Committee Hearing, January 29, 2004

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - - Room 696, City Hall Philadelphia, Pennsylvania Thursday, January 29, 2004 1:35 p.m. - - - - RESOLUTION 040046 - Resolution authorizing the Committee on Commerce and Economic Development to hold hearings to investigate the proposed closure of Medical College of Pennsylvania (MCP) by Tenet Healtcare... PRESENT: COUNCILMAN W. WILSON GOODE, Chair COUNCILMAN MICAEL A. NUTTER, Vice Chair COUNCILWOMAN MARIAN TASCO COUNCILMAN DARRELL CLARKE COUNCILWOMAN DONNA REED MILLER COUNCILMAN FRANK RIZZO COUNCILMAN FRANK DICICCO COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN JUAN RAMOS - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 I N D E X RESOLUTION 040046 JOHN DAMZALSKI, Health Comm............ 28 MICHELE DAVIS, Health Planning Assesment 33 RICHARD CENTAFONT, Healthcare Improvement Foundation.......................... 39 HENRY NICHOLAS, Hospital Workers Union.. 95 GINNY HOLZWORTH, Registered Nurse...... 106 PHILLIP SCHAENGOLD, Tenet.............. 111 CAROL ROGERS, Health Dept.............. 144 STEPHEN KLASO, Drexel.................. 238 3 012904 - COMMERCE - RES. 040046

Good afternoon. Will everyone please take their seats? This is the public hearing of the Committee on Commerce and Economic Development on Resolution 040046. My name is W. Wilson Goode, Jr., I'm the Committee's Chair. I note that a quorum is present. To my right is Councilman Michael A. Nutter, Vice Chair of the Committee and primary sponsor of this resolution. Other Committee Members present include Frank DiCicco, Donna Reed Miller, Darrell L. Clarke, Blondell Reynolds Brown, Marian Tasco and Frank Rizzo. Also present are special guests from the state and federal level. We are honored by the presence of Senator Arlen Specter. We have a representative from the office of Chaka Fattah. We also expect him to join us. Senator Vincent Hughes is here from the State, and representatives from the offices of Tina Tartaglione and Allyson Schwartz. We are also joined by State Representative Jewell Williams, Ronald Waters, Marie Lederer, James Roebuck, Louise Bishop, Harold James, Kathy 4 012904 - COMMERCE - RES. 040046 Manderino, Rosita Youngblood, and Michael Horsey. At this time, I would ask the Clerk to please read the title of the resolution.

Resolution 040046, authorizing the Committee on Commerce and Economic Development to hold hearings to investigate the proposed closure of the Medical College of Pennsylvania by Tenet Healthcare Corporation and the devastating impact that such a closure would have on the patients and employees of MCP, the East Falls Community, and the City of Philadelphia; and further authorizing the Committee in furtherance of such investigation to issue subpoenas as may be necessary to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 2-401 of the Home Rule Charter.

At this time, before we have opening remarks from the primary sponsor of the resolution, we'll be honored to have comments from Senator Specter. SENATOR SPECTER: Thank you very 5 012904 - COMMERCE - RES. 040046 much, Mr. Chairman. I'm delighted to appear before this very distinguished Committee. It's a pleasure to be back in City Hall. I had spent a considerable amount of time in this prestigious City Hall when I served as District Attorney. It's good to come to the City Council Chambers. I was identifying the Chair where Councilwoman Joan Specter sat for years. And I commend the Committee for 12 holding this important hearing, and I commend 13 all those who are in attendance with a very 14 keen interest in what will be the future of 15 the Medical College of Pennsylvania, MCP. 16 I was alerted to the problem by Mr. Henry Nicholas in December and immediately contacted Drexel President Fapodakis who has responsibility for the medical school and called Secretary Thompson, the head of the United States Department of Health and Human Services, and then in early January, January 9th, convened a meeting in my office in Washington with representatives from the Department of Health and Human Services and 6 012904 - COMMERCE - RES. 040046 the Governor's Office and various levels of government and the officials from Tenet to see what might be doable. Ten days ago, Governor Rendell and I convened a meeting where we brought together area hospitals and, again, federal and state officials with the view to seeing what might be doable. There is a major problem to have MCP close in an area where they serve many who are in urgent need of medical care. The indigent rate there is something at the 42 percent level. The emergency room is of vital importance. The employment of doctors and nurses and healthcare deliverers is of vital importance. So we have been exploring a range of alternatives. Let me welcome my distinguished colleague, Congressman Chaka Fattah. Chaka, come sit next to me. There might be some questions and there might be some hard questions, so I'd like to have Congressman Chaka Fattah to join me. We are continuing to review whether there is any federal money available, whether 7 012904 - COMMERCE - RES. 040046 there might be some facility which would qualify in a little different dimension. I have conferred continuously with the Governor and, in fact, was on the telephone with him just a few moments ago. But we are determined to see that the people in the area continue to receive healthcare. Healthcare is indispensable. It is the number one necessity. Without health, a man or a woman or a boy or a girl are unable to perform their studies, their professions, any of their activities. At the federal level we are working to try to extend healthcare to the 40-plus million Americans who are now not covered. And when the issue arose as to Medical College of Pennsylvania, this is something that has to be handled. I don't want to raise expectations unduly, but I think it is important for the people of the City and the community and the region to know that there is great, great concern over these issues. I'd be glad to respond to questions. And as I always add to that, I'd be glad not 8 012904 - COMMERCE - RES. 040046 to respond to questions.

Thank you, senator. We are pleased to be joined by Congressman Chaka Fattah. We'll ask him if he has any opening remarks at this time. SENATOR SPECTER: I'm going to be asked to be excused at this time, if I may because you're in good hands. CONGRESSMAN FATTAH: As the Senator departs, let me thank the Senior Senator. His office has conducted and arranged some meetings related to this matter in Washington. He has kept my office and everyone else abreast and along with the Governor I think has weighed in quite heavily in this matter both with the Tenet Hospital organization and also looking at what the alternatives may be. And I have said publicly before that I think that it is of note that Tenet did not contact our Senior Senator before announcing their decision, did not contact the Senior Congressman from the City, myself, both of us who share a lot in common with the 9 012904 - COMMERCE - RES. 040046 neighborhood where MCP is located and did not contact any of us. I know Councilman, the Chair of the Advisory Committee, was not notified. So it wasn't a great effort, I think, to work this out without the need for a lot of public back-and-forth. So Tenet has made some decisions that I think are very unfortunate, not just with the closing, but with the way they decided to handle this. I think that Senator Hughes and Councilman Nutter and others who thought that it would be useful to have a public hearing, that this is an appropriate way for us to proceed. And I think that, at least for myself, we're proceeding down a number of tracks. One is, I fully support the latter part of what Senator Specter says, that there may be some other institution, alternative delivery of healthcare in that community in which there could be a major role for the federal government to play. And both the Senator and I are in a position, I think, to be of some help in that regard. In terms of Tenet, we'd like them to 10 012904 - COMMERCE - RES. 040046 review their decision even in light of their announcement to sell some now 27 of their hospitals, but to review their decision because they are part of a City in which they have responsibilities for a number of our healthcare institutions. And the pattern that's being created here with Tenet and the relationship is not a good one. And I know that the Governor who I've spoken to and others want to see whether there's some arrangement that can be worked out where Tenet can work along with us in ways that there would continue to be healthcare provided at that location, whether or not Tenet was the provider and owner of the facility or not. So I'll stop there. I know you've probably heard enough from the Senior Senator. And I would be glad to do whatever the Chairman would like at this moment.

Thank you, Congressman. Thank you for joining us. You may have a seat at any of these seats here. I note for the record that we've also been joined by Councilman Juan Ramos, 11 012904 - COMMERCE - RES. 040046 another member of the Committee. At this time, we will have opening remarks from the primary sponsor of this resolution, Councilman Nutter.

Thank you, Mr. Chairman. I'll be brief. Mr. Chairman, this is a tragic situation in our City and our region. The manner in which the proposed closure of MCP has been handled, both inappropriate and disrespectful. Tenet has been a friend in Philadelphia. And now they have broken a moral promise and commitment to, in their words, let the healing begin. Rather, they have caused great pain and hurt. I am personally disappointed in their behavior. And these hearings are designed to find out what happened, how it could happen, and what is going to happen. And so, Mr. Chairman I close my remarks by saying, let the hearings begin.

Thank you, Councilman. 12 012904 - COMMERCE - RES. 040046 Are there any opening remarks from Members of the Committee?

Thank you, Mr. Chairman. Today is a serious day, and we thank all of our State Representatives for coming, and if they couldn't come, sending a staff. We thank all the people who have come out this afternoon to hear this discussion about the closure of MCP. Along with the people in this room 13 who have decided to hear what's going on are some young people from my district. And I'd like to recognize them because these young ladies just heard there was a hearing. Didn't know about the content of the hearing because they finished their mid terms, they could have done a number of other things that young people do, go to the mall, go someplace, but they came down here. And then when they heard about the hearing, they said, "Oh, yes, it's about the hospital." So I'd like to give a shout out, as they asked me to do, and that is to Brittany 13 012904 - COMMERCE - RES. 040046 Washington, Hanna Wilder, and Nasia Taylor. They're all from the 9th Councilmanic district and they attend McDevitt High School. Would you young ladies please stand? Let's welcome them. (Applause.)

Thank you, Councilwoman. Are there any Members of the Committee who have opening remarks? The Chair recognizes Councilman Ramos.

Thank you, Mr. Chairman. This is my first Committee meeting as your new Councilman, and I hear that they're trying to close down my hospital. And I'm not happy about my hospital being closed. It is a very important issue. During the summer, I was approached by people in another part of town that their hospital was closing and, in fact, closed down; Parkview Hospital. That was also managed by the Tenet Corporation. And I am very much concerned about this corporation and 14 012904 - COMMERCE - RES. 040046 other corporations, medical corporations, closing hospitals in our neighborhoods affecting people that need medical attention more so than affluent people or people like ourselves here in City Council that get medical coverage that maybe can move around to other hospitals. There are people that are not as fortunate. I'm here to let you all know that I will join in this Committee and join colleagues here and Councilman Goode, the Chair, and Michael Nutter, your Councilman of the MCP area, in this very much needed public exposure to what's happening to healthcare in our City and in our neighborhoods. Thank you.

We also note for the record we've been joined by Council President Anna C. Verna. At this time, we will invite opening remarks from our special guests from the State, no particular order. I would ask that if you press the button before you, we will actually ask them to turn on all the mikes for those people who would like to speak and I 15 012904 - COMMERCE - RES. 040046 will just acknowledge you. The Chair recognizes Senator Hughes. SENATOR HUGHES: See, in Harrisburg, red means stop and green means go.

You're in City Council. SENATOR HUGHES: First of all, let me thank Councilman Nutter and Councilman Goode and the entire body of Council for unanimously passing of this resolution and affording this opportunity to hear very specifically about what happened, when it happened, why it happened, and probably most importantly, what we're going to do now that it has occurred. And I really want to thank the Chairs of this Committee and the maker of resolution for allowing all of the levels of government to step up and join in together to hear what is going on and what role we all can play in trying to resolve this problem. I think it probably is one of the unprecedented occasions in the City's history that we've all joined together at this level from our United States Senator to our United States 16 012904 - COMMERCE - RES. 040046 Congressmen all the way down to folks in State and here in City Council to work together. It's important, I think, because most importantly it sends a message to the folks who live in that area, the folks who live in that community both in the East Falls and Germantown and North Philly and the surrounding areas that we are serious about this and there is an opportunity and hope is available for them and that working together we can resolve this problem. We have some very serious investments at the state level that we've provided in this situation when Tenet stepped to the plate, I guess it was in 1998. And we've been investing heavily and we continue to investing. Some of you have some charts in front of you about some of the economic dollars that roll from the State into this economic situation. The most important thing, however, I think is the outcome: Making sure that there's a high quality healthcare delivery system located in that area, and what does 17 012904 - COMMERCE - RES. 040046 this portend for the rest of the City. Tenet is in a serious financial situation. The Congressman spoke specifically about them announcing their intention of closing 27 other hospitals all across the country. They own a number of other institutions here in this City. But larger than Tenet, what are we going to do about healthcare and what this means for healthcare in the City of Philadelphia in the future? So I want to thank you as the Senator who represents that area. In addition, we are joined by a representative from Senator Fumo's office whose constituency is directly adjacent in the 38th Ward to the facility up there. Thank you very much.

Thank you, Senator. The Chair recognizes Representative Williams. REPRESENTATIVE WILLIAMS: Thank you, Madam Chair. I represent the 197th Legislative 18 012904 - COMMERCE - RES. 040046 District which represent North Philadelphia, East Falls and Lower Germantown. And I sit here along with all the residents of the community which, in fact, this hospital closing, the impact, will be so devastating. I'm working along with my colleagues, along with the Governor and our Congressman and our U.S. Senator. Our major concern today is to find out what is the next step and where do we go from here. If Tenet wants to go, then let them go. In my opinion, we need to find some place, some company, some health facility, some health organization who's willing to step up and do the right thing and help the citizens of the City of Philadelphia and the Commonwealth of Pennsylvania. (Applause.) REPRESENTATIVE WILLIAMS: So, Mr. Chairman, I yield to your leadership in conducting this meeting in a manner that we know that the citizens will be satisfied. And I will steadfastly do what we have to for the Commonwealth of Pennsylvania. 19 012904 - COMMERCE - RES. 040046 Thank you.

