FAQ: An Update on the St. Christopher’s Hospital Acquisition
December 16, 2019
It’s official: Drexel co-owns a hospital.
Drexel University and Tower Health purchased St. Christopher’s Hospital for Children from bankruptcy in a $50 million deal that closed on Dec. 15. Just five months ago, St. Christopher’s previous owner put the hospital up for sale and shuttered its other local hospital, Hahnemann University Hospital. Throughout the summer, Drexel worked quickly to reassign medical students who had been doing clinical rotations at Hahnemann and assisted residents and clinical faculty displaced by the closure. In September, Drexel and Tower Health entered into an agreement to acquire St. Christopher’s from St. Christopher’s Healthcare LLC, a subsidiary American Academic Health System.
The acquisition restores St. Christopher’s to nonprofit status and local ownership. Both Drexel and Tower Health have long histories of mission-driven health care, medical education and research, and innovation in the Philadelphia area. This preserves the 144-year-old hospital’s ongoing legacy as a site for quality community care and medical education in North Philadelphia.
As Drexel and Tower Health now begin bringing the venerable hospital into their circle of operations, clinical and administrative leaders are working closely to ensure a smooth process.
Here is an update on the transition.
Q: How will the acquisition benefit Drexel?
St. Christopher’s was already the primary academic affiliate where Drexel College of Medicine students did the majority of their pediatric training. Ownership of the hospital, coupled with Drexel’s recently inked 20-year academic affiliation with Tower Health, secures the college’s ability to provide high-quality, accredited pediatric training to its medical students. The hospital has highly acclaimed programs in pediatric trauma and neonatal care, oncology, a Heart Center, and the only dedicated pediatric burn center in the region.
Drexel University President John Fry describes the move as a natural extension of Drexel’s civic commitment to Philadelphia. “That’s why we get involved in partnering with important institutions like the Philadelphia History Museum and the Academy of Natural Sciences,” he says. “We care deeply about the health care, scientific and cultural infrastructure of our city, and how we can support their work.”
Q: …And what about Tower Health?
For Tower Health, the acquisition means deeper ties to Philadelphia, where it already operates Chestnut Hill Hospital, and a network of primary, specialty care and urgent care locations throughout the Philadelphia suburbs. In a recent interview, Tower Health President and CEO Clint Matthews described the acquisition as “synergistic,” particularly with respect to physician training and staffing. “We see continued turnover of physician positions as they near the end of their careers,” he says. “We have a deficit of 20 to 25 primary care physicians in each of our markets. And there is a deficit nationally of over 100,000 physicians who will be needed over the next few years.”
Tower Health also sought a children’s hospital to expand its pediatric capabilities, he says. “Our region is going to have about 1.4 million people in our primary service area — we need to have a pediatric solution,” he says. The acquisition also builds on a long-standing relationship between St. Christopher’s and Reading Hospital, in which St. Christopher’s specialists and subspecialists have seen patients at Reading’s pediatric unit.
Q: How will Drexel and Tower Health split responsibilities for the hospital?
This is a 50/50 financial venture, with shared responsibilities. Tower Health will handle day-to-day hospital operations, including negotiating a new contract with the Pennsylvania Association of Staff Nurses and Allied Professionals.
Drexel will oversee undergraduate medical education at the hospital, as it did at Hahnemann. St. Christopher’s pediatrician-in-chief, who is also chair of pediatrics for Drexel’s College of Medicine, will continue to supervise teaching standards. The two institutions intend to keep the hospital intact, while supplying operational expertise and financial resources to strengthen it.
A search for a new hospital CEO has been underway for six weeks.
Q: How will Drexel pay for its share of the acquisition costs?
The University will use a portion of its strategic funds set aside for real estate acquisitions, a portion of its reserve funds for risk management (insurance), proceeds from the sale of development rights at the former University City High School site and a loan from unrestricted board-designated funds in the University’s endowment. Drexel’s Board of Trustees was prepared for the acquisition price to be significantly higher, so there is allowance for additional working capital infusions that will likely be needed.
Q: How many former Drexel University Physicians has Tower Health hired?
In January 2020, 58 Drexel University Physician providers and accompanying support staff will join Tower Health Medical Group (THMG) — providing services in family medicine, general surgery, breast surgery, cardiology, psychiatry and rheumatology. In addition, eight Drexel University College of Medicine Internal Medicine physicians will provide care in a THMG office.
