bankruptcy Judge M. Bruce McCullough, Tenet, a for-profit corporation, will pay $ 345 million dollars for the eight Philadelphia hospitals, namely, Bucks County Hospital, City Avenue Hospital, Elkins Park Hospital, Graduate Hospital, MCP including the Hahnemann School of Medicine, Parkview Hospital, and St. Christopher's Hospital for Children.

The proposed deal, which is likely to be approved, has a direct effect on over 17,000 staff employees, 1060 doctors and over 786,000 annual patients of the system. It marks the departure of Allegheny from the region after over a decade and over 1.5 billion dollars in debts.

Mayor Ed Rendell has expressed reserved optimism on the deal, however, has indicated that a important questions remains as to whether Tenet will "maintain the same level of free care, charitable programs and outreach programs." A side benefit of the proposed deal for the City of Philadelphia in the sale from a not-for-profit corporation to a for-profit corporation, is more than 10 million dollars in annual property tax revenue.