UPHS to sell Phoenixville Hospital

The University of Pennsylvania Health System plans to sell Phoenixville Hospital, located in Chester County, to a private health care company this summer.

Last week, UPHS signed a letter of intent pledging to negotiate exclusively with Community Health Systems. CHS is a Brentwood, Tenn.-based company that already owns three hospitals in Chester County.

Negotiations will probably conclude by July 1. The sale is pending approval by the University Board of Trustees, the Pennsylvania Attorney General's Office and the Orphans' Court in Chester County.

For the last seven years, Penn has owned Phoenixville -- a member hospital in UPHS -- and contributed more than $46 million in capital to the operation. Penn will stay involved in clinical and academic programs.

Phoenixville is a 143-bed hospital in a suburban community.

Other UPHS member hospitals include the Hospital of the University of Pennsylvania, Presbyterian Hospital and Pennsylvania Hospital -- all located in Philadelphia.

Officials say the proposed sale will benefit both Phoenixville and the University.

UPHS will be able to focus more resources on the Philadelphia hospitals, which are an academic hub for University-affiliated medical students and physicians.

"Given the enormous growth we've had in our programs ... we need to continue to invest in new facilities and hospitals," Health System Chief Executive Officer Ralph Muller said.

He added that the upcoming sale will "let us concentrate on downtown."

Phoenixville will also benefit from access to more capital, since the nonprofit hospital will become a for-profit venture with private investors.

Unlike Penn, CHS concentrates on small, suburban hospitals similar to Phoenixville, CHS spokeswoman Rosemary Walsh said.

Muller added that the company's strong presence in Chester County will make Phoenixville a sensible place to concentrate resources.

Walsh said that it is too early to speculate about what CHS intends for Phoenixville.

Muller, however, predicted "considerable rebuilding."

Phoenixville has seen growth in both revenue and available services under the University's oversight, according to Phoenixville Executive Director Kevin Mahoney.

"However, the strength of Phoenixville Hospital ... requires even more capital than Penn has committed," he wrote in a company memo.

The proposed sale is the result of a committee decision to seek outside ownership. The Ad Hoc Committee on Strategic Direction included representatives from UPHS and Phoenixville, as well as community members.

"I am grateful to Penn for the opportunity to secure ... capital from another source so the [h]ospital can continue to prosper and meet its century-old mission," Mahoney wrote.

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