Thank you, Representative. Representative Roebuck. REPRESENTATIVE ROEBUCK: Thank you, Mr. Chairman and the Members of the Committee. I want to commend you for this effort to look at what's happening with MCP. My interest is somewhat indirect in that I do represent Drexel University in Harrisburg. Drexel is a partner with Hahnemann and MCP. I recognized very clearly that when Drexel agreed to assume that role, they did it with clear incentives from the State, they did it with the urging both of the Governor the then Mayor, now Governor, of this State. There is a partnership there. And the State has put money into that partnership to ensure that MCP-Hahnemann, in fact, continue to function as a viable medical institution in this City. It's important to my constituents. It's important to constituents across the City that MCP be maintained. It's important both in terms of healthcare, but also it's an 20 012904 - COMMERCE - RES. 040046 educational institution. I do serve as the Democratic Chair of the House Education Committee, so anything that threatens the viability, not only of healthcare, but also of education institutions such as MCP-Hahnemann is of interest and of concern. I commend you again for convening this meeting, for bringing us all together to discuss this important issue. And I certainly look forward to seeking a solution that will indeed maintain that intuition for, not only for East Falls, but for the whole City. Thank you.

Thank you, Representative Roebuck. Representative Manderino. REPRESENTATIVE MANDERINO: Thank you, Mr. Chairman. I know we all want to get to testimony. I'll be very brief. I just want to acknowledge the fact that this packed City Council Chambers today is just a small part of the packed street we had last night on Henry Avenue in front of MCP for a candlelight 21 012904 - COMMERCE - RES. 040046 vigil in which a vast number of the members of the community turned out. (Applause.) REPRESENTATIVE MANDERINO: And so I want it to be clear that the crowd that is here today is representative of the tenfold crowd that we had last night and the care and concern that there is in the community of East Falls and broader Philadelphia. Thank you.

Thank you. The Chair recognizes Representative Bishop. REPRESENTATIVE

Thank you very much. I would certainly like to begin by saying thank you to all of you who had the wisdom to work with this resolution, put it in law, pass it. I want to thank those who have worked behind the scene to make sure today is happening. There was a lot of preliminary work that went forth. I say thanks to all of those. I'm delighted to be a part of this 22 012904 - COMMERCE - RES. 040046 hearing today. Anytime we have the legislative bodies that have come together from City Council to State to Federal Government, it tells us that there is a crisis in healthcare. Not only do I speak for the people who possibly in my district might have gone to MCP, but this is an issue that affects the entire City of Philadelphia. All of us are bound together by this issue and all of us want to see it resolved. So I'm not going to take a lot of time. I think we should get on with the hearings, find out just what has been done, what can be done, how we can resolve the issue, because across the City there is some concern. MCP today; but who tomorrow? What area tomorrow? So we must stop this today before it has an opportunity to affect other hospitals throughout the Commonwealth, throughout Philadelphia. Thank you. (Applause.)

Thank you Representative. 23 012904 - COMMERCE - RES. 040046 The Chair recognizes Representative Waters. REPRESENTATIVE WATERS: Thank you, Mr. Chair. Before I make any comments, I would first like to compliment you and all the Councilmembers on this beautiful Chambers. I know you went through some problems here and it was closed for a while, but it's really a delight to be here today to sit in this beautiful room and to be amongst so many people who are out front with this issue of trying to save the hospital; not necessarily to save the organization that ran it, but to save the hospital. One of the concerns that I have, which I heard through the grapevine and I'm not so much on top of this as some of you other members are, but I had seen one of the major pharmaceutical companies that I don't want to mention their name right now who came into the community and bought up mom-and-pop drug stores. And after they bought them up, they bought them up and closed them down. And 24 012904 - COMMERCE - RES. 040046 it caused a great inconvenience to the community. From what I understand, something like, something similar to that is happening right now to what Tenet is doing. They are closing some of the operations down that they have entered into, and that's only going to cause tremendous negative impact on the community. I'm from West Philadelphia, but I have a lot of family members who travel far to go to that hospital because of the quality of care that they have received there. And for that reason, as well as all the reasons as the other people here have stated, I want to see that hospital stay open. That's why I'm here today, to see what I can do to help support that effort. Thank you very much. (Applause.)

Thank you. The Chair recognizes Representative Lederer. REPRESENTATIVE LEDERER: Thank you for allowing me to express my views. 25 012904 - COMMERCE - RES. 040046 I know from personal experience the devastation caused by the closing of a local hospital. Neumann Medical Center in my district closed two years ago. It was the largest employer in the community. It was really the keystone of the Fishtown community. A great sadness accompanies the closing of a local hospital. Albert Einstein Medical Center in South Philadelphia in Councilman DiCicco's area closed and was replaced with a parking lot. This must not happen with the Medical College of Pennsylvania. Citizens of Philadelphia deserve not to be denied the services they desperately need. The Medical College of Pennsylvania, everyone here knows, has a celebrated history in the medical field. My district is also home to Thomas Jefferson University Hospital. And knowing firsthand the problems caused by hospital closings, we need to find a way to prevent the closing of major medical centers. And I stand with my colleagues to help to try to find a solution. 012904 - COMMERCE - RES. 040046 Thank you.

Thank you. (Applause.)

Are there any other representatives with opening remarks? The Chair recognizes Representative Youngblood. REPRESENTATIVE YOUNGBLOOD: I am very pleased to be here today, and I am glad the role Council is taking. I have several questions which I will ask later in regards to the Tenet network. We all work together as lawmakers to ensure that our constituency receives the best quality care. I'm just confused as to whether or not Tenet followed the notification law that we have in Pennsylvania where you have to notify the local municipality before you're going to have any closures and the effect that it would have on the citizenry. Was there any plan in place? Was City Council notified? Was the Mayor's Office notified? Or was the Commerce Department 27 012904 - COMMERCE - RES. 040046 notified? These are some of the concerns that I have because I am in walking distance to Tenet hospitals, especially MCP. A majority of the constituents in Southwest Germantown were either born there or utilize it. I think some of these questions can be answered at today's hearing and whether or not the hospital notification law was utilized. And if the local municipality, which would be the City of Philadelphia, the Commerce Department, and the Mayor were also notified of the closure of not only MCP, Parkview, Graduate, Osteopath and Elkins Park, because there are a string of hospitals that are with Tenet that all slated to be closed or have been closed. Thank you.

Thank you. (Applause.)

Thank you very much. Without any further ado, I will ask Councilman Nutter to introduce his first panel 28 012904 - COMMERCE - RES. 040046 of witnesses.

Thank you, Mr. Chairman. The first panel of witnesses will seek address issues related to the impact to the City's healthcare delivery system. They would be John Domzalski, Commissioner of Philadelphia Health Department; Michele Davis, Deputy Secretary of Pennsylvania Department of Health; and Richard Centafont, COO, Healthcare Improvement Foundation of the Delaware Valley Healthcare Council. Please state your name for the record and begin your testimony.

Good afternoon, Mr. Chairman and Members of the City Council Committee on Commerce and Economic Development, Congressman Fattah, representatives of the Pennsylvania Delegation, as well as Representatives of the Rendell Administration. My name is John Domzalski. I'm the Health Commissioner for the City of Philadelphia. When an event occurs such as this, 29 012904 - COMMERCE - RES. 040046 the closure of a hospital which has had the significance in a community such as MCP has had and has, it's a tremendously significant event for that community. The impact of that is made all the more significant when the communications have been handled in the disrespectful and otherwise unacceptable manner that an event such as the closure of this hospital was handled. Communications were not had with the community. They were not had with elected officials. They were not had with appointed officials. For an event that is as significant as this to the healthcare and to the lives of individuals, totally unacceptable. It's said that all healthcare is personal. And in that regard, I'd like to look a little bit about just the personal impact of the impending closure of this facility. This is a community of approximately 177,000 Philadelphians, 85 percent of whom are African-American and about 3 percent Hispanic and about 2 percent are 30 012904 - COMMERCE - RES. 040046 Southeast Asians. The community also has a significant number of individuals 65 and older. In addition to that, the population of individuals 75 years of age and older in this community is approximately 13,000 individuals. We're concerned at the City level in terms of a variety of care, the care that is delivered to that community in terms of numbers. There are approximately 47,000 outpatient visits to the outpatient facilities. There are approximately 15,000 emergency department visits; and of those, approximately 8,000 of those visits are for primary care, the kinds of care that people rely on every day and the people in that community have relied on consistently over generations. Planning has to be done if this closure is, in fact, to happen. Under the direction of the Mayor and the Managing Director, we in this Administration are trying to get our arms around the specifics of this, the impact in this community. Clearly, we are concerned about emergency services. Clearly, we're 31 012904 - COMMERCE - RES. 040046 concerned about the impact of the personal healthcare service other than emergency services that will result from this closure. In that regard we placed a demand on Tenet for a number of documents to facilitate our understanding of the specific impact of this. But as this event has pointed out, we cannot look at this in a vacuum. This cannot be a static analysis. It has to be a dynamic analysis, one that says, sure, what is the impact of the closure of MCP on the healthcare of individuals who are relying on that facility? But what is the impact of the healthcare system in the City of Philadelphia if yet another corporate decision should be made as precipitously as this one? So we need to look at this in a continuum. In that regard also, we need to -- there are certain services that without question, no hatter how this analysis comes out, there are going to need to be services that will continue to have to be delivered at that location; emergency services perhaps, specialty outpatient services, et cetera. But 32 012904 - COMMERCE - RES. 040046 all of these need to be determined as a result of comprehensive analysis. Also, clearly, since we have a problem, Tenet has got to be part of a solution. Tenet has got to be part of a solution in terms of arrangements for care. Tenet has got to be a part of the solution in terms of a better understanding and a better and a comprehensive study and understanding of the impact and specific impact of this closure. City Council this past fall caused a question to be placed on the ballot of the election of November 2003.

The question was whether or not the City ought to be charged -- the City Health Department in particular -- ought to be charged with the opportunity of developing a plan for providing universal healthcare for the citizens of the City of Philadelphia. The voters passed that by a margin of 2 to 1. That's a tall order, a tall order from the standpoint of all the factors that impact on the delivery of healthcare in 2003. And I think that while this is a very 33 012904 - COMMERCE - RES. 040046 negative occurrence in our community and should spur us forward in trying to understand in developing just what the healthcare needs of this City are, how the healthcare systems in the City impact on that, and how we all can work together to ensure that adequate healthcare is available to the citizens of Philadelphia when they need it and where they need it. Thank you for the opportunity to present this testimony.

Thank you, Commissioner. Ms. Davis.

Good afternoon, Councilman Goode, Councilman Nutter, other Councilmembers, Senator Hughes, Senator Specter, Congressman Fattah, other distinguished Members of the House, and invited guests. My name is Michele Davis and I serve as the Deputy Secretary for Health Planning and Assessment. I am responsible for, among other things, for overseeing the Department of Health's health planning 34 012904 - COMMERCE - RES. 040046 activities. I am here on behalf of Secretary of Health, Dr. Calvin Johnson, who regretfully is unable to attend this hearing due to a scheduling conflict involving the Governor. Senator Hughes, in response to your request that the Department of Health provide testimony, I will present information regarding the community impact, should the Medical College of Pennsylvania Hospital close. First, I want to thank you for the opportunity to provide this testimony on the announced closing of the Medical College of Pennsylvania Hospital. As with any announced closing of a healthcare facility, I can understand the concern that you and other members of this community have. Therefore, the Department of Health has examined the available data on MCP's healthcare services, and I offer the following insight into potential needs this community has and will face if MCP does close. Each year, hospitals are required to report data on utilization and services 35 012904 - COMMERCE - RES. 040046 provided to the Department of Health. For the period 2001-2002, the most recent year for which data are available, MCP Hospital reported that it provided 75,919 patient days of care. For example, one person in a hospital for hours is one patient day of 8 care. These services included medical 9 surgical care, intensive and cardiac care 10 services, and psychiatric in-patient services 11 including pedestrian psychiatry. Individuals 12 will have to access these in-patient services 13 elsewhere if MCP Hospital closes. 14 Likewise, for the same time period, 15 MCP Hospital reported 27,546 visits to its 16 emergency department. This total includes 17 visits requiring treatment for 18 life-threatening emergencies, urgent 19 conditions that could become emergencies if 20 left untreated for a length of time, and 21 primary care visits for persons who do not 22 have access to a primary care physician. 23 One indirect measure of system 24 capacity is the number of days during which hospitals divert patients from their emergency 36 012904 - COMMERCE - RES. 040046 departments. A hospital diverts patients for many reasons, including ED capacity and unavailability of beds. For the 2001-2002 time period, the Department's Office of Emergency Medical Services reports that on average Philadelphia hospitals were on divert status, that is not accepting patients in their emergency department, an average of 8 percent of the time, which is significant in this context. It is important to note that specific seasons may skew this average, such as the flu season which historically creates an increased demand on emergency departments. Therefore, those individuals who seek service from MCP emergency department would have to access services elsewhere in a system that is nearing capacity. The impact of MCP's closure would cascade beyond the healthcare delivery system itself and impact the vulnerable residents of the community, specifically the aging and racial, cultural, or linguistic minorities residing in the neighborhoods that the hospital serves as well as its low income 37 012904 - COMMERCE - RES. 040046 residents. These groups are documented to be more prone to experience an unequal burden disease. For example, percent of the 5 residents of the census track in which MCP 6 Hospital is located earned less than 200 7 percent of the federal poverty level, which 8 for a family of 4, is $36,800 according to the 9 2003 federal poverty income guidelines. 10 Fifteen percent of the residents in this 11 community are African-American, and 9 percent 12 are Latino.

