Are There Bids for Sharon Hospital? Buhl Attorney Voices Concerns
SHARON, Pa. – Even before Steward Health Care System filed Chapter 11 bankruptcy May 6, several entities were considering purchasing Sharon Regional Medical Center. But all of them had serious concerns that kept them from agreeing to a purchase, according to Bob Lackey, a local attorney who represents the Christian H. Buhl Legacy Trust.
The Buhl Trust operated the hospital from 1892 to 2014, when it sold its operating assets and 54 real estate parcels to Community Health Systems. In February 2017, CHS sold to Steward, which signed a sale leaseback deal with Medical Properties Trust for the real estate.
That deal, which was not disclosed to Buhl Trust as required by legal documents, contained “burdensome financial terms … and undermined the financial viability of Sharon Hospital,” the Buhl Trust and the attorney general of Pennsylvania argue in court papers.
And it’s because of the leaseback deal that any entity interested in buying the Sharon hospital has backed off, Lackey says.
Moreover, he is uncertain of the identity or existence of “late bids” for Steward’s three local hospitals as stated by the company’s attorney during a bankruptcy court hearing Wednesday.
He said those interested in Sharon Regional continue to come upon stumbling blocks such as the amount of capital needed to pay staff to keep operating until revenue starts coming in, as well as the amount of money needed to make repairs and improvements. Ultimately, Lackey says, it comes down to whether Medical Properties Trust will continue to own the buildings.
At Wednesday’s court hearing, U.S. Judge Christopher Lopez ruled that Steward could reject all its leases with MPT but postponed ruling on an effective date.
Still to be determined is how much liquidity MPT will extract from Steward’s bankrupt estate.
“Nobody wanted to enter into this with that albatross around its neck,” Lackey said of the MPT leases. “There were potential buyers – four or five or even six – that looked at the facility. But nobody wanted to put any money into it if they didn’t own it and didn’t get the benefit of their own capital.”
Still, the Buhl Trust attorney said two or possibly three potential buyers remain interested and seem to be waiting to see what the Pennsylvania attorney general can negotiate to change the landlord-tenant situation.
U.S. Bankruptcy Court in Houston has scheduled a hearing Aug. 13 related to the Sharon hospital and Steward’s two hospitals in Ohio – Trumbull Regional Medical Center in Warren and Hillside Rehabilitation Hospital in Howland.
Lackey said he is working with bankruptcy attorneys who have questions about the reason behind the Aug. 13 hearing.
“Our big question to Steward’s counsel is, why did you set that up? There is no buyer,” Lackey said. “Do you have a deal in your pocket that you’re not telling us about because we haven’t approved any deal on our part here? So what’s this hearing all about?”
Lackey said his group is unaware of any late bids and is concerned about the intentions of an investment firm said to be among those interested in the hospital.
He also has concerns about the worse-case scenario – the closure of Sharon Regional.
“If the judge says on Aug. 13 that Steward does not have to operate the hospital anymore, the attorney general either has to produce somebody who will, on terms acceptable to the court, or go along with the closure,” Lackey said.
Should the 184-licensed bed hospital close, who would treat the 13,150 residents of Sharon? UPMC Horizon – Shenango Valley hospital in adjacent Farrell, Pa., and UPMC Horizon – Greenville have 106 and 122 patient beds, respectively. UPMC Jameson has another 133 beds in New Castle, Pa.
Do these hospitals have sufficient resources to handle the needs of Sharon Regional’s patients?
“In my opinion, they absolutely do not, and I have various sources who believe that equally,” Lackey said.
He said the $1.5 million addition to the UPMC emergency department in Farrell, which opened this week, is evidence of that hospital’s inability to handle its current patient load.
Dr. Beth Piccione, UPMC Horizon and Jameson president, disagrees. The Farrell expansion came from the need to streamline care, reduce wait times and improve patient care, she said.
“Over the last year, we have started to see an increase in ER visits, especially at our Shenango Valley campus. “I do think it is related [to the Sharon hospital situation], and it certainly created an urgency for us. … We needed to react and react quickly,” Piccione said.
“To be honest, I don’t think we would have done this so quickly if there wasn’t so much disruption in our market.”
In just six months, UPMC went from design to opening the five-bed expansion project in Farrell, she said.
UPMC is prepared to expand again and continue to make improvements, should the situation with Sharon Regional create more need, she added.
“As someone who lives in and around these communities, I do not want hospitals to close,” Piccione said. “I feel very confident about our ability to meet the needs of the community. We will be up to the task, and we will continue to evolve to do that. … I think that there is capacity here and capacity to grow within Mercer County to meet whatever needs come. This is not going to become a place where people do not have access to the care that they need. We would not allow that to occur for many reasons.
“We are very committed to Mercer County, and we want to continue to build up our services here and are very committed to taking care of this population,” Piccione said.
According to the Pennsylvania Department of Labor and Industry Center for Workforce Information & Analysis, Sharon Regional was the sixth-largest employer in Mercer County in the fourth quarter of 2023. It was just behind fifth-ranked UPMC Horizon.
At peak employment, Sharon Regional employed 1,800. Today, it employs 700 and has deferred more than $10 million in urgent building maintenance, according to court papers.
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