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Invited Commentaries

Lessons to Learn From Hahnemann University Hospital’s Closure

Orlowski, Janis M. MD, MACP; Thompson, Thalia MPH

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doi: 10.1097/ACM.0000000000003170
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Abstract

As a foundational tenet in the practice of medicine, the Hippocratic oath promises that physicians will “Do No Harm” when caring for and treating patients. This promise is intended to show the physician’s dedication to care and commitment to treat the patient during a time of ailment to the best of the physician’s ability. The closure of Hahnemann University Hospital (HUH) in Philadelphia showed us that ailments can extend beyond a patient’s condition as we have witnessed this closure greatly impacting at least 4 different populations: patients and their communities, faculty, medical students, and residents.

Background

The closure of HUH was the biggest teaching hospital closure to date in the history of academic medicine, surpassing the 2010 closure of St. Vincent’s Hospital in New York City. Although both hospitals had a long-standing presence in their respective communities caring for the disadvantaged, and both faced battles with financial hardship, HUH’s financial struggles were chronic, having been apparent since the 1990s when its ownership transitioned from traditional academic medicine institutions to more business- and investment-focused firms.

In the early 1990s, HUH was acquired by Allegheny Health Education and Research Foundation (AHERF), a nonprofit academic health system which went on to fold amidst bankruptcy and scandal.1,2 HUH was then sold to Tenet Healthcare Corporation, a multinational investor-owned health care services company, in 1998 after AHERF declared bankruptcy.1,3 In 2018, Tenet sold both HUH and St. Christopher’s Hospital for Children to American Academic Health System, a private equity-backed firm, as part of Tenet’s efforts to reduce debt and improve operations in leading market share areas.1,4 The 2018 transaction generated several financial disputes among American Academic, Tenet, and others. HUH’s financial condition worsened to the point that American Academic concluded that the hospital was no longer viable or saleable as a going concern.3

Responding to a Crisis

In July 2019, HUH filed for Chapter 11 bankruptcy, and the city of Philadelphia and its residents lost a long-standing safety net institution5 that began in the mid-19th century. Medical school faculty and trainees had to scramble to keep their careers on track6 while other Philadelphia hospitals suddenly faced overcrowded emergency departments and the need to credential more physicians quickly so they could absorb physicians displaced by the closure of HUH.

Several stakeholders, including the Association of American Medical Colleges (AAMC), offered support and services to help those most affected by this unanticipated event. The City of Philadelphia worked closely with hospital leadership and staff to ensure that the safety, care, and well-being of the hospital’s patients were not compromised in any manner. Drexel University, which had an academic affiliate agreement with HUH until the end of 2022, immediately discussed and acted on opportunities to reassign its faculty and student trainees to other regional campus partner hospitals.6 These reassignment locations included Tower Health, which is now in a 20-year academic affiliate agreement with Drexel to educate Drexel’s medical students.6 Ultimately, Drexel announced that 40% of the university’s physicians and clinical staff would be laid off due to HUH’s closure.7

The closure of the hospital also changed the trajectory of the training and careers of over 550 residents and introduced the possibility that this could be a career-changing event for many of them.8 To continue their training, these residents had to find programs at other institutions that would not only accept them but also properly fulfill the requirements of their residency. Given that the hospital’s sudden announcement of the closure occurred just before July 1 (the date when residency programs start), this was a herculean task as most residency program slots had already been accounted for by the time the closure was announced. The Centers for Medicare and Medicaid Services (CMS) has rules in place to allow hospitals taking displaced residents to receive temporary residency slot increases, a way to ensure that training can continue.9

The AAMC along with the Educational Commission for Foreign Medical Graduates (ECFMG), the Accreditation Council for Graduate Medical Education (ACGME), and others called upon the medical community to find replacement residency positions for the orphaned residents—and the medical community responded. The residents, however, found that support services were limited. Since HUH’s closure was an unprecedented event, the limited resident support resources and services could be attributed to a number of factors: academic medicine’s lack of experience in addressing the displacement of such a considerable number of residents, the limited number of available residency slots and the limited amount of funding for displaced residents, the complicated process for filling each slot, and American Academic’s prioritization of its own financial priorities over the welfare of the residents. Despite these obstacles and the limited time available to overcome them, all HUH residents have been placed in new positions, approximately half of them within a 60-mile radius of Philadelphia. Special commendation goes to the tireless work of HUH’s designated institutional official who supported the transition of the residents and often found himself caught between the circumstances of his employer and the needs of the residents. Despite the placement of residents in new positions, there were significant disruptions in their training and in their personal and family lives, especially for those who had to relocate. The American Medical Association, AAMC, ECFMG, ACGME, and other institutions also developed a fund managed by the Philadelphia Medical Society to provide residents some financial assistance for dislocation and other expenses.

