December 10, 2021
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Tower Health had agreed to sell Jennersville and Brandywine hospitals to Canyon Atlantic Partners, which would have kept both facilities open. But the deal fell apart and they are expected to close.
Jennersville and Brandywine hospitals in Chester County will cease operations over the next two months after an agreement between Tower Health and Canyon Atlantic Partners LLC to keep them operational fell through.
Jennersville Hospital in West Grove will close by Dec. 31. Brandywine Hospital in Coatesville will shut down on Jan. 31.
Tower Health President and CEO P. Sue Perrotty noted the changes in a memo sent to employees and staff Thursday.
"I understand this will come as a shock and we are all deeply saddened by this turn of events," Perrotty wrote.
In November, the Berks County-based health system agreed to sell Jennersville and Brandywine hospitals to Canyon Atlantic Partners, which specializes in hospital ownership and management organization. The Austin, Texas-based company had agreed to assume control of the hospitals on Jan. 1 and keep them open as acute care facilities.
But Canyon Atlantic Partners "has not been able to demonstrate that it is capable of making an effective transfer of ownership and operation of these two hospitals," Perrotty wrote in the memo.
"Unfortunately, despite our understanding at the time the agreement was signed — and after multiple requests and extensions over the last three weeks — Canyon Atlantic Partners has ultimately not demonstrated the necessary regulatory and operational preparedness, nor validated its financial ability, to complete this transaction and operate these hospitals. Our responsibility to our patients, employees and the communities served is to ensure this transition included an effective and safe path for change. In the end, we are highly disappointed that Canyon Atlantic Partners has not been able to satisfy these essential requirements."
Canyon Atlantic Partners could not be reached for comment.
Tower Health said all patient services will continue until each hospital closes. Patients that require inpatient care after the closing dates will be provided services at another facility, Perrotty wrote. The hospitals combined offer more than 200 beds.
Tower Health is working to transition as many employees in good standing as possible to other openings within the health network, Perrotty said. Penn Medicine, which has a partnership with Tower Health, has offered priority consideration to Jennersville and Brandywine workers for open positions within its network. The facilities employ about 800 staffers combined.
"I understand this is a challenging situation – especially for our employees and physicians at Brandywine and Jennersville, as well as the communities we serve," Perrotty wrote. "When we entered into our agreement with Canyon Atlantic Partners, we were pleased that a solution to secure acute care in these communities was finally realized. Unfortunately, this was not the case, and we are deeply saddened that this is the outcome."
Tower Health purchased the hospitals from Community Health Systems in 2017 in an effort to expand its reach into Southeastern Pennsylvania, according to the Reading Eagle. The $423 million deal also included buying 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 will leave 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.
Tower Health's relationship with Drexel University also is safe. The health system signed a 20-year academic agreement in 2019 with Drexel. The partnership includes a new regional campus of Drexel University College of Medicine near Tower Health's Reading Hospital.
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 earlier this year.
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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