Lower Bucks Hospital’s top executive has confirmed that the hospital will close its cardiac rehabilitation unit by the end of the month and said more changes involving patient services are likely at the Bristol Township hospital.
The elimination of services doesn’t violate the lease/purchase agreement between Prime Healthcare Services and the Bucks County Redevelopment Authority, because that document doesn’t dictate how the for-profit Prime runs the hospital, said redevelopment authority Director Robert White.
Prime leases the hospital building and property, which is owned by the redevelopment authority.
Under a separate asset purchase agreement, the California-based hospital chain is only required to continue operating Lower Bucks Hospital as a community hospital with an “open and accessible” emergency department for at least five years, White said.
The closure of the cardiac rehab unit is expected to impact three employees, who might be able to transfer to other positions, Lower Bucks Hospital CEO Peter Adamo said Friday. The news closure follows Thursday’s announcement that 30 hospital employees were being laid off.
Adamo said every area of the hospital is under scrutiny for potential savings, cuts or elimination, and low-volume and expensive services that patients can find elsewhere — such as open heart surgery — could be eliminated.
“Every aspect of this hospital is suspect right now,” he added. “If you are losing $1 million or more a month, something has to change.”
One of the more “ominous” situations involves the hospital’s maternity unit, Adamo said. It delivers about 1,000 babies a year, loses about $1 million a year and employs fewer than 100 workers.
The private OB-GYN practice that provided 60 percent of the hospital’s maternity patients recently stopped referring patients to Lower Bucks, putting the program in danger of closure, Adamo said. Hospital officials are attempting to find a new obstetrics group to fill the gap, but that could prove futile.
“It’s pretty ominous right now,” he said.
The layoff situation has captured the attention of the union that represents hospital nurses and other health care employees there. Union representatives were scheduled to meet Friday with Adamo to discuss the future.
“Of course we have concerns (about Prime),” said Mark Warshaw, spokesman for the Pennsylvania Association of Staff Nurses and Allied Professionals. “We’re hoping for the best.”
Warshaw said a positive sign is that Prime hasn’t closed any hospitals it has acquired.
The layoff news took some employees by surprise, since an Aug. 28 press release announcing the sale to Prime stated that the company would maintain all services, including the ER, maintain all union contracts, “hire” all current hospital employees, and invest at least $10 million over five years in capital improvements.
Prime Healthcare Services officially took over operations of Lower Bucks Hospital Oct. 11, a transfer approved by the redevelopment authority. County taxpayers remain responsible for the debt service on the $14 million loan that let the hospital emerge from bankruptcy in January.
In 2010, the Bucks County commissioners agreed to let the redevelopment authority borrow the money by issuing bonds backed by the county and the hospital’s dedicated .05 percent from Pennsylvania table games revenue at Parx Casino in Bensalem.
Under that arrangement, the redevelopment authority took title to the property as collateral and the hospital committed its right to the future gaming revenues to pay the debt service on the bond.
Lower Bucks Hospital had agreed to repay the $14 million with interest over 20 years and buy back the property. The total amount the hospital promised to repay would be almost $30 million. It’s unclear if Prime has agreed to the same terms.
Prime is bound to the lease/sale agreement that requires that it lease the property until Dec. 15, 2030, White said. Prime also agreed to pay off the hospital’s remaining liabilities in its bankruptcy reorganization plan, including a $1.2 million note to unsecured creditors and a $2 million mortgage on a surgery center.
Prime Healthcare Services operates a chain of 20 hospitals, most on the West Coast. It specializes in buying financially challenged hospitals.
Lower Bucks struggled financially for years, bleeding more than $17 million from its reserve over the four years prior to filling for Chapter 11 bankruptcy in January 2010. That year, the hospital brought in less money than it spent overall, with a more than 6 percent loss of overall revenue and a more than 7 percent drop in patient revenues, according to a 2011 analysis by the Pennsylvania Health Care Cost Containment Council.
At a county Orphans’ Court hearing in September, former hospital CEO Albert Mezzaroba reportedly testified that, without the sale to Prime, the hospital would be forced to close immediately — just nine months after emerging from bankruptcy.
Mezzaroba reportedly told the judge that months after emerging from bankruptcy, the hospital encountered cash flow problems because two major suppliers demanded pre-payment for goods; others demanded payment on delivery.
Jo Ciavaglia: 215-949-4181; email: jciavaglia@phillyBurbs.com; Twitter: @jociavaglia
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