Data from the Pennsylvania 13 Healthcare Cost Containment Council revealed 14 that for Fiscal Year 2001-2002, 47 percent of 15 MCP patient revenues were from Medicare and 25 16 percent from medical assistance. Specifically 17 during the same period, MCP reported that 10 18 percent of the care it provided was 19 uncompensated. 20 Perhaps even more telling are the 21 census tracks to the east, northeast, and 22 southeast of MCP Hospital that the federal 23 government has designated as health 24 professional shortage areas or medically 25 undeserved areas. These designations indicate 38 012904 - COMMERCE - RES. 040046 that access to health services, especially basic primary care health services, are challenging for many people who rely on MCP Hospital for care. A study done by the Philadelphia Health Management Corporation in 2000 reveals that percent of the residents 8 of this geographic area where MCP Hospital is 9 located have no regular source of medical care 10 and 9 percent have no health insurance. This 11 information suggests that a population of 12 vulnerable persons may have to search for hospital services elsewhere. In addition, when a community hospital closes, it can impact other aspects of the community in which it exists. Hospitals are major employers and closure results in the loss of jobs and economic stability to the area. In an era of shortages in the professional healthcare workforce, employment opportunities for health professionals are more available in a large City. It is the many dedicated individuals who make up the other services, the housekeepers, the cooks, the aides, clerical 39 012904 - COMMERCE - RES. 040046 workers, maintenance workers and others who are likely to suffer disproportionate impacts of a hospital closure. In other words, as a community evaluates the impact of a hospital closing, the community should consider the closing's impact in other areas in addition to the direct delivery of healthcare services. Again, I would like to thank you for the opportunity to provide testimony on the announced closing of MCP Hospital and the potential impact that such a decision may have on this Pennsylvania community.

Thank you, Secretary. Mr. Centafont.

My name is Richard Centafont, I am the Chief Operating Officer of the Healthcare Improvement Foundation.

Excuse me one second, Mr. Centafont. Please pull your mike closer to you. And also, anyone who has testified, if you have copies of your testimony, would you please give them to the Sergeant-at-Arms. 40 012904 - COMMERCE - RES. 040046 Please proceed.

My name is Richard Centafont, I am the Chief Operating Officer of the Healthcare Improvement Foundation of the Delaware Valley Healthcare Council, DVHC. I am providing this testimony on behalf of Andrew Wigglesworth, the President of DVHC who, due to business obligations, is out of town and could not be here today. The DVHC represents 150 hospitals, health systems and other health-related organizations in southeastern Pennsylvania, southern New Jersey and Delaware. We want to thank the City Council and the Committee on Commerce and Economic Development for the opportunity to provide our viewpoint about the impact of the closure of MCP and the factors affecting all hospitals in this region. Tenet's decision to close MCP Hospital has received a great deal of attention in the media as well as among public officials and in the East Falls community. The closure of such a historically significant hospital is a tremendous loss to this region. 41 012904 - COMMERCE - RES. 040046 What has happened with MCP is indicative of the negative systemic factors that have been affecting hospitals throughout the Delaware Valley. Since 1994, other hospitals in 6 Southeastern Pennsylvania have closed or 7 converted their facilities for other uses, 8 such as outpatient clinics, rehabilitation 9 centers, or long-term care facilities. While 10 the focus is currently on MCP, we believe it's 11 important to take a look at the underlying 12 issues that affect all hospitals and in no 13 small part prompted the decision to close MCP. Worsening financial conditions are affecting hospitals throughout this whole region. 36 percent. With that level of margin, hospitals find it more and more difficult to overcome the increasing obstacles to providing care in their communities. These obstacles include a rising number of uninsured 42 012904 - COMMERCE - RES. 040046 residents, insufficient reimbursement rates, the need for updated technology, continued skyrocketing medical liability costs, severe workforce shortages, and new disaster preparedness requirements that are costly to implement. All hospitals are committed to providing care to all who enter their doors, weather rich or poor, old or young, insured or uninsured. Philadelphia is the largest City in America without a public hospital system. Last year, uncompensated hospital care in the City of Philadelphia grew by percent, and 15 in the region approximately 17 percent, 16 compared to a statewide average increase of 17 approximately 12 percent. For our region, 18 this meant nearly a half billion dollars in 19 services to individuals who could not afford 20 to pay. And in Pennsylvania, the number of 21 uninsured individuals increased by 18 percent 22 over the past year to more than million. 23 Hospitals are the safety net for 24 anyone without health insurance seeking 25 treatment. But increasingly, neither 43 1 012904 - COMMERCE - RES. 040046 government nor the private sector wants to help finance this care. Hospitals are not the government. They cannot print money. When the resources are not there, they are forced to make difficult decisions about what services can be provided. Last year, we narrowly avoided a major fiscal and social disaster when the Governor and General Assembly acted to restore $133 million in Medicaid payments to hospitals in this region. In absence of that action, it is likely that this hearing today would have been the reduction of services and closure of other institutions as well as MCP. But even with that action, Medicaid only reimburses the typical hospital in Pennsylvania about 75 percent of its cost. It is difficult to understand how any organization, let alone a hospital, could continue to operate when it has to deliver such a large percentage of its service below cost. In addition, hospitals in this region are very vulnerable to changes in Medicare policy. For example, the Balanced 44 012904 - COMMERCE - RES.

040046 Budget Act of 1997 took more than a billion dollars out of this hospital region's finances. While recent Medicare reform legislation provided some payment fixes for hospitals, those improvements were more than offset by the loss of over $100 million in so-called Medicare outlier payments. The change in outlier payment policies fundamentally changes the financial posture of MCP. Moreover, we are very concerned that the skyrocketing deficits at the federal level are going to prompt another round of devastating budget cuts in Medicare after the election. Most hospitals in our region simply do not have the capacity to absorb another round of major cuts. Further complicating this picture is that the Philadelphia area has one of the lowest private insurance reimbursement rates in the country. In 1999, the average payment-to-cost ratio among private insurers in Pennsylvania was only 104 percent, the fourth lowest in the nation. This means, on average, a hospital 45 012904 - COMMERCE - RES. 040046 will barely break even on the care delivered to many privately insured patients. By way of comparison, the national average is around 115 percent. Only three states have lower ratios than Pennsylvania. In short, unlike their counterparts in many other parts of the country, hospitals in this region have little ability to cost shift to cover the cost associated with uninsured or government underpayments. There is no shortage of stories of physicians fleeing Pennsylvania and relocating to states with reasonable medical liability insurance rates. Over the past several years, more than 1500 doctors stopped practicing in Pennsylvania because Pennsylvania's liability average costs are way out of line with the rest of the country. Hospitals, however, can't move and are forced to absorb double and triple digit increases not only for their institution but increasingly for their physicians. In fact, we would face a major OB crisis in Pennsylvania if hospitals had not acted to employ physicians to ensure continued 46 012904 - COMMERCE - RES. 040046 services. As it is, it is nearly impossible to recruit a new physician to our area. This is a disturbing fact for a region that provides training to about percent of the 6 nation's doctors. 7 These are some of the key issues. 8 These issues are not new nor are they 9 necessarily unique to our region. But how 10 much more must the region's healthcare system 11 take before there is political will to act on 12 long-term solutions? For our region, inaction 13 poses a double threat: Continued access to 14 care that we all depend on, and the health of 15 the regional economy, which in no small part 16 is centered in life sciences. 17 Most immediately in MCP's case, 18 Tenet has stated publicly that it will 19 entertain any viable offer from qualified 20 willing purchasers. So far as DVHC knows, there is no purchaser interested in taking over MCP as an acute care hospital. We are pleased that Governor Rendell, Senator Specter, Councilman Nutter, State Legislators and other Members of the Philadelphia City 47 012904 - COMMERCE - RES. 040046 Council have become involved and are committed to finding a lasting solution to meet the healthcare needs of our community. Let's look at some of the immediate areas of impact. First, let's look at the access of healthcare. While we are fortunate to have a number of hospitals nearby to MCP to help meet the acute care needs of these residents, such as the Albert Einstein Medical Center and Temple University Hospital, it will be difficult not only because these and other hospitals throughout the region are unusually full right now but because these nearby hospitals have also been absorbing patients as a consequence of the diminished service availability at MCP since their nursing strike began last fall. We need also to look at ways to more equitably finance the subsequent redistribution of uncompensated care.

The closure of MCP will shift as much as $17 million in uncompensated care to other institutions, according to the Healthcare Cost Containment Council's latest data. 48 012904 - COMMERCE - RES. 040046 Equally important, we believe that there is a need to have a concerted effort to enhance the availability of primary care services in this community. While there are two district health centers and several federally qualified health centers in the area, the data suggests that the closure of MCP will leave a void in primary care services that should be filled. Secondly, let's discuss the jobs. There is a severe healthcare workforce shortage in the Delaware Valley, and we fully expect that those people with clinical skills will be hired by other Tenet hospitals or other hospitals throughout the region. For example, last month there were 1400 vacant nursing positions in this region alone. There may be less opportunity, however, for housekeeping, maintenance, food service workers, and others that we need to have a concerted effort to help those individuals in the transition period. Unfortunately, an unintended consequence of the legal issue surrounding this situation has barred us from 49 012904 - COMMERCE - RES. 040046 doing a detailed assessment of the employees' skills of potential retaining needs. When these legal issues are resolved and if MCP proceeds to close, the State Rapid Response Team DVHC, and the Life Science Career Alliance will work in a coordinated fashion with all involved parties to provide transition assistance to all these folks. Finally, what is the impact in the surrounding neighborhood in addition to the access to healthcare? We know that every dollar spent in the hospital turns over two or three times in a local economy, and every job loss in a hospital generally results in a loss of jobs elsewhere in the community. Consequently, the loss of MCP will reverberate outside its walls and impact businesses ranging from vendors, the flower shops, the dry cleaners, et cetera. All of us need to look at alternative uses for the MCP site. While we know there are continued efforts by some to keep MCP open under another owner, we also need to use this period of time between now and March 31st to develop a 50 012904 - COMMERCE - RES. 040046 comprehensive plan for what happens if that effort fails. In this context, we would urge the City and State to engage a consultant to develop a comprehensive plan that looks at the need for primary care, uncompensated care, and alternative uses for the City. We believe that this effort needs to be coordinated and not piecemeal. As such, DVHC will offer itself as a facilitator for these coordinating efforts. In summary, the long-term care issues of this community are vital to all of us. As opposed to waiting for the next crisis to occur, we need to create a strategic game plan now for our region as it relates to our healthcare system and work together with Harrisburg and Washington to address these systemic needs. Thank you.

Thank you, Mr. Centafont. Councilwoman Tasco has a question.

My questions are for Commissioner Domzalski. 51 012904 - COMMERCE - RES. 040046

Good afternoon, Councilwoman.

Good afternoon, Commissioner. When were you informed that Tenet was going to close?

I read about it in the Inquirer.

So do they come under the City's requirement to notify us when a business intends to close, where we have to have a 60-day time period of notification?

I think that there are some employment economic development notification issues that apply. I defer to counsel on those laws. But on an issue of this significance of impact to the community, just overall carefulness and decorum would indicate that there be prior notification.

Mr. Domzalski, you know, as Charter mandates the City to provide for the health and welfare of its citizens and our Health Department is the arm of the government that is to provide this 52 012904 - COMMERCE - RES. 040046 service and, you know, we did, as you mentioned earlier, pass a Charter change to provide that we come up with a healthcare plan that would look out for the health and welfare of our citizens. At this point -- we will further discuss this during budget hearings -- where is the Health Department in coming up with the overall plan for providing health services, universal health services to our citizens?

We're actually in the process now of understanding just what our demographics look like, and they pretty much change every month, as Mr. Centafont indicated, in terms of the number of uninsured having gone up percent in the last year in 18 Pennsylvania. We know in our health centers, for example, that of the hundred thousand -- about 105,000 individuals rely on the City's health centers for care, 60 percent of those individuals have no insurance. So we're taking that into consideration. We're also talking to various 53 012904 - COMMERCE - RES. 040046 individuals within the healthcare organizations in Philadelphia, Delaware Valley Hospital Council, et cetera, to look at the kinds of things both from an economic standpoint as well as a service standpoint that would be major components of such a plan. Overarchingly, we need to know and understand that local governments do not influence directly national policies around Medicare, national policies around Medicaid, because they are federal as well as state contributing functions. So one of the reasons I think that you see that every candidate for the upcoming presidential election has healthcare on the agenda is just this has risen to such a significance across the country. And we looked at the fact that not only is the uninsured, those who don't qualify for publicly supported insurance, but increasingly what we're seeing are a contraction, a reduction in employment-based insurance, either with higher --

Mr. Domzalski, 54 012904 - COMMERCE - RES. 040046 thank you, but what I really want to know is what are we as a City, what is our Health Department doing? Are we working? What collaboration do you have with the local hospitals? We just read -- Councilman Nutter has an article from the business section that shows that St. Agnes and Methodist have come to an agreement on how to prevent each of them closing. What is the City doing working with these hospitals to address some of the problems that they have? What are we doing to help them to stay open? And what are we doing to dialog with them about the whole responsibility we have to maintain health for our citizens? That is the issue. What is the City's role in addressing these issues? And are you in dialog with the various hospitals about some of the problems that they are facing on an ongoing basis?

