Hahnemann Hospital Bankruptcy Threatens To Leave New Residents Facing Massive Malpractice Liabilities

A plan to find new work for about 570 resident physicians that will be stranded by Hahnemann University Hospital’s bankruptcy has come under fire for leaving its residents potentially uninsured, according to Bloomberg.

Hahnemann University Hospital, in Philadelphia, filed for bankruptcy in July and began shutting down at the same time that hundreds of doctors were beginning their residencies. Now, the plan to move those doctors has been criticized by both medical education groups and the US government.

Hahnemann came up with a plan to sell its residency program to Tower Health, an operator of other hospitals in the region. The program could wind up being auctioned off if competing offers come in, with plans for an auction to be held this week and the results to later be presented to a judge in bankruptcy court in Delaware.

The proposed sale would give residents a place to go, while at the same time making money for Hahnemann by moving its Medicare contracts along with other elements of its residency program.

However, the US government has been critical of the plan, stating this week that it doesn’t comply with requirements for handing off Medicare arrangements. US authorities are urging the bankruptcy judge to reject the resident program sale when it comes up for review. Pennsylvania medical oversight officials argued on Tuesday that nothing in the deal overrides the state’s licensing authority.

Medical education authorities also cautioned that Hahnemann could be “sticking new doctors with liability if something goes wrong with patients they saw while working at the hospital.”

The Association of American Medical Colleges, the Educational Commission for Foreign Medical Graduates and the Accreditation Council for Graduate Medical Educationor all noted that nothing in the resident program sale protects the residents and that Hahnemann has not assured that it will continue to provide insurance coverage for any medical mishaps that take place as it winds down.

The hospital is closing after failing to return a profit to its private equity owners, headed up by former investment banker Joel Freedman.

The hospital has a limited number of options, but medical groups argue that either the hospital or its buyer has to provide insurance coverage and preserve medical records for residents. Michael D. Brofman, a New York lawyer who has represented unionized residents and interns in other hospital bankruptcies said: “Everyone who signs a chart gets named in a malpractice case.”

Once Hahnemann is completely disbanded, lawyers for those claiming that they were injured by treatment at the hospital will likely try to collect damages from the people that work there. The exposure could be a massive problem for young doctors who already have significant amounts of student loan debt.

Lawyers for the Association of American Medical Colleges and other education groups urged the court to provide answers on how residents would be protected going forward.

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