Another Echo of the Fall of the House of AHERF: Hahnemann University Hospital to Close Its Doors, Stranding Patients, Leaving Trainees without an Educational Site, and Leaving Staff and Health Care Professionals Unemployed

Those who cannot remember the past are condemned to repeat it. [George Santayana]

The impending closure of a big teaching hospital in Philadelphia did not get much national attention, but should have.

The Closing of Hahnemann University Hospital

On June 26, 2019, the Philadelphia Inquirer reported:

Hahnemann University Hospital will close in early September, with the wind-down of services at the 496-bed facility starting immediately, hospital officials said Wednesday.

Officials representing American Academic Health System LLC, which bought Hahnemann and St. Christopher’s Hospital for Children early last year for $170 million, said the closing ‘on or about Sept. 6’ would be orderly.

The closure would likely have big impacts on health care and medical education in Philadelphia, and on health care professionals and other hospital workers.  The article quoted the president of the Pennsylvania Association of Satff Nurses and Allied Professionals:

Hahnemann is a safety-net hospital that for decades has provided care to an under-served community,

Oddly enough, I could not find much more in the media about projected impacts on patients.  A July 2 Philadelphia Inquirer article stated

Hahnemann University Hospital’s pending closure and immediate move to turn away critically ill emergency patients threatens a safety net that has served close to 150 emergency room patients a day — many of them poor minorities who rely on the hospital for even primary care.

Close to half of the people admitted to Hahnemann were on Medicaid and two-thirds are black or Latino, according to an Inquirer analysis of state inpatient billing data.


Hahnemann had 17,000 inpatient stays and 53,000 emergency room visits in 2017, making it the eighth-busiest E.R. in the city, according to state Department of Health statistics.

The plight of the hospital’s current house staff got a bit more attention.  An Inquirer article on July 3, stated,

The impending closure of Hahnemann University Hospital is forcing about 570 residents who work at the Center City institution to find a new place to continue their training.


Hahnemann’s closure is causing ‘the largest orphaning of medical residents in the history of the United States,’ Drexel University said in a Philadelphia Court of Common Pleas lawsuit against Hahnemann and its corporate parents. Drexel handles the educational side of Hahnemann’s residency programs.

And then there were the other employees of the hospital to think about.  An NBC10 Philadelphia article on June 26 included,

The closure would leave around 800 union nurses, said the union, which represents around 8,500 nurses across the state.

In addition,

The nurses are among about 2,500 employees that PAHS says are employed at the medical center.

A major teaching hospital will close, abandoning many poor and vulnerable patients, orphaning 570 house-staff and leaving about 800 nurses and about 1700 other staff unemployed, and the national media take no notice?  The numbness is striking.

Reactions to the Bankruptcy of Hahnemann

Also, in my humble opinion, the reactions to the impending bankruptcy were somewhat muted even in the local media.

The media did feature some complacent reactions from local health care experts with ties to other competing hospital systems or to  for-profit hospital management who seemed confident that everything would work out.  For example, from the June 26 Inquirer article:

with more hospital beds per capita than many urban areas, Philadelphia
is better equipped to handle the impact of a closure than many places,
said Stuart H. Fine, an associate professor in Temple University’s
College of Public Health.

‘Philadelphia is fortunate to
have enough hospital beds for the city’s needs, even if Hahnemann
closes,’ he said. ‘I’m not minimizing the impact of this closure on
those patients who live right by Hahnemann, rely upon it for their care,
and will have difficulty traveling to other locations.’

The article, though, failed to mention that Mr Fine, per his bio on the Temple website, is a former hospital manager with a health administration, but not a public health or medical background, viz:

having served as a health system CEO for more than 30 years, Dr. Stuart
H. Fine joined the faculty of Temple University in 2014 as Associate
Professor & Director of Programs in Healthcare Management for
the Fox School of Business.

A few public relations
people from other local hospitals seemed pleased about getting some of
Hahnemann’s business, but I could find no opinions from actual public
health experts.

On the other hand, there was outrage from unionized employees (look here for an account of a small public protest by union members.)

