Prime Healthcare transitioning Pennsylvania hospitals to nonprofit status

Hospital operator Prime Healthcare said Monday that it is transitioning two of its for-profit hospitals in eastern Pennsylvania over to nonprofit status.

The 44-hospital system currently has 14 of its community hospitals owned and run by its 501(c)(3) public charity, the Prime Healthcare Foundation.

Prime said it plans to have Roxborough Memorial Hospital, in Philadelphia, and Lower Bucks Hospital, in Bristol, join the charity by this summer.

With Suburban Community Hospital, in East Norriton, already under the foundation’s umbrella, the planned transition will leave all of Prime Healthcare’s Pennsylvania hospitals as nonprofits.

“This will improve care coordination between the three facilities and aligns with statewide policy initiatives regarding not-for-profit ownership,” the system said in its announcement.

The Prime Healthcare Foundation was established in 2006, five years after Prime Healthcare, and has more than $1.3 billion in assets donated by Prime Healthcare’s president and CEO, Prem Reddy, M.D., and his family. The charity is active in six states, as opposed to the broader system’s 14-state footprint.

The two hospitals—131-bed Roxborough Memorial Hospital and 150-bed Lower Bucks Hospital—were respectively acquired by Prime Healthcare in 2016 and 2012, while the currently nonprofit Suburban Community Hospital was acquired by the foundation in 2016.

Prime Healthcare said it has invested nearly $100 million in the trio since the acquisition, “including new emergency rooms, intensive care units, upgraded IT infrastructure with EPIC system installation at all three facilities, lab and radiology equipment, inpatient rehab and more.” The system also noted that all three Pennsylvania hospitals are ranked by Healthgrades among the top 10% in the nation for patient safety.

“As not-for-profit healthcare providers, we look forward to engaging the community to develop community health needs assessments that will further improve the health and well-being of all those we serve,” Sonia Mehta, M.D., CEO and Chief Medical Officer of Prime Healthcare Region II (which includes Pennsylvania, New Jersey and Rhode Island). “Prime’s hospitals are valued community assets, and we are focused on ensuring that much-needed care is provided in the way the community needs and deserves, with high quality and affordable healthcare.”

Prime Healthcare’s announcement described ongoing plans to adjust services at Suburban Community Hospital toward emergency care with a full-service, 24/7 emergency department. On the flip side, it said it would be suspending behavioral care at the hospital “due to low demand … and challenges in retaining qualified behavioral health providers.” The service changes are set to take effect in mid-July.

In April Fitch Ratings upgraded Prime Healthcare Foundation from “BBB” to “BBB+,” noting “material improvement in operating results” during its 2023 fiscal year and management’s focus on stabilization.

At the time, Fitch said it did not expect, but did not rule out, future hospital additions, writing that the foundation’s “current strategy is now less focused on acquiring distressed hospitals, but rather directed at strengthening the system fundamentals through vertical integration of existing assets, supported by investment directed at ambulatory presence.”