Reading Health System buys hospitals
WEST READING » There was a change in the health care landscape across the region in 2017. Reading Health System, which owns Reading Hospital, purchased five area hospitals, changing its name at the same time to Tower Health System.
The hospitals included in the deal were the 232-bed Pottstown Memorial Medical Center in Pottstown (which has been renamed Pottstown Hospital), the 151-bed Phoenixville Hospital in Phoenixville, the 169-bed Brandywine Hospital in Caln Township, the 148-bed Chestnut Hill Hospital in Philadelphia and the 63-bed Jennersville Regional Hospital in Penn Township in southern Chester County (which was renamed Jennersville Hospital).
The acquisition — announced in May — was completed Sept. 29 and became effective Oct. 1. No details about the terms of the sale were disclosed by Tower Health. However, according to a November filing with the Securities and Exchange Commission by Community Health Systems Inc., the former owner of the hospitals, Tower Health paid approximately $418 million dollars to complete the transaction.
“We are coming together to create an even more dynamic, expansive and nationally recognized health system,” Clint Matthews, president and CEO of Tower Health, said in a press release. “Our new name, Tower Health, reflects our collective strength, innovative spirit and bold commitment to taking healthcare to new heights.”
The deal is a major expansion for the health system — taking it beyond the borders of Berks County. In addition to Reading Hospital in West Reading and the five newly acquired properties, Tower Health also includes: Reading Hospital’s Reading Hospital Rehabilitation at Wyomissing, Reading Hospital School of Health Sciences and Reading HealthPlex, an advanced surgical center; Tower Health Medical Group, a comprehensive network of primary and specialty providers; Tower Health Partners, a clinically integrated network; and Tower Health/UPMC Health Plan, according to a release.
To launch the new system, the five hospitals, plus Reading Hospital, held simultaneous celebrations Oct. 2. Employees and community members heard from each hospital’s CEO as well as representatives from the health system about the “bold new beginning in health care” the transaction represents.
On the day the sale became official, Oct. 1, Independence Blue Cross issued a statement indicating that because the insurer and Tower Health had failed to reach agreement on a provider agreement, its 120,000 members would not be able to consider the hospitals or their physicians as in network providers.
The provider agreement that had been in place with Community Health Systems Inc., expired with the completion of the sale, and a new accord had not yet been reached.
In response to questions from Digital First Media, the two sides had differing views on why an agreement hadn’t been reach prior to completion of the sale.
According to Anthony V. Coletta, M.D., MBA, president, Independence Blue Cross Facilitated Health Networks, Independence submitted a proposal to Tower Health that would have allowed the agreement to continue, but claimed the proposal had been rejected.
According to a statement by Tower Health, the health system was prepared to accept the existing agreement terms and rate structures with Independence Blue Cross and then enter into negotiations for a long-term contract. However, Tower Health claimed the insurer asked for a series of concessions including rate reductions, and a non-compete provision in the service areas of the Tower Health/UPMC Health Plan products.
Both companies indicated their willingness to continue discussions, and On Oct. 6 announced they had reached an agreement on a new, three-year contract, effective immediately.
The Tower Health system is comprised of more than 11,000 employees, offering a regional, integrated healthcare provider/ payer system to an estimated 2.5 million people.
“This is a tremendous opportunity to collectively deliver on our Tower Health promise of advancing health and transforming lives,” Matthews added.
The five hospitals included in the transaction are part of the 30 planned hospital divestitures discussed by Community Health Systems Inc. on the company’s second quarter 2017 earnings call.
The agreement of sale between Reading Health System and the Franklin, Tenn.-based Community Health Systems Inc. was announced in May, eight months after Community Health systems Inc. announced it would begin “exploring a variety of options for its future.” Community Health then began announcing sales agreements for some of its properties.