One of the issues impacting healthcare economics, of course, is 55 012904 - COMMERCE - RES. 040046 financing. And we are not in, as a local government, a position to finance local healthcare. We do this for the uninsured and we do this for those individuals who elect our health centers for care. So if we weren't seeing the uninsured, about 60 percent, 60,000 individuals in our health centers, they would be elsewhere in the healthcare centers. So we are making that contribution both for primary care and specialty care. Planning, we are doing that. This plan is due to City Council to be reported on November 3, 2004. We have every expectation we will meet that deadline.

Thank you very much.

The Chair recognizes Councilwoman Reynolds Brown for a follow-up question.

Thank you, Mr. Chairman. Good afternoon, gentlemen. We learned in the early testimony that elected officials were not alerted and 56 012904 - COMMERCE - RES. 040046 notified or there was no dialog with regard to the closure of Tenet. And we now learn that Philadelphia Health Department was not notified either. I'm curious to know from the gentleman that represents 150 hospitals, Mr. Centafont, at what juncture were you aware that Tenet was closing?

To be honest with you, I'm not sure when Tenet was in contact with Mr. Wigglesworth.

I did not hear your answer.

I'm sorry. I'm not aware of the time frame of when Tenet spoke to Mr. Wigglesworth about that issue.

We've learned that Temple and Einstein are the hospitals closest to Tenet. Has there been any conversation about how the elderly and those who are sick remaining in the hospital will ultimately be transitioned to Temple and/or Einstein? Has there been any conversation or dialog? 57 012904 - COMMERCE - RES. 040046

Actually, there has been ongoing conversation since the announcement with the hospitals in that region on figuring out ways to improve capacity and to meet the needs of those individuals who may now be coming to their facilities.

And the status of this at this juncture?

It's ongoing, as these proceedings are ongoing.

So you simply can't answer that yet, whether those hospitals have the capacity? In Ms. Davis' testimony, she mentioned that there's 75,000 patient days and 25,000 emergency room visits. So at this point, we just don't know if those hospitals have the capacity to take on those needs?

That's correct.

Thank you for your testimony.

The Chair recognizes Councilman Rizzo for a follow-up question. 58 012904 - COMMERCE - RES. 040046

Thank you, Mr. Chairman. Councilwoman Tasco made, I think, a very good point. We're being critical about the notification process of Tenet not notifying elected and appointed officials and other organizations. But don't you think we have some responsibility to monitor the situation? Didn't we see this coming? I remember a few years ago -- maybe you can refresh my memory -- when Temple was announcing the fact that the trauma center, accident ward, whatever it's referred to, that they were going to close. But don't we have a process in place? Do we know if we have any other troubled facilities in Philadelphia that could be in the same situation? Because even though we're being critical, I think we have to examine our own process here. We should really have been watching the ball, and I don't think our eye was on the ball. Knowing that this institution was in financial trouble, we should have anticipated something had to happen. 59 012904 - COMMERCE - RES. 040046 What are we doing to look at all -- we look at the Jeff, we look at Hahnemann, we say, "Oh, they're never going to close," but do we know that that in fact our speculation that everything's honkey dory and it may not be.

Well, we don't know.

Well, why?

Clearly in this case, we did not. In terms of -- I think we have to look at the way hospitals are regulated. For example, part of Councilwoman Reynolds Brown's question about other plans and can the other hospitals absorb, I think those things become clearer when Tenet meets its obligation to the regulatory body in regard to hospitals in this Commonwealth, which is the State Health Department which has oversight and regulatory responsibility for hospitals. It's not a local effort. I think we're going to look closely at that as to how we exchange information better. But part of that plan that's required is to identify just if that 60 012904 - COMMERCE - RES. 040046 institution closes, what happens to those patients that rely on it for care? What happens to the medical records? There will be many individuals in those situations where you won't be able to just give them an appointment to an alternative source of care, they're going to need some case management, et cetera. So I think from a number of standpoints, this points up some issues where we need to look at in terms of our planning.

Commissioner, did it surprise you as the City's Health Commissioner when you read in the Inquirer that Medical College of Pennsylvania was going to close their doors? It's been no secret that that has been a very costly operation. I'm not defending them. I'm just trying to ask the question. Did anybody or did anyone in the Administration at the State or City level anticipate this closure?

In all honesty, I will tell you Councilman, yes, we were 61 012904 - COMMERCE - RES. 040046 surprised. And I will tell you, part of the reason for that -- I don't know whether my recollection is accurate or faulty on this, but I can recall in that same news outlet reading in August, I think, where some Tenet officials were quoted as saying they're going to have a tough year but after that year, everything's going to be fine, "We're going to be on stable ground, it's going to be okay." Now, I may be wrong on that. I may be wrong. I may not have read that, but I have to go back and look at that. But I sort of distinctly reading that.

Could you just finish up with a few years ago, and again, correct me if I'm wrong, it was Temple that was talking about closing their trauma unit. I remember that there was some activity in here, conversation about Temple Hospital doing something about reducing services. Wasn't there an issue involving Temple, either the emergency room or they were diverting patients or they were talking about closing? Are they healthy? What Councilwoman 62 012904 - COMMERCE - RES. 040046 Brown says, that that's the next logical place to go for emergency services, especially emergency service because I know Medical College of Pennsylvania was the primary care facility for terrible, violent accidents that occur out on the expressway and the Route 1 Extension. Could you refresh my memory about what went on with Temple? Was that going to close? Because I remember there was doctors and lobbyists running around here talking about that in conversations. Was it Temple that was talking about closing their accident ward or trauma center? And is it healthy, if in fact my recollection is correct?

That's not in my recollection. Do you have, Mr. Centafont, any recollection of that?

Actually, Temple has for a number of years been on the cusp, if you would. And they go through this almost annually. They are able to somehow get subsidies from the State on occasion because 63 012904 - COMMERCE - RES. 040046 of the university attached to them. But Temple is not in any better financial condition than any other hospital in this region.

So this could put them in a situation where if the patients that are being diverted don't have the ability to pay, this could put Temple in possibly even a worse situation where they could be closing?

As I mentioned, a majority of the hospitals in this region are losing money on operations. With the average margin of only .36 percent, there's $17 million of uncompensated care that will spread around when MCP closes to those other hospitals. So those hospitals will have to absorb that $17 million deficit.

So my recollection is correct, that Temple did have an announcement or there was a suggestion that they were going to close the trauma center?

That's correct.

It was a few years ago. 64 012904 - COMMERCE - RES. 040046 Thank you, Mr. Chairman.

The Chair recognizes Councilman DiCicco.

Thank you, Mr. Chair. Not to divert from the discussion about MCP, but I would like the record to be correct. Councilwoman Tasco referenced an article in today's newspaper about the agreement between --

I just saw the headline.

But you referenced somehow, and I just want to make the record clear that there is no agreement for the merger between Jefferson and Methodist Hospital. It is a proposal that Mercy Healthcare System who runs the St. Agnes facility has put on the table. My guess is that this is the first step in the attempt or ultimate decision that they will make in a year or so to literally close down St. Agnes because St. Agnes Hospital, as we know it today, if this merger 65 012904 - COMMERCE - RES. 040046 does take effect, will become a non-acute healthcare facility, which basically in my opinion means that this is the beginning of the end for St. Agnes. So I suspect that this Committee and a number of the people in this room who are here today will probably be back in this room in the not too distant future to talk about the same problems at St. Agnes Hospital in South Philadelphia as well. Thank you.

The Chair recognizes Councilman Nutter, to be followed by Councilman Clarke.

Thank you, Mr. Chairman. Commissioner Domzalski, I have one question and then I have a concern based on some of the responses from earlier. Tell me to date what meetings or conversations have taken place since the announcement on December 18, 2003, between the City and Tenet with regard to the proposed closure of MCP.

Well, I participated 66 012904 - COMMERCE - RES. 040046 in one meeting that was a City meeting.

Can you bring that mike a little closer, please?

I participated in one meeting which was a City meeting that occurred with Managing Director and myself and Mr. Schaengold and Teresa Huskey from Tenet.

So you're saying that the first meeting was yesterday?

Yes.

Well, I understand your surprise --

Councilman, if I may. There were some telephone meetings that we participated in with the Governor. I'm referring to meetings specifically with the City Administration.

Well, if you're talking about the conference calls or meetings that you and I have participated in, I understand that. That was not my question. My question is specific to the City and Tenet from Thursday, December 18, 2003, engage in any meetings or discussions in response to the 67 012904 - COMMERCE - RES. 040046 newspaper announcement that MCP was proposed to close. What has happened for the last month and days? 5

We've met with Tenet 6 yesterday. 7

Okay. 8 With regard to the questions that 9 were asked earlier by some of my colleagues, 10 some of us, I think -- and I'm certainly not going to speak for my colleagues, but there seems to be a bit of a disconnect to some extent between the City and probably the two most pertinent agencies would be the Health Department and the Commerce Department and in some relationship with the gentleman next to you and Mr. Wigglesworth over at the Delaware Valley Healthcare Council. If we can be so surprised by proposed closure announcements in our healthcare industry, which I think is a major industry in the City of Philadelphia -- the City is blessed to have so many different healthcare providers -- what system is in place that allows us to maintain a certain sense of pulse, if you will, with our various 68 012904 - COMMERCE - RES. 040046 healthcare institutions? And what are we doing, similar to what we do in the rest of the business community, to make sure that people are either healthy, they're allowed to operate and function and provide either City, State, or federal resources to help these vitally important entities in our City? What's the game plan?

Well, clearly, as we talked, the City Health Department does not have a system. But when we're talking about MCP situation, there was a system in place where there was evidently some conversation going on with the boards and community oversight boards and governing boards and those kinds of things, and we never got a call from any of those individuals.

Are you aware of specific meetings that took place related to the closure?

No, all we understand is that these were structures that were set up and some individuals were Chair of those meetings, of those groups. We never got 69 012904 - COMMERCE - RES. 040046 a call from any of those individuals either that, "Hey, listen, there's a problem here."

So our system is to rely on community boards and advisory entities to tell the City of Philadelphia what's going on in the healthcare community?

No, sir, I'm not saying that. I'm saying that the Department of Public Health does not have regulatory responsibility for the hospital industry. It does not. It has regulatory responsibility for public health issues. In this particular instance --

The City of Philadelphia doesn't have responsibility for food service in Philadelphia, but we were absolutely positively directly involved in trying to make sure that ARA stayed in Philadelphia and provided incentives from both the City and State to make sure they stayed here. And we don't have regulatory authority over food service either.

Councilman, I understand that and I respect that. I'm the 70 012904 - COMMERCE - RES. 040046 Public Health Commissioner. We have responsibility for the regulation of the retail food industry and we discharged that responsibility. We do not have responsibility for oversight of the business practices of various facilities, institutions, and corporations.

Okay.

I will defer to Congressman Fattah. CONGRESSMAN FATTAH: Thank you. I just want to say a couple things. One is that I think that the two witnesses would agree that the City has a shortage of hospital beds at this time; is that correct?

I think it depends on the calculation.

I agree. CONGRESSMAN FATTAH: Well, can you supply us with the varying calculations on that question?

I think Mr. Centafont can do that. 71 012904 - COMMERCE - RES. 040046 CONGRESSMAN FATTAH: Just send it to us so we can look at it. I think that the back and forth has probably got some utility, but at least for myself, and I think I speak for the Governor and for Senator Specter, we'd like to see a healthcare facility, a comprehensive healthcare facility stay at that location. As for Tenet, I have no interest in them staying at all. (Applause.) CONGRESSMAN FATTAH: I don't want to get into a side track about meetings with them and not -- I have not met with Tenet at all. Because I've had earlier conversations with them, and I am extraordinarily disappointed in the fact that they would not contact any of the people who represent the City, whether it be the Mayor or the Governor or myself or others, Senator Specter, who are uniquely situated to be of help. Most of the time when you have businesses who want to stay in Philadelphia, they say, "Look, we're having a problem. This is what our problem is. And 72 012904 - COMMERCE - RES. 040046 can you help us?" And the Council has abated taxes for decades so that businesses don't have to pay taxes in order to stay. They've done other things to be helpful. Those of us at the federal and state level have found tens of millions of dollars to help people to stay. If Tenet wanted to stay, they would have come forward, said they had a problem, met with the appropriate people. And if the problem could have been resolved in a manner in which they could have stayed, then that's how we would have proceeded. It is clear that since they didn't put the -- the way that they handled this is that for their own business reasons, they decided that they had no need to operate in a respectful way to the citizens of Philadelphia even though they were welcomed here in terms of purchasing this entire group of hospitals. The other thing is, the gentleman who speaking on behalf of the hospital association and this foundation says, well, these hospital operate in a tough margin. 73 012904 - COMMERCE - RES. 040046 Hospitals across the country operate in a tough margin. Hospitals that are involved in education activities always operate at a very tough margin. And the suggestion that was raised earlier that Temple's getting ready to close. I just want to be clear. I spent a long time on the Temple Board and spent years looking 10 and working related to the hospital. There's never been a year in which there hasn't been millions of dollars of un-reimbursed care. But I don't want anyone to leave this room 14 thinking that Temple's getting ready to close its hospital; it's not. And people who are involved in educational activities, that is, training doctors, you need to have a hospital. MCP is a medical college which is involved in training doctors. And these hospitals have never been involved in a bottom line calculation that Tenet is involved in, which is a for-profit business. And they've just made a decision for their own business reasons that they don't have to have any reasonable discussion with people here; they're going to 74 012904 - COMMERCE - RES. 040046 do what they need to do. And I think that's fine. They made that decision, and we should treat them accordingly. At least for myself, that's how I'm going to treat them. Because if they think as a major corporation in this country that that's how they should conduct their affairs, I think that it deserves the same level of respect that they've decided to show us. (Applause.)