Q: How does the change in ownership impact pediatric rotations for College of Medicine students?
Drexel will be St. Christopher’s primary academic affiliate. College of Medicine students will continue to conduct their third-and fourth-year clinical rotations there. St. Christopher’s is entering into a long-term academic affiliation agreement that provides for the College of Medicine to collaborate on academic and research activities at the hospital. Ownership by Drexel and Tower assures that this will continue uninterrupted into the future.
Q: How will other medical schools be impacted?
St. Christopher’s will continue to operate residency and fellowship programs, as well as serve as a pediatric training facility for other regional medical schools. Temple, Einstein and Jefferson, among others, all have graduate medical education programs that have rotations at St. Chris, and those will continue for the current academic year.
Over time, the size and scope of those programs will be reviewed and right-sized to the hospital’s capacity. Those changes will be made slowly and without disruption to current programs. Drexel and Tower are in the process of meeting with other medical schools and residency programs in the city, including the Philadelphia College of Osteopathic Medicine, to assess how they can contribute and participate in the future.
Q: With Hahnemann closed, will the College of Medicine remain in Center City?
The College of Medicine operates partly out of leased offices in Center City. It is planned that in 2023, some sections of the college will relocate to a new 450,000-square-foot academic building at 36thand Filbert streets on the University City Campus.
Wexford Science & Technology will begin construction (at its own cost and on land it is leasing from Drexel) this spring, with a target of occupancy by academic year 2022–23. The building will also house Drexel’s College of Nursing and Health Professions.
The first sections of the medical school to make the move in 2023 will be the college’s administrative functions, the Graduate School of Biomedical Sciences and Professional Studies, and Drexel’s first- and second-year medical program currently located at the Queen Lane campus. Eventually, the College of Medicine will vacate all leased space in Center City, at the Bellet Building and the New College Building, as well as the Queen Lane campus. Plans are underway to identify space in University City to house College of Medicine researchers.
In North Philadelphia, a subsidiary of AAHS still owns the hospital towers and garage on St. Christopher’s campus. It is expected that those properties will be sold into a venture that will lease them long-term to Drexel and Tower Health.
Q: What is the vision for the College of Medicine going forward?
The College of Medicine currently trains medical students at over 20 affiliate hospitals around the region. When Hahnemann closed, those hospitals and others expanded their clerkships to absorb College of Medicine students. Drexel has established a primary academic affiliate relationship, previously with Tenet and AAHS since 1998, with a 20-year academic agreement with Tower Health, signed in February 2019. At Tower Health’s West Reading location, construction is underway on an additional, state-of-the-art College of Medicine facility, slated to open in fall 2021. When fully operational, the West Reading location is expected to educate and train at least 200 Drexel medical students.
The events of this summer created difficulties and tumult, but Drexel now has a stronger medical education partner than it has ever had before in Tower Health. Our joint venture ensures an excellent learning environment for physicians-in-training and high-quality community care well into the future.
About Tower Health
Tower Health is a strong, regional, integrated healthcare provider/payer system that offers leading-edge, compassionate healthcare and wellness services to a population of 2.5 million people. With more than 14,000 team members, Tower Health consists of Reading Hospital in West Reading; Brandywine Hospital in Coatesville; Chestnut Hill Hospital in Philadelphia; Jennersville Hospital in West Grove; Phoenixville Hospital in Phoenixville; Pottstown Hospital in Pottstown; and St. Christopher's Hospital for Children, a partnership of Tower Health and Drexel University in Philadelphia. It also includes Reading Hospital Rehabilitation at Wyomissing; Reading Hospital School of Health Sciences in West Reading; home health care services provided by Tower Health at Home; and a network of 22 urgent care facilities across the Tower Health service area. Tower Health offers a connected network of 2,200 physicians, specialists, and providers across more than 230 convenient locations. For more information, visit towerhealth.org.
About the Drexel College of Medicine
The College of Medicine currently educates more than 2,000 future physicians, biomedical scientists and health professionals. It offers some of the most innovative and rigorous academic programs available, incorporating Drexel's expertise in engineering and technology into patient-centered medical training. The College is home to one of the nation's leading centers for spinal cord research; one of the foremost centers for malaria study; and a highly regarded HIV/AIDS program with extensive NIH-funded research in prevention and therapeutic interventions.