The Governor of Pennsylvania and the Mayor of Philadelphia, both Democrats, issued a statement saying

We continue to stand in solidarity with the workers, patients and community. For months, the commonwealth and city have been working aggressively to protect patient care at Hahnemann and find solutions to maintain current medical services at the hospital,

However, they did not propose very strong action

While it is clear that the hospital’s current operation is no longer financially viable, we are both committed to working with potential investors to find support for the restructuring of Hahnemann and for protecting St. Christopher’s Hospital for Children

Note that they did not seem to question the notion that any continuation of Hahnemann would have to be as a for-profit corporate entity funded by “investors.”

The American Association of Medical Colleges put an informational article on its website, featuring an interview with Janis Orlowski, MD, AAMC chief health care officer. However, the article only discussed the nuts and bolts of how Hahnemann housestaff might go about trying to find new positions.  There was no hint of outrage, and nothing about anything the AAMC might do beyond that.

The only discussion about the bankruptcy beyond the Philadelphia area that I could find came from presidential candidate Sen Bernie Sanders (D-VT), who was quoted in Politco a few days after the bankruptcy announcement:

‘The business model of America’s current health care system is not about healing people or providing access to medical care — it is about making as much money as possible for insurance companies, drug companies and wealthy investors,’ the Democratic presidential candidate said.

‘The situation in Philadelphia illustrates the entire problem: In a city with one of the highest poverty rates in the country, a major hospital serving low-income communities is on the verge of laying off 2,500 people, abandoning 500 medical residents, and closing its operations thanks to an investment firm looking to make as much money as possible in a corporate fire sale.’

The Vermont senator added that he stood in solidarity with the nurses and others who are fighting to keep the hospital ‘from being destroyed by Joel Freedman and his investment firm’ and reiterated his call for ‘Medicare for All.’

Per the Inquirer, again, Sen Sanders is also planning a rally for July 15, and plans “to call for Philadelphia, state and federal officials to find a way to keep Hahnemann open.”

A major teaching hospital will close, abandoning many poor and
vulnerable patients, orphaning 570 house-staff and leaving about 800
nurses and about 1700 other staff unemployed, and there is no national outrage, particularly from health care professionals?  The learned helplessness is striking.

Finally, lacking in what reporting there has been, however, is much
explanation for why a big teaching hospital is coming to such a sudden,
and ignominous end, particularly, since in a sense it has all been done
before.  One gets the impression of deep seated ennui.

A Very Late Echo of the Fall of the House of AHERF

There might be a reason for that.  It has all been done before.

The June 26, Inquirer article did mention, somewhat as an aside:

Hahnemann, which traces its roots to a homeopathic medical college opened in 1848, has been through a tumultuous era dating to at least 1993, when Allegheny Health, Education, and Research Foundation acquired it as part of rapid expansion that led in 1998 to what was then the nation’s largest nonprofit health-care bankruptcy.

Tenet Healthcare Corp. bought Hahnemann and eight other Allegheny hospitals in the Philadelphia region but quickly scaled back, hanging on to just Hahnemann and St. Christopher’s, which were frequently the subject of sales negotiations that failed until Freedman decided to leap across the country from his Southern California base.

The Freedman to which this refers is one Joel Freedman, president and founder of American Academic Health Systems LLC, the last for-profit firm to own the hospital.

So Hahnemann and one other hospital were already the only survivors of the eight hospitals Tenet bought in 1998?  I could find a 2017 article that stated that all other hospitals it owned in Philadelphai were either sold or closed by then.  One hospital it sold, the Graduate Hospital, was converted into a long term care facility (look here). The fate of the other six hospitals seems anechoic. 

However, the lassitude greeting the demise of the last remaining hospitals was foreshadowed by the story of Tenet’s precursor in the Philadelphia “market,” the Allegheny Health, Education and Research Foundation (AHERF) whose demise has been much discussed on our humble blog as a harbinger of the dysfunction that would afflict US health care.

