From having a deal to shutting the doors: Tower Health plans to close two hospitals

The Pennsylvania-based system made the announcement less than three weeks after saying it had an agreement to sell them. Tower has been dealing with serious financial issues after a costly expansion.

Tower Health thought it had an agreement to sell two of its hospitals. Now, the Pennsylvania-based system said it will be closing those two hospitals after the deal has dissolved.

On Thursday, Tower said it would close Brandywine Hospital and Jennersville Hospital in the Philadelphia suburbs within the next several weeks.

“We are deeply saddened by this turn of events, however, no viable options remain for the continued operation of these facilities. Our responsibility to our patients, as well as employees and the communities served, is to ensure this transition included an effective and safe path for change,” Tower said in a statement.

Jennersville Hospital will close Dec. 31, 2021. Brandywine Hospital will close Jan. 31, 2022.

The announcement represented a remarkable reversal. On Nov. 22, Tower said it had an agreement with Canyon Atlantic Partners to acquire the two hospitals and expected to finish the deal fairly quickly. But Tower said Canyon Atlantic didn’t respond to Tower’s requests to close the deal.

“When we announced a definitive agreement for Canyon Atlantic Partners to acquire both hospitals, we believed we had finally found a solution that would preserve Brandywine and Jennersville as acute care hospitals,” Tower said in its statement Thursday.

“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,” Tower stated.

An attempt for comment from Canyon Atlantic wasn’t successful.

Some local officials are seething over the plans to close the two hospitals. Josh Maxwell, a Chester County Commissioner, blasted Tower Health. Both hospitals slated for closure are in Chester County.

“This is a tragedy in management, these hospitals have existed for a combined 200 years serving one of the wealthiest per capita counties in the country. They are laying off thousands of employees that have worked there for decades because they didn't know what they were doing,” Maxwell posted on Twitter.

“The result of this incompetence is going to take emergency and acute care away from hundreds of thousands of people who have relied on it for their entire lives including Chester County's only city, Coatesville,” he said.

Tower Health said it “will work with patients to transition care, and with employees and providers on placement into other positions."

The plans to close the two hospitals comes as Tower has battled serious financial challenges following a costly expansion.

In 2017, the Reading Health System, anchored by Reading Hospital, acquired five hospitals in the Philadelphia area and formed the new organization called Tower Health. Tower paid $423 million for the hospitals but the move did not pan out financially. Earlier this year, Tower said it had lost $370 million on the hospitals it acquired, The Philadelphia Inquirer reported.

Earlier this year, Tower Health replaced chief executive Clint Matthews, who pushed for the expansion and led the system for years. Tower chose P. Sue Perrotty, a retired bank executive, to lead the system.

Faced with heavy debt, Tower has moved to shed some of its operations.

In September, Tower announced it had a letter of intent to transfer Chestnut Hill Hospital in Philadelphia and more than a dozen urgent care facilities to Trinity Health Mid-Atlantic.

Tower also said in September it planned to continue operating St. Christopher’s Hospital for Children but is “working with local and state agencies and organizations to help secure its long-term future.” Tower and Drexel University teamed up to buy St. Christopher’s from bankruptcy in 2019, paying $50 million.

In July, Tower Health announced it was developing a strategic alliance with Penn Medicine, based in Philadelphia. Tower stressed that the alliance was not a merger but a partnership to strengthen the organization. At the time, Tower said it planned to identify areas of collaboration within six months.

Tower reported an operating loss of $243 million in the 2021 fiscal year. It represented an improvement from the previous year, when Tower’s operating loss was $415 million.

On the upside, Fitch Ratings revised its outlook for Tower from “negative” to “stable” in October. Fitch said it “expects that Tower will see slow but gradual operational improvement after another challenging year in fiscal 2021.”

In addition to Reading Hospital, Tower operates Phoenixville Hospital and Pottstown Hospital.