TENET: Allegheny Purchase Hits New Snag
Tenet Healthcare Corp.'s bid to take over eight ailing Philadelphia hospitals hit a potentially serious snag yesterday when Drexel University, which had been set to take over operation of Allegheny University of the Health Sciences, unexpectedly bowed out of the deal. Drexel trustees did not publicly give a reason for their about-face, but one unnamed trustee said "the decision boiled down to not wanting to spend the amount of time needed to run an entirely different kind of school." The Pittsburgh Post-Gazette reports that Tenet, which "has maintained in the past that an academic affiliation is essential to its plans" to take over the eight Allegheny Health System hospitals, "said it was working to find another academic partner" (Gaynor/Snowbeck, 10/14). The Wall Street Journal reports that "the rejection is certain to delay any transaction beyond Oct. 21, when" the deal was set to close, and "renews doubts about the future" of Allegheny's Philadelphia-area hospitals, "which are beset with declining admissions as more doctors in the community refer patients to competing hospitals" (Rundle, 10/14). The Philadelphia Inquirer reports that there are few obvious choices to fill the gap left by Drexel. "Temple Health System is said to be interested," but would be in an awkward position because its hospitals compete directly with those slated to be purchased by Tenet. Officials from Penn State, St. Joseph's and the University of the Sciences all denied any interest in replacing Drexel (Stark/McCullough/Uhlman, 10/14).
Dr. James Wilberger, vice dean for education and student affairs at Allegheny University of the Health Sciences, said the Drexel pullout "opens the door for Tenet to back out." He added, "I don't know how they'll react. Certainly if there's not some inflow of cash from some quarter, there's no way this school can stay viable" (Post-Gazette, 10/14). Tenet spokesperson Lance Ignon said the hospital chain "will press the Bankruptcy Court for an extension of the Oct. 21 closing date" in order to buy more time in which the company can search for a new academic partner (Inquirer, 10/14).