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Hahnemann residency slots auction: Main Line Health, Cooper join Temple and Jefferson in bid

The bankruptcy auction of Hahnemann University Hospital’s residency programs, scheduled for Thursday, drew several bidders by the 4 p.m. deadline Wednesday

The bankruptcy auction of Hahnemann University Hospital’s residency programs, scheduled for Thursday, drew several bidders by the 4 p.m. deadline Wednesday
The bankruptcy auction of Hahnemann University Hospital’s residency programs, scheduled for Thursday, drew several bidders by the 4 p.m. deadline WednesdayRead moreTIM TAI / Staff Photographer

The bankruptcy auction of Hahnemann University Hospital’s residency programs, scheduled for Thursday, drew several bidders by the 4 p.m. deadline Wednesday, in addition to the $7.5 million starting bid by Tower Health that was announced last month.

Christiana Care Health System, Cooper University Health Care, and Main Line Health joined Einstein Healthcare Network, Jefferson Health, and Temple University Health System in a joint bid, two sources said. Philadelphia College of Osteopathic Medicine is part of a group that wants to buy St. Christopher’s Hospital for Children, but it does not have a hospital where it can employ residents.

The amount of the group’s bid was not disclosed Wednesday, but to force an auction they likely had to bid at least $7.825 million, which includes a breakup fee of $225,000 for Tower, plus $100,000, the incremental amount required of each new bid.

Details about other bidders were not available.

The auction, run by V. Scott Victor of SSG Advisors LLC, is scheduled to start at 10 a.m. Thursday in the Center City offices of Saul Ewing Arnstein & Lehr LLP, which is representing Hahnemann and St. Christopher’s Hospital for Children in the bankruptcy filed June 30.

While the unprecedented auction of Hahnemann’s Medicare provider agreement, which includes the residency slots, should result in a winning bidder, there is no guarantee that the winning bidder will be able to complete the purchase.

The Centers for Medicare and Medicaid Services (CMS) said in a bankruptcy-court objection Monday that the sale proposal is “contrary to law and contravenes CMS regulations” because it limits to $3 million the amount of money Medicare could recoup for potential overpayments at Hahnemann, and amounts to an illegal transfer of a Medicare provider agreement.

Medicare provides the money for hospitals to pay the residents who work for them.

The last of Hahnemann’s 583 residents and fellows were released Tuesday, allowing them to continue their training at other hospitals, many of them outside the Philadelphia region.

The Medicare agreement is valuable because the residency slots would go to the owner of the Hahnemann agreement after the current residents complete their training. If CMS ultimately blocks the sale, the Philadelphia region would lose the services of more than 550 doctors-in-training who provide a significant amount of care in area hospitals.