How buying a failing hospital can pay off

Hahnemann University Hospital entered Chapter 11 bankruptcy in late June, but the Philadelphia-based hospital's real estate was not included in the bankruptcy filing. City and state officials, a nurses union, and presidential hopeful Bernie Sanders say Hahnemann's owner let it fail to sell the valuable real estate, according to The Philadelphia Tribune.

Philadelphia Academic Health System, which owns Hahnemann, separated the operating business from the land beneath the hospital and its adjacent buildings. The separation, which is common in private equity purchases, helps ensure the owner makes a profit whether Hahnemann succeeds or fails. The hospital is slated to shut down Sept. 6, and the closure will likely be followed by a lucrative land sale, according to the report.

Buying and closing businesses and then selling the land they sit on is more common in the grocery and retail sectors. The potential pay off from selling Hahnemann's real estate may set a dangerous precedent, Eileen Appelbaum, a private equity expert and co-director of the left-leaning Center for Economic and Policy Research, told CNN.

"If you have a success like Hahnemann — that will blow up," she told CNN. "Everybody will know that you can make money on the real estate of a hospital."

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