Thank you, Councilman. You are here representing the Administration?

I am.

You did not decide to come here on your own, you were sent here to represent the Administration?

I was notified yesterday morning of this hearing and told by Councilman Nutter that they would appreciate my being here. We discussed it, and the Managing Director decided, yes, I would appear this afternoon and give testimony on this 75 012904 - COMMERCE - RES. 040046 issue.

And you are aware that this hearing is being held in the Committee of Commerce and Economic development?

I am.

You stated on the record that your first meeting with Tenet was yesterday, and before that you had a conference call with the Governor. Who initiated that conversation?

Which one, Councilman?

The conference call with the Governor.

The Governor.

So what did the Administration or your department do proactively?

Our Law Department is looking at the agreements that were executed when Tenet came in, looking at those issues to see whether or not this action in any way violates those agreements. That 76 012904 - COMMERCE - RES. 040046 inquiry is ongoing. We participated in additional telephone conversations and some in-person meetings with Councilman Nutter and the Governor. In fairness to --

So you have examined this in its context as an economic development issue and how Tenet was treated in the past?

Those are things that are under consideration by the Law Department.

What was the nature of your conversation with the Governor?

I'm sorry.

What was the nature of your conversation with the Governor?

Well, just what the situation was. And I don't think I want to go into a great deal of detail about that inasmuch as our whole situation in terms of the legal strategy is still being developed.

Beyond the legal strategy, I guess my question is, were you part of a conference call that was treating 77 012904 - COMMERCE - RES. 040046 this as a health issue, as an economic development issue, or as both?

Essentially, we're treating it as the impact of healthcare delivery in that community. And, of course, anytime you've got a facility that's got a thousand employees who's going to close, everybody understands that there's an economic ripple impact of that, and clearly that was on everyone's mind.

Beyond legal and health issues, how is the Administration treating this as an economic development issue?

As an economic development issue?

Beyond legal and health issues, how is the Administration treating this as an economic development issue? In other words, is there some other proposed bail-out or treatment of this issue as a business issue?

Not that I know of. 78 012904 - COMMERCE - RES. 040046 I don't know.

The Chair recognizes Councilman Nutter.

I'm finished, Mr. Chairman, with these particular witnesses. I do want to state for the record -- I know there's been discussion or concern about who was notified when. I do need to at least state for the record that of all of the various officials, I was notified with a significant amount of lead time, probably about 8 to 10 hours on Wednesday, December 17, 2003, after the financial markets closed at about 5:15, 5:30. I was visited by representatives from Tenet to tell me that the next morning at 5:30 a.m. Pacific time the announcement would be made. They laid out what the issue was; that was the notice. So I actually had a preview of what the next day's Inquirer would be, but it was about 8 to 10 hours. So, one, I want to put that on the record. Second, Mr. Chairman, if it's okay with you, there are two individuals that we 79 012904 - COMMERCE - RES. 040046 definitely need to recognize. If we did already, I apologize. But Ralph Winder, Ward Leader of the 38th Ward; and Lou Agre of the 21st Ward have played a tremendous role in all of the activities here. I don't have anything further for the witnesses, but I would again like to strongly encourage through the Health Commissioner -- I understand the Managing Director may be here -- there is a serious need for greater coordination within the City government looking at the overall picture of healthcare here in Philadelphia. While the Department may not be charged either by code or by the Philadelphia Charter to pay attention to these issues or by statute to regulate these industries, they are so large and so impactful to this City that I think we have an obligation to the citizens of this City to pay closer attention and develop a coordinated plan on how we're going to deal with ongoing healthcare issues. This is not the end of this situation; it is merely the continuation of a cascade that is happening 80 012904 - COMMERCE - RES. 040046 not only in Philadelphia but across the country. I'd rather we be prepared for it, have a sense of what's going on, than a continuation of hearings examining the body of something that may be in a fatal condition.

I think that's the sense of everyone, particularly when we have situations in place where we might have known.

Thank you, Mr. Chairman.

The Chair recognizes Councilman Rizzo for a very quick follow-up question.

Commissioner, I want to follow-up for the record, because apparently there's some confusion here. When I asked a question about Temple Hospital or at minimum the trauma center or the accident ward -- I'm not sure how they refer to it there. You suggested that you weren't aware of any situation that involved Temple suggesting that they were under the gun and planning to close that facility, whether it be the whole hospital or just the emergency 81 012904 - COMMERCE - RES. 040046 operation there. I believe it was limited to emergency operation.

That's correct. That's what I said.

But I believe you suggested that there wasn't a problem.

No, I said I was not aware of one. I was not aware that there was a problem and I deferred to Mr. Centafont. He may have known something about it from an economic standpoint.

My point being, you said you were not aware that Temple had an issue a few years back.

That's correct. Quite frankly, I'm speaking right now as John Domzalski, the Health Commissioner. The Health Commissioner at that time may have been aware of it. It just may not have been in my responsibilities at that time.

I'm not sure how long ago it was. But for the record, Mr. Centafont, would you please be real clear on how significant an issue it was with Temple at 82 012904 - COMMERCE - RES. 040046 that time and when it may have been? Because I know that I had visits from doctors here in this building looking for funding. They indicated that if they didn't get the funding, the place was going to close. Now, can you go, for the record, in one minute just tell us exactly what the situation was, if you know? Apparently, you do know.

Actually, Councilman Rizzo, I know there was an issue. It was, as the Commissioner says, it was a different life for me also. I mean, it was on the periphery. Mr. Wigglesworth, I'm sure, could give you a better answer on that. And I will give him the question, if you'd like, to get back to you.

I would like that.

I will have Andrew call you.

Well, I'd like it for the record. I'd like to have the answer during the hearing process, if you could. I 83 012904 - COMMERCE - RES. 040046 think Wigglesworth is here, isn't he?

No, he's out of town today.

Okay. I would like the answer to that question forwarded to the Chair, for the record.

That's fine.

Thank you, Mr. Chairman.

Thank you, Councilman.

Can I be excused?

Not quite yet. We have three or four more panels, at least 15 more witnesses. I would like to move forward, but Councilman Clarke has been waiting for a while, and Councilwoman Reynolds Brown also has a follow-up question.

Thank you, Mr. Chairman. Good evening, gentlemen. I have a lot of personal relationships with Medical College, representing the district adjacent to the facility. 84 012904 - COMMERCE - RES. 040046 Councilman Nutter, you appreciate that my first visit to Medical College was when I was playing football for Edison at the old Edison Football Field at 29th and Chalmers. A 300-pound lineman blindsided me, and I found myself in the Medical College of Philadelphia. And I had the unfortunate occasion to witness my father's death in Medical College, and since then as a Councilperson, as a ward leader, visited numerous individuals that I've represented at that facility. So I know of its importance to that community, in adjacent communities. So what I'd like to do is ask you a question of a different light. And you may not be able to directly answer this, some of the specifics of the question. First of all, it's my understanding the healthcare field is probably the growth industry locally because of the numerous facilities that we have and maybe nationally, and I've heard that reference and I understand there are cutbacks as it relates to specific hospitals in specific locations, but the 85 012904 - COMMERCE - RES. 040046 industry itself to some degree, the biomedical field is probably one of the growth industries we hope and we anticipate. And I understand, correct me if I'm wrong, are probably some of the higher paying positions as it relates to categorizing the various fields throughout the nation. Am I correct in assuming that?

I think in the hospital industry, you've got positions that are very appropriately compensated at the upper end of the pay scale, but there are also a large number of individuals who do not make large salaries who provide very critical services to patient care and in support of patient care across the system, so everyone who works in a hospital is not handsomely paid.

Would you say generally if you average out the compensation for the employees in a hospital will probably average above a department store or some other type of retail operation.

I don't have the pay scales that well in mind, Councilman. I don't 86 012904 - COMMERCE - RES. 040046 know.

The reason I asked that, while we continue to look at the impact as it relates to the ability to provide the appropriate healthcare -- that is, as far as I'm concerned, primary -- there is a certain economic impact on the City if this facility is allowed to closed. And I've seen too many instances where people have decent-paying jobs. The job after that job tends to be at a lower pay scale, one, because the person is overqualified for a specific job and they end up taking a job in retail or some lesser-paying job. I'm wondering has the City or will we look at the economic analysis as it relates to the potential loss of jobs? And I think we sometimes need to look at that when there's the analysis to determine if there's any resources put on the table from any government entity, be it the federal, state, or local level. As was indicated earlier, I think Councilman Nutter talked about certain facilities threatening to leave. Right now 87 012904 - COMMERCE - RES. 040046 we're being threatened by a number of facilities in Center City. Our friends over in Camden are throwing all types of money on the table. And as we move forward in this particular debate, I'm wondering do we have or can we have an analysis of the jobs categorized, the salaries associated with the jobs, the wage tax associated with the jobs as it relates to the peripheral impact. I'm sure that those people that work at that facility possibly shop in the immediate area. I know on Henry Avenue, they probably run up to D'Allasadro's or Chubby's and get one of these healthy cheese steaks on a consistent basis. Could you pull together that information for us?

Well, I can certainly take that back to the Commerce Department and the job retention and development folks over there. But, you know, I think your concern is well taken, that people who are going to be the most challenging to place in the system are those individuals who provide critically important 88 012904 - COMMERCE - RES. 040046 care, critically important care, to support of an institution such as the dietary and housekeeping. These are individuals -- I think your concern is well taken there, because, quite frankly, we know we have a nursing shortage across the region and we can always place physicians because we need their services so desperately. The other folks at the other end really need some attention.

I'm extremely concerned about that, the impact of that. And I just wanted to say for the record that as the Councilperson adjacent to this particular facility, I remain committed to support not only Councilman Nutter as the District Councilperson but all the local elected officials who represent that area have had some -- I hate to use the term "behind the scenes," but they were, in fact, behind-the-scenes conversations with individuals. And at the appropriate time, we will look at some possibilities in terms of providing some support. So I just want to give that commitment here publically today. 89 012904 - COMMERCE - RES. 040046 And if you can get that information as soon as possible, it will be very helpful.

Yes, sir.

Thank you, Mr. Chairman.

Thank you, Councilman. The Chair recognizes Councilwoman Reynolds Brown.

Mr. Chair, I do have a meeting, sir, that I'm certainly urgently needed at and I'm wondering if I may be excused.

We would not like to excuse you. I noticed that the Managing Director was here. Is he still in the room? If he is not, then you need to be relieved by someone, sir.

I'm sorry.

I noticed that the Managing Director was in the room at some point. We would not like to excuse you. If you do leave, you need to be relieved by someone else from the Administration. 90 012904 - COMMERCE - RES. 040046

If you can excuse me a second, Chairman, I'll try to make that arrangement.

Absolutely.

Thank you.

Councilwoman.

Follow-up to an earlier question regarding the awareness of the closing and how so many of the stakeholders were caught flatfooted and surprised. I have a question around what I call SOP, standard operating procedure. Given the mission of the organization you represent, is there some procedural step where hospitals that want to close bring it to this body, given your mission to at least alert those around the table so that some proactive measures, if possible, can be put in play?

It's been my experience there that the CEOs of the hospitals are in contact with our organization, and they do give us a notification of when something happens. In this particular case, I'm not sure when that 91 012904 - COMMERCE - RES. 040046 occurred. SENATOR HUGHES: What is the procedure --

I yield.

The Chair recognizes Senator Hughes. SENATOR HUGHES: I apologize. We just yell all around in Harrisburg. The question that I have -- and Commissioner Domzalski was involved in a number of conference calls that I was involved in. I think I called him the Tuesday or Wednesday before Christmas, and we had conference calls right around New Year or something like that. But the important thing here is, did Tenet -- do you, Mr. Centafont -- and I talked to Mr. Wigglesworth yesterday and he told me you'd be here. Did Tenet follow the appropriate procedure for notification of anyone in this decision-making process? I found out -- I think Teresa Huskey called me. I'm up in Harrisburg, it's almost midnight, we're trying to get a budget done. She called me, Representative Williams, and I 92 012904 - COMMERCE - RES. 040046 ran into a lobbyist walking around the floor lobbying on gaming and he said, "Oh, by the way, I picked up Tenet as a client, and you need to know about this. They're getting ready to shut down tomorrow." Did Tenet, knowing that we were working on this decision for a number of months, knowing that -- because you don't make a decision like this arbitrarily. Did Tenet follow, as Councilwoman Reynolds Brown said, SOP, standard operating procedure for notification, as required by every level of government, from a health standpoint and, Councilman Goode, from a commerce and economic development standpoint since this involves a thousand jobs?

I have no way of knowing that answer. SENATOR HUGHES: So I will assume the answer is no, because none of us got notification. The residents got no 23 notification, the employees got no 24 notification. They were in a bogus negotiation with the nurses. 93 012904 - COMMERCE - RES. 040046 (Applause.) SENATOR HUGHES: Because as soon as that agreement was allegedly reached, a minute later they announced the closing. So the question then becomes -- and I have good relations with the Tenet people on other matters. But the question then becomes, on this matter, there is a procedure, if not health-wise, Councilman, in the context of economic development issues, closure, foreclosure, all that other kind of stuff which we've dealt with every level of government in the past, did they follow the appropriate procedure? And you have to convince me that they did, because I believe and I know that they didn't.

