Physician groups save hospitals in Pennsylvania, Oregon

Tenet Healthcare Corp. has agreed to sell Medical College of Pennsylvania Hospital for $1 in a deal that should keep the troubled hospital open while its operations are handed over to a group led by physicians.

After months of legal wrangling and negotiations, Tenet and state officials in Pennsylvania announced on July 29 that they had struck a deal to keep open the hospital whose fate has been uncertain since Tenet revealed in December 2003 that it intended to shutter the money-losing facility.

Under the agreement, Tenet said it would keep the hospital open until Aug. 31 -- a month beyond the July 30 closure date previously set -- at which time East Falls Hospital System would assume operations of the facility. East Falls, a nonprofit organization, was created by Nancy Pickering, MD, a cardiologist who led an effort to save the hospital from closure.

Tenet also agreed to sell the MCP facilities and grounds for $1 to WMCH Inc., a nonprofit corporation created by Pennsylvania after the state stepped in to ensure that the hospital would stay open.

Tenet Pennsylvania spokesman Jeff Jubelirer said the hospital had been losing more than $5 million a month, prompting the company's decision to pull out of it. "The $1 transaction was the best alternative to closure," he said.

East Falls is expected to enter into agreements with the Drexel University College of Medicine and other academic partners so the 379-bed hospital can continue its tradition of being a teaching facility.

Meanwhile, a hospital in Portland, Ore., that closed in January is getting a new lease on life from a group of physicians.

The Portland Development Commission announced on July 27 that a group of physicians on the medical staff at Woodland Park Hospital had purchased the 209-bed facility for about $5 million and planned to reopen it in November 2004, under the name "Physicians' Hospital." Woodland Park had previously been owned by Symphony Healthcare of Nashville, Tenn., which filed for Chapter 11 bankruptcy protection in May.

But a no-go in Indiana

While those hospitals prepare to open for business under physician leadership, a Lafayette, Ind., multispecialty group has scrapped plans to build a new hospital.

Arnett HealthSystem, which operates 23 clinics and other facilities and a health plan in Indiana, announced on July 22 that it was discontinuing its $150 million Arnett Hospital project, which had been in the works for nearly a year and called for the creation of a 140-bed acute care hospital in Lafayette.

Arnett leaders said their plans had been foiled by Greater Lafayette Health Services, which operates St. Elizabeth Medical Center and Home Hospital, the only two full-service, acute care hospitals in Lafayette.

A group of nearly two dozen Arnett physicians, most of whom had an ownership stake in the health system, filed a lawsuit in July accusing Arnett's leadership of ignoring shareholder input on big business decisions such as the plans for the new hospital, said their attorney, John J. Morse.

Arnett countersued, saying Greater Lafayette Health Services, which owns both Lafayette hospitals, had induced the doctors to sue. Greater Lafayette balked at those allegations, although it acknowledged that there had been some communication between itself and the disaffected Arnett doctors. The lawsuits are pending.

The same day it announced it would not build a hospital, Arnett announced the resignation of its chair, Jeffrey Brown, MD, effective Oct. 31, and its chief executive officer, Fred Titze, effective Aug. 31.