As we noted
in 2008 (and discussed most recently in 2013 here), although the AHERF bankruptcy appears to be the largest
failure of a not-for-profit health care corporation in US history, its
story has produced remarkably few echoes for doctors, other health care
professionals, health care researchers, and health policy makers. I
often use the fall of AHERF as major example in talks, at least the few
talks I am allowed to give on such unpleasant subjects. Rarely have more
than a few people in the audience heard of AHERF prior to my discussion
of it. I only could locate one article in
a medical or health care journal that discussed the case in detail,
albeit incompletely since it was written before Abdelhak’s guilty plea
[Burns LR, Cacciamani J, Clement J, Aquino W. The fall of the house of
AHERF: the Allegheny bankruptcy. Health Aff (Millwood) 2000; 19: 7-41.] I
doubt the case is used for teaching in most medical or public health
schools. The lack of discussion of such a significant case is
a prime example of the anechoic effect.

Some of the important points of this case will sound familiar  (see also this narrative, starting on page 5):

  • AHERF, one of the largest health care systems of its day, was
    built by the poster-boy for health care imperial CEOs, Sherif Abdelhak.
  • Abdelhak, who started as food services purchasing manager at Allegeheny General Hospital, was repeatedly hailed as a “visionary” (in the March, 1997, ACP Observer)
    a “genius,” and the like. His plans to create a huge integrated health
    care system were part of the wave of the future. Abdelhak was even
    invited to give the prestigious John D Cooper lecture at the annual
    meeting of the American Association of Medical Colleges (AAMC), which
    was published in Academic Medicine [Abdelhak SS. How one academic health
    center is successfully facing the future. Acad Med 1996; 71: 329-336.]
    He proclaimed that “we will need to create new forms of organization
    that are more flexible, more adaptive, and more agile than ever before.”
    And he announced that “my aim as chief executive has been to unleash
    the creativity and productive potential of every individual and to
    provide an environment that encourages teamwork”
  • While Abdelhak was making these grandiose promises, he paid himself
    and his associates very well. For example, he received $1.2 million in
    the mid-1990s, more than three times the average then for a hospital
    system CEO. He lived in a hospital supplied mansion worth almost
    $900,000 in 1989. Five of AHERF’s top executives were in the top 10 best
    paid hospital executives in Philadelphia.
  • Although Abdelhak talked of teamwork, he warned the combined faculty
    of the new Allegheny University of the Health Sciences (AUHS): “Don’t cross me or you will live to regret it.”
  • As AHERF was hemorrhaging money, Abdelhak continued to pay himself and his cronies lavishly.
  • After the AHERF bankruptcy, which was at the time the second largest
    bankruptcy recorded in the US, Abdelhak was charged with numerous
    felonies involving receiving charitable assets. In a plea bargain, he pleaded no contest to misusing charitable funds, a misdemeanor, and was sentenced to more than 11 months in county prison.

Note that at its peak, AHERF had 14 hospital in its network.  After its bankrupcy, it transferred 8 hospitals, including Hahnemann and the Medical College of Pennsylvania teaching hospital to Tenet.  In 2003 Tenet closed MCP (look here).  Tenet is a for-profit hospital system with its own history of bad behavior (look here).  So out of a 14 hospital network ultimately only one, not Hahnemann apparently will survive.

However, few people, even in Philadelphia seem to remember that history, and therefore seem to have drawn lessons from it.  However, had they, perhaps they would have concluded, as we asserted in 2013,

The story of AHERF is not merely that of an unlucky bankruptcy. It shows
what can go wrong when health care is taken over by generic managers who adapt the latest management fads, and health care decision making is ruled by marketing, public relations and propaganda instead of evidence and logic, and allows power to be concentrated in organizations run by imperial CEOs.  We did not get a chance to learn this history, so we seem bound to repeat it.

Saving health care will take clear thinking and hard work by a lot of
people. The “visionaries,” if we let them, are likely to depart with a
huge cache of money, leaving us and health care worse off. If it is just
“not done” to talk about cases such as that of AHERF, and other
examples of “recent unpleasantness,” how will be learn not to fall for
the propaganda?

Of course, it is those who benefit from the propaganda who do not want us catching on to their game.

If physicians, health professionals, health care researchers, and health
policy makers do not learn the lessons of the fall of AHERF, and now the fall of one of its two surviving hospital components, they will
be doomed to see its endless repetitions, throughout the land.

With apologies to the Bare Naked Ladies – “it’s all been done before”

Leave a Reply

Your email address will not be published. Required fields are marked *