I have no personal knowledge of what procedures they followed. SENATOR HUGHES: Does the hospital industry have a procedure in terms of public notification about these kinds of decisions?

The State Department of Health requires that they be notified in an 94 012904 - COMMERCE - RES. 040046 appropriate period of time by regulation of when a hospital intends to reduce services or close. SENATOR HUGHES: And the State Department of Health was not notified?

I do not know.

Senator, we actually wish to interrogate Tenet a lot more directly a few panels from now. SENATOR HUGHES: I'm sorry.

Councilwoman Brown, were you finished?

We'll wait until we hear from Tenet. But the question has not been answered, given your role even as Chief Operating Officer, what the procedure is and whether or not it was followed.

My role as chief operation officer is of the foundation, not of DVHC. DVHC is the membership organization that Tenet is just one member of.

Very well. Thank you.

This panel is 95 012904 - COMMERCE - RES. 040046 excused from the table but not from the room. We ask everyone that's testified to stay around. In addition to this Committee, I know there are other guest legislators that wish to question you, but there are other panels that need to testify. Some of those witnesses need to leave. So I ask Councilman Nutter to introduce his next panel. {Pause.)

The next panel will deal with impact to doctors, nurses, and employees of MCP. We ask Dr. David Wagner, Mr. Henry Nicholas, and Ginny Holzworth to please approach the witness table. Mr. Nicholas, will you please identify yourself for the record?

My name is Henry Nicholas and I'm President of the Hospital Workers Union nationally and also President of Local 1199C here in Philadelphia.

Please proceed with your testimony.

Mr. Chairman and Members of the City Council, these are very 96 012904 - COMMERCE - RES. 040046 difficult proceedings for me because I've been around the block just a few times. And it is clear to me that this body, according to the way I read the Home Rule Charter, is duty bound to protect the healthcare of the citizens of Philadelphia. We made that cry when PGH closed under Council's auspices with them pledging these other hospitals to pick up the slack. But that was in the good old days. The true fact, we are in a healthcare crisis in Philadelphia. The worst crisis in the entire United States. And the issue before us is Medical College, but for all of us in this room, it is bigger than Medical College. It is whether the citizens of Philadelphia will have access to healthcare. In the last months, before the 20 loss of 300 doctors at Medical College, we 21 lost in this region 1500 doctors. There's a 22 void out there. I was in the emergency room 23 at Temple on Friday night. The wait is 11 24 hours long. And that's true about many of the hospitals. 97 012904 - COMMERCE - RES. 040046 Council should use its authority to call on the Governor of the Commonwealth of Pennsylvania to declare Philadelphia a healthcare emergency area. (Applause.)

Because failing to do that, we will not get to the issues. And the three persons testifying before I did made a case. They said we have a crisis. It is bigger than whether we have too many beds. We don't have enough doctors to attend the beds that we have. We don't have enough nurses to attend to the beds that we have. I've been in all of the meetings. I just met with the Mayor for an hour before I came in here. I met with him 10 times since I got my call. I represent 600 workers there. I got my first call at 5:47 on December the 10th. They said, "We're going to have a layoff of 160 people." Seven days later, they told me they were closing down. And I got my notice the same as everyone else, at the last minute. But for all of the citizens of 98 012904 - COMMERCE - RES. 040046 Philadelphia, and when we know that the majority of the hospitals serving the neighborhoods, all of them, are in the intensive care unit on a respirator as we speak, it is bigger than Methodist and St. Agnes, St. Joe's and Girard, Graduate, Episcopal, Northeastern, Miseracordia, all of those hospitals are in the intensive care unit as we speak. If a crisis should hit Philadelphia such as occurred on 9/11, we would not be able to respond. This City is ill-prepared to respond to emergency healthcare crisis as we speak. I represented the D.C. General Hospital that closed 10 days before 9/11. When the crisis occurred at the Pentagon, they had to reopen the hospital that they had just closed because the other hospitals were ill-equipped to deal with a crisis. And we are confronted here in Philadelphia with a crisis bigger than that, bigger than any other City. Our doctor crisis is worse than any city in the nation. And so it is very, very important. 99 012904 - COMMERCE - RES. 040046 Councilman Rizzo asked, "Did not Temple have a problem with its trauma center?" Yes, it did. And it was kept open because I went on a hunger strike in the emergency room 6 for eight days to keep it open. That's how it was saved. (Applause.)

But we have not -- we just skirt the issues. When Tenet decided to close, at the same time they announced closing not one but both of its trauma centers. They are both closed now. The trauma center at Medical College closed and the trauma center at Hahnemann closed. And so if you look at that in the real content, all of the patients that was taken to those two hospitals by those operations get diverted to Temple, to Einstein, to the Hospital of the University of Pennsylvania and so you have a 10-hour wait. It is a crisis. We must deal with it. It is an important debate around Medical College because it points up the essence of the issue. There is a crisis. Here is where we -- 100 012904 - COMMERCE - RES. 040046 A lot of people have been looking for, what happens after Tenet leaves? One of the missing elements if the State decides they would bring some resources to the table, if through Senator Specter's office some resources come to the table, and if the City puts some resources on the table, then who runs this new infrastructure. That's a missing part of the equation. One of the serious crisis facing the people of Philadelphia, poor people, in these days is there are a lot of poor people without healthcare. And the numbers are growing. Someone asked whether there are other jobs in the marketplace. Yes, there are jobs at Wal-Mart, at $6.30 an hour with no 18 healthcare benefits. That's why I came to this Council when they wanted to locate at the emergency door of one of my hospitals, Northeastern. They don't have healthcare. Before I came here, I was handed a list of all of my members that will be out of work as of the 31st of March. The total number of people impacted by this is 1650 101 012904 - COMMERCE - RES. 040046 taxpayers, good-paying jobs. They're not replaceable. A tremendous jolt to the Philadelphia economy. The biggest loss of jobs in a long, long time in this region. We have the capacity to do it. The question is whether we will summons the will. That's the charge to all of us. I haven't met anyone yet who was not concerned about whether we should keep the hospital open. We've got to draw the line here and make this an emergency situation. The people in the streets, we're not going to stop marching. We're going to keep this on the front burner because it's bigger than the Medical College. (Applause.)

And I would urgently request of City Council that you review the City Charter. You're empowered and given the duty, and part of that duty is that you call on the Governor to declare Philadelphia a healthcare emergency so all of the emergency measures can be put at work to take care of this issue. 102 012904 - COMMERCE - RES. 040046 Thank you for the opportunity. (Applause.)

Thank you for your testimony, Mr. Nicholas. Dr. Wagner, please identify yourself for the record.

I'm Dr. David Wagner. I'm head of emergency medicine for Drexel University and head of the emergency services at MCP Hospital. I've held that position for longer than I wish to admit publicly, first arriving at the campus known as Woman's Medical College in 1965. I'm also a longtime resident of the surrounding community. The healthcare facility now known as MCP which anchors East Falls and surrounding communities has, as many of you know, a rich and varied history. I enjoy reminding our medical students of today that when I first arrived on the faculty, this school was turning out 48 graduates a year, all of whom were women. And if you were a woman practicing medicine anywhere in the United States at that time, you had a 50 percent 103 012904 - COMMERCE - RES. 040046 chance of graduating from that college. Fortunately, we've come a long time from that era of under-resourced gender-based medical education. Today, Drexel University College of Medicine graduates 250 students, of which a better than 50 percent majority remain women. Even the acreage at 3300 Henry Avenue has a rich history, having been designated by the founding father's as the site on which the capital of the United States was to be built when Philadelphia was designated to house that facility. Today, MCP as a healthcare facility provides unique and important resources for the community. It houses an active emergency and trauma center. We see close to 30,000 emergencies, of which close to over 8,000 are ill and injured enough to be admitted as emergencies. The trauma center of the two when Drexel, when it was fully functional was the busiest of the two, significantly the busiest. We have over 80 physicians that have medical offices and practices on that site. The renal dialysis site manages over 150 104 012904 - COMMERCE - RES. 040046 chronic dialysis patients. It is a federally designated site for a center for women's health and the only designated decontamination site for bio-terrorism concerns in the entire greater Delaware Valley. All these resources serve a community with one of the highest percentage of elderly in the City and for whom there is no other easily reached alternative for health and hospital services. What can be done to enhance and preserve these resources? Let me suggest three things. First, accept the fact that the goals and needs of the community do not mix or match with the goals and needs of the current owner. This is not to denigrate the mission and goals of the current owner but to realize that profitability to satisfy Wall Street is difficult to obtain when a substantive portion of a community is under-resourced. We must find a way that will allow MCP to separate from its current ownership, develop a plan to provide the needed health resources and implement this under a non-profit umbrella. (Applause.) 105 012904 - COMMERCE - RES. 040046

Second, in order to accomplish the above, additional time beyond the projected closure must be allowed. This time must be aggressively used to develop a fiscally viable business plan which incorporates a non-profit entity whose mission includes health services for the under-resourced. And, finally, to accomplish the above, a coalition of the committed must be developed to include appropriate City, State, and federal resources to join with the loyal staff and employees of MCP, some of whom are here today but many, if not most of whom, both work and live within the community. We are here today to say we need your help, and we will do whatever we can to work with you. We cannot survive this crisis without your help; but with it, an institution with a rich history and a tradition of service, under-resourced will be salvaged, a vibrant community will be preserved, and the health needs of its citizens will be saved. The consequences of closure are too untenable 106 012904 - COMMERCE - RES. 040046 to warrant mention at this time. Thank you. (Applause.)

Thank you, Dr. Wagner, for your testimony. We're going to ask Ginny Holzworth to please approach the witness table. Please identify yourself for the record and proceed with your testimony.

My name is Ginny Holzworth. I'm an intensive care registered nurse at MCP. Ladies and gentlemen, my name is Ginny Holzworth, Registered Nurse and founder of the Save MCP Hospital Coalition. I am also one of the 70,000-plus people that the closing of MCP Hospital will affect. I've been working in the intensive care unit of MCP Hospital for the past six and a half years, which also means that I, along with approximately 1,000 other employees, have had the privileged opportunity to serve this community without regard to race, creed or economic status. We have cared for the rich, 107 012904 - COMMERCE - RES. 040046 the poor, the insuranced, and the uninsured. The one common thread that exists between each individual that is cared for at MCP is that each and every person has received and will continue to receive the highest quality of care without regard to what their net worth is. The right to be cared for when you are sick, the right to be comforted when you are dying, the right to be healed. These are basic human rights; rights that Tenet has now told us are not making them enough money, so as a result, they want to close our hospital. Close, not sell. No alternative measures, no 15 other solutions were offered, just close. This is a blatant disregard for human life. Do they not understand? Human life does not get measured with words like profit margins and revenue. Tenet has slowly butchered MCP over the past five years, removing one service after another; cardiology, orthopedics, geriatrics, dentistry, psychiatry, letting our hospital slowly bleed to death. The needs of this community have never correlated with the wants 108 012904 - COMMERCE - RES. 040046 of Tenet. (Applause.)

The population that MCP serves was here five years ago when Tenet bought it. They knew the area, the mix of insured versus uninsured, rich versus poor. Yet they bought MCP anyway, giving this community hope in what appeared to be a hopeless situation. "Let the healing begin," remember that slogan? A promise made to a community that its hospital will be for it to serve as a place to be cured, to be healed. It stings for me to hear those words now, for they represent a promise broken. Do they not understand? Nurses and doctors, we are employable anywhere. However, we choose to stay the course and fight this corporate giant. But what about the other employees, those that work in housekeeping or maintenance, those that have worked at MCP for 20 or 30 years and are near retirement? What is to become of them? (Applause.)

Many of us have 109 012904 - COMMERCE - RES. 040046 given our whole careers to MCP, whether it's been one year or 30 years. This loyalty means nothing to Tenet. We have stayed at MCP through the good times and the bad because of our love and dedication to our professions and to our community. This our hospital. This is our neighborhood. We live here. We work here. (Applause.)

Decisions about our very livelihood are made from across the country 3,000 miles away, far from the Abbottsford Housing Projects, far from North Philly, in order words, far from the people that will die as a result of MCP being closed. They do not look into their faces; but we, the approximately 1,000 employees, do. How do they not understand? With all their money, with all their consultants and accountants, tell me, how do they not understand? Do they not see that closing our Level trauma center will allow people to die because the length of time to get them to the nearest Level trauma center will now be 110 1 012904 - COMMERCE - RES. 040046 longer? Do they not see that now the people of this community, sick people, will now have to take multiple buses or find some other type of transportation to get to another facility for their dialysis or their chemotherapy or their blood work? Can't one of their highly-paid executives explain to them that statistics show that more people will be noncompliant with their healthcare if their access to healthcare is made more challenging? The result, people will die. Do they really not understand, or is it that they just don't care? We stand before you, our political leaders, as your community, as your people to ask you for your help as we fight what should be basic human rights, the right to be cared for, the right to be cured, the right to be healed regardless if you are rich or poor, insured or uninsured. Please do not let them take MCP from us. Thank you. (Applause.)

