Rich investors may have let a hospital go bankrupt. Now, they could profit from the land

By Lydia DePillis, CNN Business
Updated 1917 GMT (0317 HKT) July 29, 2019

For decades, Hahnemann University Hospital served as the main safety-net hospital for downtown Philadelphia's neediest residents. But last week, it released its last patient. Within a month, the hospital's 2,572 staff will all have been laid off, and the doors will close, leaving a gaping hole in the city's ability to serve its poor — not to mention any victims of trauma, like shootings or car accidents.

"It's not safe. We're right here in the middle of everything. Jefferson [University Hospital] isn't that far, but for a life-threatening situation, minutes matter," said Maria Gutierrez, a Hahnemann oncology nurse who on Wednesday received a call from a manager saying all her shifts had been canceled. "That's why he wants the land."

The "he" Gutierrez was talking about is Joel Freedman, the California-based owner of the private equity-backed company that bought Hahnemann and its sister hospital St. Christopher's for $170 million in early 2018. About a month ago, the entity that owns the two hospitals filed for Chapter 11 bankruptcy protection, saying that although St. Christopher's was profitable, Hahnemann's financial situation was unsalvageable.

Not included in the filing: The entity that owns the entire city block's worth of land underneath the hospital, as well as a few associated medical office buildings and parking garages, which Freedman had split off from the operating businesses when he and his co-investors acquired them. The same central location that made Hahnemann valuable as a health care provider — spitting distance from City Hall and the convention center — also makes the site incredibly desirable for a high-end hotel or condominiums.

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