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March 09, 2022

Canyon Atlantic ends pursuit to reopen Tower Health's Brandywine, Jennersville hospitals

Attorneys representing the Texas-based company said time had run out for it to save both Chester County facilities

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Tower Health Brandywine Jennersville hospitals Street View/Google

Canyon Atlantic Partners filed a motion in Common Pleas Court to end its litigation to purchase and reopen Brandywine and Jennersville hospitals from Tower Health.

Brandywine and Jennersville hospitals in Chester County will remain closed for the foreseeable future.

Canyon Atlantic Partners filed a motion in Common Pleas Court on Tuesday to end its legal efforts to purchase and reopen the two facilities from Tower Health, the Reading Eagle reported.

Attorneys representing the Texas-based company said time had run out for it to save both hospitals.

Canyon Atlantic also had failed to post a court-ordered $1 million bond within 10 days of Judge Edward Griffith ruling last month that the companies needed to resume negotiations over the sale. Tower Health then called on Griffith to toss out Canyon Atlantic's litigation.

"Tower Health welcomes the decision by Canyon Atlantic Partners to withdraw its claim with the Chester County Court," the Berks County-based health system said in a statement. "We are now able to move forward with exploring partner organizations with the financial and operational ability to complete a transaction."

The fate of both Brandywine and Jennersville hospitals became ensnared in a months-long court battle between Tower Health and Canyon Atlantic.

Tower Health agreed in November to sell Brandywine and Jennersville hospitals to Canyon Atlantic, a company that specializes in hospital ownership and management organization. Canyon Atlantic was to assume control of the hospitals in January and keep them open as acute care facilities.

But Tower terminated the $16.5 million deal in December, saying at the time that Canyon Atlantic "has not been able to demonstrate that it is capable of making an effective transfer of ownership and operation of these two hospitals."

Jennersville Hospital in West Grove closed at the end of December. Brandywine Hospital in Coatesville shut down at the end of January. The two hospitals combined to offer more than 200 beds and employ about 800 workers. 

The move to close the hospitals was strongly rebuked by local health and elected officials, who argued that it would make it more difficult for Chester County residents to access reliable medical care and put many people out of work.

Canyon Atlantic filed an injunction to prevent Tower Health from walking away from the agreement. Tower Health argued in hearings last month that the injunction was invalid and said Canyon Atlantic waited too long to file it.

However, Griffith sided with Canyon Atlantic, saying the company's injunction request was "justified" and that allowing Tower Health to cancel the deal would harm both Canyon and the local community. 

Griffith also said that Tower's decision to terminate the agreement was "null and void" and that the health system withheld important financial information from Canyon Atlantic during the sale process. The companies were given 90 days to reach a new agreement.

Tower Health purchased the hospitals from Community Health Systems in 2017 in an effort to expand its reach into Southeastern Pennsylvania. The $423 million deal also included the acquisitions of Chestnut Hill Hospital in Philadelphia, Pottstown Hospital in Montgomery County and Phoenixville Hospital in Chester County.

But Tower Health initiated a large-scale company restructure in September that will see the health system's footprint in the Philadelphia region dramatically decrease.

As part of the reorganization, Jennersville Hospital was initially set to close by the end of the year. Brandywine Hospital was expected to remain within the health system, but the facility's long-term future was still being assessed at the time.

The two hospitals lost more than $42 million in the last fiscal year and accounted for just 9% of Tower Health's inpatient admissions between April and June 2021.

Tower Health's downsize left the health system with half as many hospitals in the Philly region.

The health system agreed in September to sell Chestnut Hill Hospital and nearly 20 urgent care centers in the region to Trinity Health Mid-Atlantic.

Phoenixville Hospital and Pottstown Hospital will not be impacted by Tower Health's restructure. St. Christopher's Hospital for Children in Philadelphia remains within the Tower Health network, but its long-term future is still being evaluated.

The decision to decrease Tower Health's hospital and urgent care network in the Philly region comes as the health system seeks to become more financially sustainable.

Tower Health has lost more than $658 million over the last two fiscal years, and it wrote off $370 million in value of its hospitals in 2021.

After a $212 million drop in revenue at the onset of the COVID-19 pandemic, the health system cut 1,000 jobs across various departments in June 2020. Tower Health said the layoffs would help the company save roughly $230 million over a two-year period.

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