Thank you, Ms. 111 012904 - COMMERCE - RES. 040046 Holzworth. I want to thank this entire panel for their testimony. We're not going to entertain any questions of the panel at this time. If you can stay around, we ask that you do so. But at the request of the primary sponsor of the resolution and because Senator Hughes is itching in his seat, we are now going to call the next panel which will be Tenet Healthcare and representatives from Drexel University College of Medicine.

Could the gentlemen identify themselves for the record, please?

My name is Phil Schaengold, I'm the Vice President of Operations for Tenet Pennsylvania.

I am Dr. Stephen Klasko, I'm the Dean of Drexel University College of Medicine and a practicing ob/gyn at MCP Hospital.

Mr. Chairman, I have a couple of items which I would like to put in the record. You and I have discussed 112 012904 - COMMERCE - RES. 040046 this, and with your approval I'd like to proceed. Mr. Chairman, this hearing today comes as a result of Resolution No. 040046, the title of which was read into the record, but at this point I wish to make note of a particular section of the title. This section of the title deals with "The Committee is authorized in furtherance of its investigation to issue subpoenas as may be necessary to compel the attendance of witnesses and a production of documents to the full extent authorized under Section 2-401 of the Philadelphia Home Rule Charter." With that in mind, again, Mr. Chairman, Section 2-400 -- and that resolution 18 was passed unanimously by this Council on January 22, 2004. Section 2-400 of the Home Rule Charter is entitled, "Inquiries and Investigations. The Council shall have power by resolution to authorize inquiries and investigations to be conducted by the entire body or by any of its committees in aid of its 113 012904 - COMMERCE - RES. 040046 legislative powers and functions." Section 2-401 is "The Power to Obtain Attendance of Witnesses and a Production of Documents. The Council shall have the power to compel the attendance of witnesses and the production of documents and other evidence at any meeting of the body or of any of its committees under the procedure set forth in Article 16, Section 8 of the Act of June 25, 1919, Public Law 581." Lastly, Section 2-402, Oaths of Witnesses. The presiding officer of the Council or of any of its committees shall have the power to administer oaths to the witnesses." With that in mind, I'd like to ask the witnesses to stand so they can be sworn. Please raise your right hand. Do you swear or affirm that the testimony that you are about to give is the truth, the whole truth and nothing but the truth, so help you God?

Yes.

Yes. 114 012904 - COMMERCE - RES. 040046

Thank you. Mr. Chairman, let me read into the record Title of the Pennsylvania 5 Consolidated Statutes, Section 4903. It's 6 entitled, "False Swearing." Section A, "False 7 Swearing in Official Matters. A person who 8 makes a false statement under oath or 9 equivalent affirmation or swears or affirms 10 the truth of such a statement previously made 11 when he does not believe the statement to be 12 true is guilty of a misdemeanor of the second 13 degree if, one, the falsification occurs in an 14 official proceeding; or two, the falsification 15 is intended to mislead a public servant in 16 performing his official function. Violations 17 of this nature are misdemeanor of the second 18 degree, is punishable by two years imprisonment or by a fine of up to $5,000." Mr. Chairman, I have a couple questions I'd like to place into the record, seek answers to those questions, and with your approval, I'd like to proceed.

Please proceed.

Thank you, Mr. 115 012904 - COMMERCE - RES. 040046 Chairman. Mr. Schaengold, please identify all individuals who were and/or may have been involved in any way with the drafting, negotiation, or interpretation of the asset purchase agreement, specifically identifying the terms of their involvement and respective roles therein.

I do not know all the individuals that were involved in that drafting of that document. I was not part of Tenet at the time.

Is there an individual at your team who would have that information? You know what document I'm talking about; is that correct?

The assets purchase agreement to buy the assets from the Orphans Court is what you're referring to.

In 1998, yes.

Right. I don't believe there is anyone here that was involved in that. We'll be perfectly happy to provide 116 012904 - COMMERCE - RES. 040046 that information to you at a later date.

I'm sorry?

We'll be happy to provide that information to you.

Your counsel is not aware and cannot answer such a question?

Of all the individuals that were involved?

Yes.

I'm not sure that she could. None of those individuals are here today.

Have you read the asset purchase agreement?

I have read portions of it.

You have not read the entire agreement?

No, I have not.

So you're not familiar with all of its terms and conditions?

No. The individual sitting next to me is Barbara Zurzolo who is our legal counsel. 117 012904 - COMMERCE - RES. 040046

That's fine. When I have a question for her, I'll ask. Can you identify all the individuals who were and/or are involved in any way with the formation, empowerment, and/or operations of the MCP Governing Board?

Please clarify the question.

Can you identify any individuals who were or are involved in any way with the formation, empowerment, and/or operations of the MCP Governing Board?

The Governing Board is appointed by Tenet, and I don't know all the members on that Board.

Who are some of the members?

On the Board?

Yes.

Frank Congdon, Richard Freedman, we've got some physicians that are on there. I'm not familiar with all the members of the Board.

So you don't 118 012904 - COMMERCE - RES. 040046 know who's on the MCP Governing Board?

Not all of them, no. 5

How many times have you been to MCP?

Probably a half dozen since I've been here.

How long have you been here?

Since May of 2003.

But you're not familiar with all the members of the MCP Governing Board?

That is correct.

Do you know any of the individuals who are involved in the formation of the services rider agreement that's a part of the asset purchase agreement?

I'm aware of some of the attorneys that were involved in that, but I was not part of the Tenet Corporation at the time.

Is it within Tenet's -- the sole province of Tenet 119 012904 - COMMERCE - RES. 040046 Healthcare, Tenet Health System, and/or Tenet MCP to make the decision to close MCP?

Yes.

What's the basis for your answer?

I'm sorry?

What is the basis of your answer?

We are the owner of MCP.

And are there any specific documents that pertain to that authority?

I'm sure there are.

What are they?

Well, I would say that the asset purchase agreement and as owners of the facility.

Let's talk about the proposed closure. What date was the decision made to close MCP?

The decision was made on December 12th, I believe. 120 012904 - COMMERCE - RES. 040046

Who participated in the decision?

A number of executives. I wonder, sir, would it possible for me to make a statement and then answer a series of questions? Because I think I can clarify many of the comments that have been made about Tenet in the process and then I'd be happy to answer any questions. I would really appreciate an opportunity to speak to the Council.

You have an opportunity to speak to the Council right now. You're answering my questions. Who are the individuals involved in the decisions to close MCP?

Myself and other executives.

What are their names?

Trevor Fetter, the CEO of the company; Steve Farber, the CFO of the company; Reynold Jennings, President of 121 012904 - COMMERCE - RES. 040046 Eastern Division, and I'm sure there were other individuals involved.

And this decision was made on December 12th?

I believe that's the date.

How many meetings were held prior to December 12th to consider the proposed closure of MCP?

We presented a budget relating to MCP and the business plan proposal two days before that, and there were other discussions that went on, on and off for several weeks.

Several?

Weeks.

When did you present the business plan?

On December 10th.

Where do the several weeks come into play?

Well, we've been talking about the performance of MCP for several weeks. And in fact, we have spoken 122 012904 - COMMERCE - RES. 040046 about the performance of MCP with their Board on a number of occasions.

When was the first discussion of a proposed closure of MCP?

I don't know the exact date.

Was it close to December 12th, was it a month before, was it two months before? What's your recollection of the first time that someone said, "We should close MCP"?

It probably would have happened in November-December time frame. I don't have a recollection of an exact date.

How many hospitals have you closed?

I personally?

I'm asking you the question.

Well, I'm asking for clarification.

How many hospitals have you personally closed?

One. 123 012904 - COMMERCE - RES. 040046

Does that include MCP or prior to MCP?

No, we have not closed MCP yet.

How many hospitals have you proposed to close personally?

Two.

What are they?

Parkview and MCP. Elkins Park was a sale.

And so since you have not closed or proposed to close a significant number of hospitals, is it unreasonable to think that you would actually recall the numbers, specific details to such a significant act? This is not something you do on a regular basis, right?

I think I've responded to the best of my recollection, sir.

So you think sometime in November-December someone suggested that maybe MCP should close; that's 124 012904 - COMMERCE - RES. 040046 your testimony?

That was one of the alternatives considered.

And who proposed that?

I can't specifically recollect who specifically proposed that.

Did you propose it?

Did I propose it? I recommended that in view of MCP's financial condition that that was probably the most likely outcome.

When did you propose that?

I do not recall.

Who did you propose it to?

To my senior management.

That would be Mr. Fetter and Mr. Jennings?

Correct. 125 012904 - COMMERCE - RES. 040046

So what happened at the December 12th meeting?

After we presented our business plan and budget --

On the 10th.

On the 10th, our discussions must have taken place in Dallas by the senior executives, and I was advised on December 12th that the decision has been made to proceed with closure of MCP.

How many hours were these discussions? How long did it take to decide to close a 153-year hospital?

I don't know. I was not present.

But somewhere -- now you're saying somewhere contained within a 48-hour window the decision was made; is that your testimony?

Yes.

And are you the only person from Philadelphia who participated in these discussions?

In the presentation 126 012904 - COMMERCE - RES. 040046 of the budget, no. My vice president of finance presented the budget. Richard Freedman was present to present the budget for MCP and there were other Tenet executives there to hear the presentations.

And so who actually gets to make the call? Whose call is this?

I believe it would be the senior most managers of the company, Mr. Trevor, Mr. Farber, Mr. Jennings.

And who called you and told you that that was the recommendation?

Mr. Jennings.

Now, has Mr. Jennings been to MCP?

I believe he has.

How many occasions?

I don't know.

Did he ever meet with the Governing Board?

I do not believe 127 012904 - COMMERCE - RES. 040046 that he had met with the Governing Board.

What's the role of the Governing Board?

The role of the Governing Board is to monitor the quality of care provided at the hospital.

Was the Governing Board consulted about this decision?

No. They were advised of that the morning of the announcement.

So some of them may have read about it in the newspaper as well.

That is correct.

What's the status of the five other hospitals?

Well, yesterday we made a national announcement of a reorganization of our company, and we are divesting ourselves of 27 hospitals. We, at the same time, announced that we remain committed to Philadelphia, and the five remaining hospitals in Philadelphia will be 128 012904 - COMMERCE - RES. 040046 part of the strategic core that is kept by the company.

And based on that announcement, is your testimony that none of the remaining five hospitals will close?

As far as I know, and based on information that I have, there is no reason to consider their closure.

A year or so ago you probably could have made the same statement about MCP; is that correct?

That is correct. In fact, as of August of last year I thought we had an opportunity to be able to save MCP.

Based on what?

Well, I had hoped that their financial could be reversed, and I was proven wrong.

Didn't you, in fact, hire a consultant to look at this situation?

That is correct.

What's the name of the consultant? 129 012904 - COMMERCE - RES. 040046

TRG.

When did they start doing their consulting work and when did they conclude?

They began about September, and they concluded their work around Thanksgiving period.

What was their conclusion?

Their conclusion was that if you assume that there could be major changes in how the clinical practice at MCP is conducted, if you would assume that major changes in operations could be accomplished, if you assumed that we could reduce the length of stay and the resources applied to each stay could be accomplished, there was a chance that within a 24-month period MCP could reach a break-even point. However, during that same period of time, it would still experience about a $25 million cash flow loss.

During the two-year period? 130 012904 - COMMERCE - RES. 040046

Correct.

What happened to the report? What did you do with it?

The report was accepted by me and considered as part of the decision process.

So you never took advantage of any of the advice or opportunity from the consulting report or sought to implement any of the recommendations; is that correct?

That is correct. We concluded that regardless of the changes that we would make, that would not substantially change the financial losses at MCP.

But you decided not to give it a chance?

We made a decision based on the facts available to us that we could not sustain the continuing losses at MCP and take the chance of jeopardizing the well-being of the remaining five hospitals in this market. 131 012904 - COMMERCE - RES. 040046

Could you provide to the Chair a copy of the consultant report?

We have provided a copy of that to the City, but we'd be happy to provide you a copy also.

When did you provide a copy to the City?

The City is conducting an audit, and that is part of the documents that they requested.

I understand that. The question was, when did you provide it to the City?

I don't have the exact date but, it was within the last couple weeks.

Please identify yourself for the record.

I'm Barbara Zurzolo, I'm Senior Counsel for Tenet. We are working with the City on an audit under the settlement agreement. And as part of that audit, the City has requested 132 012904 - COMMERCE - RES. 040046 that document. They've come over and reviewed it on site, and we have made copies for them. And when they return, we'll give them a copy of it. But they have had an opportunity to go through it at Tenet.

I thought you said you gave them a copy.

Mr. Schaengold knows that we're in the course of the audit. It's an ongoing thing. It's very document intensive. And as they come over and go through documents, they're tagging them. We give them their copies when they return.

I don't understand that. What do you mean you give them their copies when they return? From where?

They'll be back. They'll be back next week, and they have identified those areas of various documents that they wanted copies of when they were here the last time.

I understand that. How big is this consultant report? 133 012904 - COMMERCE - RES. 040046

It's large. It's a three-ring binder.

Fifty pages, a hundred pages, a hundred fifty pages?

Probably about a hundred pages. We'd be happy to provide a copy to the Chair and Vice Chair.

Can you have one brought over this afternoon?

Certainly.

Be happy to.

Thank you. Mr. Chairman, I recognize that a number of members or State Legislator guests may have questions. As you can imagine, I have just a couple more. But I'd certainly relinquish so that others could participate. I do have a number of questions around the proposed closure issue, but I will yield.

Thank you, Councilman. The Chair recognizes Councilwoman Tasco.

