This story was last updated on July 22.
On Friday, July 19, the U.S. Bankruptcy Court in Wilmington, Delaware, held a hearing on the proposed sale and closure of Hahnemann University Hospital in Philadelphia, Pennsylvania, whose parent company filed for bankruptcy in late June.
During the hearing, Judge Kevin Gross expressed deep concern about the impact of the bankruptcy and sale of assets on Hahnemann’s 571 medical residents and fellows. About 20 residents were in attendance, and Judge Gross offered them an opportunity to speak on the record.
Here’s what residents and program directors need to know about the bankruptcy hearing, its potential effect on residents, and the Medicare funding associated with those residents.
During the hearing, Hahnemann advised the court that it will share information about its residency Medicare funding, broken down by full-time equivalent (FTE) amount, by Monday, July 22. This will likely show the extent to which a resident will be able to transfer Medicare funding to another program to allow the resident to finish training in his or her current specialty. Hahnemann signaled that the FTE amount per resident will be less than the amount for a full resident slot. Under CMS rules, with a few narrow exceptions, fellows are considered to be at most a 0.5 FTE.
Hahnemann committed to releasing half of its residents by July 26. The remaining residents should be released no later than Aug. 9. During the hearing, Hahnemann did not provide additional information regarding which residents would be released on which dates.
Residents are not legally obligated to stay in Philadelphia to continue their training. We understand that state officials would like to accommodate as many residents as possible in Philadelphia and the greater Pennsylvania area. But in the end, it is the residents’ choice to choose the best alternative.
Residents do not need to wait for the bankruptcy proceedings to be resolved before they can actively seek a new residency slot. Residents should be seeking residency slots right now. They can seek a position at any hospital that is willing to take them. Many residents have identified slots already and are awaiting approval from Hahnemann. Given the extraordinary circumstances, the National Residency Matching Program® (NRMP®) also is waiving the restriction on Hahnemann’s matched applicants who are seeking alternate training positions and/or communicating with programs absent a waiver (including signing an agreement with an alternate training program). The NRMP® has informed the AAMC that it would not pursue these communications as violations of The Match® Participation Agreement signed during registration.
Residents who have identified an available position elsewhere must still follow Hahnemann’s existing policies about leaving the program. This includes notifying the program director, who must release a resident from the program. If a resident does not have any federal funding, then all they need is the permission of the program director. If the receiving hospital does expect federal funding, then the resident not only needs to get permission to be released from the Hahnemann program, but also needs the sign-off of the Hahnemann CFO or equivalent senior individual so that funding goes with them. The receiving hospital will then have to go through the application process with the Centers for Medicare and Medicaid Services (CMS) to register the resident so that they can get an increase in slots.
The Accreditation Council for Graduate Medical Education (ACGME) has identified programs at institutions that are willing to take the displaced residents and is sharing daily updates of approved positions with the Hahnemann DIO. The AAMC has also been in touch with Hahnemann’s DIO to offer support. Most of the programs that have offered slots do expect that the residents will come with federal funding.
The AAMC filed a statement in U.S. Bankruptcy Court to ensure that the needs of the residents are considered during bankruptcy proceedings. In our bankruptcy court filing, we noted that the Hahnemann closure marks what we believe to be the largest displacement of medical residents in a single event ever, even more than the number of residents displaced from Charity Hospital in New Orleans, Louisiana, after Hurricane Katrina. We urged the court to require the court-appointed patient care ombudsman, or any other interested party, to consider the educational and professional impact to residents of any proposed transaction.
Any transfer of Hahnemann residency slots to Tower Health or another health care system depends on a number of factors, including program accreditation by the ACGME. After Hahnemann agreed at the AAMC’s request to require potential bidders to disclose additional information, including the number of current and anticipated accredited programs, the judge approved the bid procedures.
For federal funding to transfer to a “receiving” hospital, residents must be employed and present at the closing of the “home” hospital on the day the home hospital closes. Because of this nuanced requirement by CMS, Hahnemann is trying to balance releasing residents with meeting the requirement that residents be at the institution on the day of closing. The AAMC is exploring whether CMS may be willing to make any exceptions to this requirement to ensure that there is minimal disruption in residents’ training. However, at the present time, the residents who leave with a federally funded residency slot must be present on the day of closure in order for funds to be transferable to the receiving hospital.
Those residents who are doing a transitional year at an institution other than Hahnemann and who matched with Hahnemann for residency starting July 1, 2020, do not have federal funding that will travel with them. These include residents in ophthalmology, anesthesiology, diagnostic radiology, and neurology who are not currently employed by Hahnemann or in a program at the time of closure. The NRMP® is granting an immediate waiver to these applicants to allow them to start looking for a residency slot outside The Match®. The AAMC has requested clarification from CMS and help in addressing this situation, but for now no CMS funding is available.
Residents who are training at Hahnemann under J-1 visas should contact the Educational Commission for Foreign Medical Graduates (ECFMG) for additional information. Residents and fellows training at Hahnemann under ECFMG J-1 visa sponsorship should contact their ECFMG case manager with any questions or concerns.
Philadelphia Academic Health System, which owns Hahnemann University Hospital, has postponed the timeline for the sale of the hospital. The auction will now take place on Aug. 7, with the sale hearing on Aug. 9. Hahnemann expects to close the sale on Sept. 6.
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