As the events unfolded, and despite the CMS rules allowing hospitals taking displaced residents to receive temporary residency slot increases,9 the funding of residency slots became a factor in the ability of residents to move to new institutions. During the deliberation and development of the Affordable Care Act, the AAMC and others worked to include a provision that allows for the permanent redistribution of residency slots from closed institutions. This process is known as the “Section 5506 residency slot distribution.” Since the bill’s passage into law, 1,530.36 Direct Graduate Medical Education (DGME) slots and 1,459.12 Indirect Medical Education (IME) slots have been, or are in the process of being, redistributed. DGME payment refers to Medicare payment for a portion of the direct expense of training a resident, and IME payment refers to the institutional costs associated with having a higher complexity of care in a teaching environment. At the time of the provision’s enactment, it was not anticipated that the Medicare-capped residency slots, which had been unchanged since 1997, would be seen as corporate “assets” in a bankruptcy,10 but that is exactly what happened with HUH’s slots. Despite CMS’s strong objection to the sale of the slots, the bankruptcy judge allowed bidding for these slots. A successful coalition of teaching hospitals in the Philadelphia area—Thomas Jefferson, Einstein Healthcare Network, Temple University Health System, Main Line Health, Cooper University Health Care, and Christiana Care Health System—bid on the slots with the hope that the residency slots would stay within the Philadelphia area. As of this writing, the sale is not moving forward. In the meantime, CMS has initiated a redistribution of the residency slots through the Section 5506 mechanism.

The process for temporary cap adjustments for residency programs to absorb displaced residents is overseen by CMS. It allows the residents “to travel with their slot” until the completion of their current training program so that hospitals that take on displaced residents can receive temporary cap adjustments and the Medicare payment that goes with them. Although HUH had sufficient slots for all of its residents, they had entered into other arrangements that meant the slots were limited to less than 1.0 full-time equivalent for each resident to bring to their new training spot. After the completion of training, the slots will be permanently redistributed by CMS in a process that favors resident slots within the same geographic area and/or for institutions that trained the displaced residents.

Even as all HUH residents found new places for training, a new issue emerged—lack of tail insurance for the current residents and those who recently graduated. Tail insurance provides a physician with extended coverage for a specific amount of time after their claims-made policy ends.11 The AAMC and ECFMG initially filed a motion in this case to ask the judge to direct an ombudsperson to oversee the interest and well-being of the residents and to ensure that the sale process provided for adequate medical malpractice tail insurance and the protection and maintenance of all of HUH’s historical residency records. For some states, including Pennsylvania, it is a requirement for a physician to demonstrate continuous medical liability coverage, including tail coverage, to maintain their license. The judge was appropriately concerned, calling the treatment of the residents a “human tragedy,” but nonetheless approved the sale of the slots. The issue of providing tail insurance remains active at the time of this writing.

The Importance of Supporting Medical Education

There are many lessons to be learned by all, particularly the academic graduate medical education (GME) community. The HUH story confirms that for teaching hospitals to succeed, there must be a strong commitment—financial and otherwise—to the academic mission and all that it entails. When that commitment no longer exists, dire consequences can follow. This also underscores a situation created by Congress—a cap on residency slots that has remained constant over 20 years—that makes some believe that residency slots are an asset that can be bought and sold, rather than a commitment to physician education. At a time of physician shortages, a stable source of more funding for residency training is vital.

We, the GME community, will need to debrief to discuss lessons learned on this cataclysmic closure. We will need to consider whether financially struggling institutions should be required to prepare potential “disaster plans” just as we prepare clinically for disaster events at our institutions. Finally, we will need to consider how best to protect the interest and well-being of residents in case of unexpected closure.

The closure of HUH and the events that followed ultimately demonstrate that the “Do No Harm” approach should extend beyond patient care to apply to the educational mission of medicine as well.

Acknowledgments:

The authors would like to thank and acknowledge their colleagues, Association of American Medical Colleges (AAMC) chief legal officer Frank R. Trinity, JD, and AAMC senior director and regulatory counsel Ivy Baer, JD, MPH, for their review and input of the information presented in this Invited Commentary.

References

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4. Kacik A. Tenet finalizes Philadelphia exit with $170 million sale of area hospitals. Modern Healthcare. https://www.modernhealthcare.com/article/20180111/NEWS/180119959/tenet-finalizes-philadelphia-exit-with-170-million-sale-of-area-hospitals. Published January 11,2018. Accessed January 8, 2020.
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9. Centers for Medicare and Medicaid Services (CMS). Medicare fact sheet on displaced residents due to program or hospital closure. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/Fact-sheet-displaced-residents.pdf. Published July 2019. Accessed January 8, 2020.
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