Thank you. 134 012904 - COMMERCE - RES. 040046 When you received the consultant report, you said you made the decision to close the hospital. Did you take the report to the Governing Board? Did they look at the report?

No, they did not.

Well, if they have the responsibility for the financial health of the hospital, why did not the Governing Board see the consultant report? And is it the Governing Board's responsibility to also participate in those decisions?

The Governing Board has the responsibility to monitor the quality of care provided to the hospital. They do not have the responsibility for the financial operations of the institution.

Well, it seems to me that they go hand in hand. You've got to have the ability to provide the services, you have to have the financial ability to do that. It seems to me that they would have some fiduciary responsibility for the hospital as a Governing Board. Do they not? 135 012904 - COMMERCE - RES. 040046

Under our structure, the Boards of the hospitals are advisory in nature. They are responsible for monitoring the quality of care. They are not responsible for the financial aspects.

So you don't take any financial issues to the Governing Board at all?

We report to them the financials, but that is not one of their fiduciary responsibilities.

Well, if they don't have the responsibility for the financial health of their hospital, why do you report it to them?

They are responsible for monitoring the quality of care provided.

Do you disagree that they shouldn't have financial information so they would know what kind of services you're providing to their patients?

Yes, they do get the financial information. The report was not 136 012904 - COMMERCE - RES. 040046 given to them for implementation.

Don't you think it was important for them to know that if you were going to close the hospital that having that report and knowing that there were other alternatives to your closing the hospital, that should have been their decision as their role in providing the health of the hospital?

Well, the decision as to whether the hospital should remain open or closed is a Tenet responsibility. In the process of evaluating our alternatives, we had concluded that the likelihood of MCP remaining open was very low and that there would not be any other alternatives to keep it open in view of the losses that were mounted in that facility.

Thank you very much, Mr. Chairman.

Thank you, Councilwoman. The Chair recognizes Representative Manderino. REPRESENTATIVE MANDERINO: Thank 137 012904 - COMMERCE - RES. 040046 you, Mr. Chairman. Thank you for being here. Mr. Schaengold, it is my understanding that the Pennsylvania State Department of Health has delivered and Tenet has received a letter with regard to the State's position or perception of where you stand with regard to the 90-day notification for hospital closures in Pennsylvania. Are you aware of that letter?

Yes. REPRESENTATIVE MANDERINO: Could you describe to us your understanding of what that letter says?

Well, we obviously have a difference of opinion. The Department of Health has written to us that they believe that since we are under an order not to close MCP that the 90-day notification period will not start until the order is lifted. But in fact, there is no order prohibiting the closure of MCP. There is an agreement between the petitioner and Tenet that we won't do anything to accelerate the closure activity prior to March 31. 138 012904 - COMMERCE - RES. 040046 REPRESENTATIVE MANDERINO: Let me ask a few follow-up questions from that. First of all, it is my understanding, and tell me if you agree with me, that the State law requires 90-day advanced notification before a hospital closure. Are we on the same with regard to that?

Yes, and we in fact provided that notice. REPRESENTATIVE MANDERINO: Okay. It is my understanding that that notice comes with an obligation to file a hospital closure plan; is that correct?

That is correct. REPRESENTATIVE MANDERINO: And have you filed that hospital closure plan?

We did not file a closure plan because we were concerned that that would be construed as accelerating the closure process and we would then be in contempt of the agreement. We are now discussing this matter with legal counsel, and we are perfectly prepared to work with the Department of Health, but we were basically 139 012904 - COMMERCE - RES. 040046 caught in a no-win position. We were trying to respond to -- REPRESENTATIVE MANDERINO: You certainly are. Let me get this straight. (Applause.) REPRESENTATIVE MANDERINO: On the one hand, you don't believe that there is any stay of action or anything that the court case currently going on and that the judge has ordered did anything to stop the 90-day clock from starting to tick, but at the same time you legally were concerned that you couldn't file a closure plan because the judge may think that in contempt. Now, to me, there's an incongruity there. To me, it means that you certainly have concerns about the legal ramifications. And let's not have a legal argument, because that's what the lawyers will have in court. But do you not agree by what you just said that the 90-day clock doesn't start to run until you file, under the State law, the closure plan?

Our legal counsel 140 012904 - COMMERCE - RES. 040046 will be filing a formal response to the Department of Health tomorrow on that issue. REPRESENTATIVE MANDERINO: For the record -- and it looks like Councilman Nutter wants me to --

Just a point of information, Representative. Please continue. REPRESENTATIVE MANDERINO: Go ahead.

Representative, I think there's a clear difference of opinion, but this is the order from Judge Carrafiello. "And now this 8th day of January 2004, it is hereby stipulated by the parties and ordered" -- in bold type -- "that, one, defendant has agreed until further order of this Court not to take any action to implement closure of the hospital of the Medical College of Pennsylvania subject to the following paragraphs of this order." And then it's four or five paragraphs that detail all of the things that the defendant in this matter cannot do; can't take equipment, can't stop providing service, can't do a whole host of things. There is no ability under this court 141 012904 - COMMERCE - RES. 040046 order if you read the plain English for the hospital to close until the judge takes further action. And that matter, at least according to this order, won't be taken up until February 19, 2004, at o'clock a.m. I 7 don't think there's any dispute about that. 8 REPRESENTATIVE MANDERINO: Thank 9 you, Councilman Nutter. I think that you have 10 helped to further make my point, but I do want to, again, make sure that I understood the answer submitted for the record, which was the reason a hospital closure plan wasn't submitted to the State was because you were concerned that if you did so you would violate what Councilman Nutter just read. Did I understand you to testify as such?

That is correct. REPRESENTATIVE MANDERINO: Okay. For the record, I will just state for the record what I believe is now the time frame and what I think the Department of Health believes is now the time frame, and I think that is that until at the earliest February 11th, if at such time on February 11th that 142 012904 - COMMERCE - RES. 040046 the Court takes any kind of action -- and if they don't, then that time frame of February 11th doesn't even stand -- but once the Judge lifts any stay, that then would allow for a closure plan to be filed with the State, then the 90-day clock starts to run. So the way I do math, March 31st does not seem to meet a time frame that is consistent with Pennsylvania State law. Does Tenet agree that March 31st is not consistent with State law or is that part of what you -- the March 31st closing is not consistent with complying with the State Hospital Notification Closure Act, or are you at this point still disagreeing with that conclusion of the Pennsylvania Department of Health?

I'm going to have to defer to our legal counsel to respond to our position. REPRESENTATIVE MANDERINO: Are we deferring now, or are we deferring --

We're going to be filing our response tomorrow. 143 012904 - COMMERCE - RES. 040046 REPRESENTATIVE MANDERINO: Filing a legal response tomorrow. My last question, and I didn't get a chance to ask it when the City representative was here, but I do believe as a Tenet representative you have equal knowledge. And that is, there was discussion in the first panel about tax implications, tax reliefs, tax abatements. But it's my understanding that there is as part of the asset purchase agreement that Councilman Nutter talked about there was already some sort of tax relief, tax abatement, tax deferrals that were given to Tenet as part of that 1998 agreement. And I would like to hear you state for the record what those were so that I make sure I understand it.

Representative, I believe there's also still a City representative here. I ask them to approach the witness table to answer that question as well. You may proceed.

In 1998, Tenet paid 144 012904 - COMMERCE - RES. 040046 the Orphans Court $345 million for the eight hospitals, and we pledged another $70 million to support the College of Medicine. Because we committed to continue the educational mission of both Hahnemann University Hospital and MCP Hospital, the City agreed to continue a tax abatement for the two properties. The tax abatement that was extended to Tenet was for Hahnemann and MCP real estate, and it totalled $4.8 million per year for a 10-year period. Five years of this abatement has been realized, totaling approximate $24 million. So that is the only State and City tax support that Tenet has received as part of our multimillion dollar rescue of the eight properties.

Thank you. Will the City representative please approach the witness table, identify yourself for the record and respond to the Representative's question.

My name is Carol Rogers. I'm standing in for Health Commissioner John Domzalski. I don't have the 145 012904 - COMMERCE - RES. 040046 figures. It's my understanding also that there were Gas Works bills that were forgiven as well, as well as other utility bills that were owed by some of these properties.

Who would have direct access to that information at this moment?

I could probably get it for you if I can make a phone call, which I'll be happy to do.

Would you please do so? Thank you.

We'd like to know, Ms. Rogers --

The Chair recognizes Councilwoman Tasco.

We'd like know not only what were the abatements -- I mean the give-backs, and the actual amount. Because $24 million dollars is a lot of money. And I'd certainly like to know the amount not paid to the Gas Works, as Chair of Gas Commission because the people's rates are going up. I want to know what a profit-making 146 012904 - COMMERCE - RES. 040046 company didn't pay when people in this City do have to pay. (Applause.)

If I may clarify, those tax bills belonged to the preceding organization, the one that was bankrupt. They were not bills that we generated. There was an agreement for Tenet not to be responsible for bills that were accumulated by the bankrupt entity.

That's still tax forgiveness. You didn't assume their liabilities.

No, we did not. That's the point.

The Chair recognizes Representative Roebuck. REPRESENTATIVE ROEBUCK: Thank you, Mr. Chairman. I'm troubled by this discussion, in part because it seems to focus as if MCP stands by itself. But my recollection is that in reality MCP is tied to Hahnemann. Indeed, Drexel University which runs their College of Medicine captions 147 012904 - COMMERCE - RES. 040046 everything MCP-Hahnemann as if they're one entity. And you're saying that you're abandoning MCP but you're going to keep Hahnemann going. I find that hard to believe, I really do. (Applause.) REPRESENTATIVE ROEBUCK: I find that hard to believe in light of what's going on with MCP at this point. I guess maybe the question is both to Tenet and to Drexel as to what is the real commitment here to keep Hahnemann going once you cut and run on MCP and you still own Hahnemann? (Applause.)

As a company, we have looked at the assets that we purchased out of bankruptcy in this market, and I just want to remind everyone that five years ago, Tenet was the only party that came to the table and was willing to acquire the bankrupt assets with what still remains as the largest bankruptcy of US history for a not-for-profit entity. We were the only ones who accepted 148 012904 - COMMERCE - RES. 040046 the burden of all eight properties. Unfortunately, some of these properties simply have not been able to survive. They were on the verge of closing within days of our acquiring those properties. We believe that with the closure of MCP, the remaining five hospitals are strengthened, are stable, and will continue to succeed in this market. And that is why the company included those five hospitals in its core group of institutions when we announced the restructuring yesterday. REPRESENTATIVE ROEBUCK: But again, if memory serves me correct, at least part of the viability goes on State tax dollars. Every year, as I remember, we vote in Harrisburg money to Drexel to keep Hahnemann-MCP going. And we did that this year even after you announced you were closing MCP. Now, I guess I'm troubled by -- I'm trying to understand where the money's going. I'm trying to understand what we're doing. I remember Drexel got $50 million in the course of this deal for putting this agreement together. So where is the long-term 149 012904 - COMMERCE - RES. 040046 commitment for these dollars that taxpayers across the Commonwealth have given up?

Well, the dollars were not given to Tenet. I believe they funded the continuance of the School of Medicine, and I cannot speak to the specifics. REPRESENTATIVE ROEBUCK: But every time I drive by that facility at Broad and Vine, which I just did coming here, it says Tenet on it. That's the name on it, it says Tenet.

That's correct. That's Hahnemann Hospital. Right.

Mr. Schaengold, I know our State friends are used to this. They go sometimes even longer than ourselves, and we'll take the time that we need. I do want to at least suggest to you that the continued defense or reference that we should continue to be just so totally thankful and possibly genuflect and bowed for Tenet coming five years ago, now, you were not here but I was. Tenet actually was not the only entity that was interested -- 150 012904 - COMMERCE - RES. 040046 (Applause.)

-- in purchasing the then bankrupt Allegheny Health System. There were others. Actually, there was a deal put together before Tenet came to the table, and for whatever reason -- with a company by the name of Vanguard. I met with them after they signed up, a couple weeks after they announced their deal. For whatever reason, the deal fell apart. That's one. Second, when Tenet came on the scene, who virtually no one in Philadelphia knew, they were in fact welcomed, although there was an attempt in bankruptcy to cherry pick the eight hospitals because they didn't want all eight hospitals because they knew all eight hospitals were not necessarily viable. The deal from the judge in Bankruptcy Court was, it's an all-or-none transaction. Tenet made a business decision, not a benevolent decision, not a holy decision, not a oh-we'll-just-come-and-help-you-out decision, they made a business decision to come to this market where there is no 151 012904 - COMMERCE - RES. 040046 for-profit entity operating and thought they could make a go of it because things were riding high and profits were up and the company was doing well and it was off to the races. So I want to caution you that many of us do have a sense of appreciation from five years ago. We didn't want to see eight hospital closed and thousands of people thrown out of work. I want to caution you that it's worn thin, because we're now in a very serious situation about this hospital. We didn't have all of these hearings about the other three, and we've gone through some of these same procedures. And actually, if the company had done what it did with City Avenue, maybe you wouldn't be sitting here under these circumstances; but you didn't, because someone made a business decision to now close this hospital. So I just want to caution you that we're grateful for things that happened in the past. We're going to resent the continued reference to it because this situation has not been handled right. You know that; I know 152 012904 - COMMERCE - RES. 040046 that. Certain statements were made, certain commitments were made, certain representations were made. Has the company made money in Philadelphia?

Yes.