SHARON, Pa. – An agreement between Steward Health Care System and the Pennsylvania attorney general’s office will keep Sharon Regional Medical Center on life support for another five days.
The commonwealth now has until 11:59 p.m. Monday, Dec. 9, to fund the operating losses of the Sharon hospital, according to Stephanie Morrison, the attorney representing Steward, who reported the agreement to U.S. Bankruptcy Court Judge Christopher Lopez on Wednesday afternoon.
Although the Pennsylvania attorney general’s office in an earlier filing had stated Steward is seeking $3 million to keep the hospital open through December, Morrison said in court Wednesday the exact amount is still being determined. Morrison said there must be progress on the sale, with terms that are acceptable not only to Steward, but to the other debtors and lenders in consultation of the creditors committee.
If the commonwealth can’t fund the hospital’s operations through December, Steward will be allowed the flexibility to file a facility closure notice if it chooses to do so. The agreement also contains an expedited deadline for objections of three days instead of the 10 days originally requested. And Pennsylvania and Meadville Medical Center, the nonprofit hospital working to purchase the hospital, reportedly will not file an objection.
“What we really need is certainty and the ability to proceed and file a notice of closure in a timely manner if we choose to do so and if it is appropriate to do so,” Morrison said, adding that Steward understands the commonwealth continues to work hard to look for the needed funding for a sales transaction for the hospital “in the very near term.”
Morrison will file a proposed order for Lopez to sign after the hearing.
Attorney Ray Urbanik of the Pennsylvania attorney general’s office said negotiations are ongoing and the commonwealth is working with the governor’s office, state legislators, economic development agencies and municipalities to find the funding to cover the operating losses of the Sharon hospital, as well as working on terms to acquire the hospital for Meadville Medical.
In addition to negotiations with Steward and Medical Properties Trust Inc, the owner of the hospital’s real property, Urbanik noted a hearing scheduled for Friday morning in Mercer County Common Pleas Court, which is the beginning of the process to determine if the title held by MPT for the properties where the hospital operates is valid.
The committee of the unsecured creditors said it is in favor of the five-day extension. However, Michael Price, the attorney for the FILO lenders, said he has concerns that it has taken months to reach a deal, not only for the Sharon hospital but for some of the collateral held by the lenders, and the FILO lenders have not been approached to be included in negotiations.
“The FILO parties are an important piece to this puzzle, and we’re certainly not going to just walk away from our property interests,” Price said, adding extensions add to the costs of operations.
A representative for Sodexo Operations LLC, which provides food prep, housekeeping and other services for the Sharon hospital, and previously for several of Steward’s other hospitals, reported to Lopez the company was owed $5 million by Steward as of the end of October, including $246,000 for the Sharon hospital’s operations alone. That amount continues to grow, and it was noted that despite the $4.5 million provided by the commonwealth in the past three months for the hospital’s operations, Sodexo has not been paid, leading to the question of whether Meadville Medical, with the support of the commonwealth, will be able to pay the bill.
Meadville Medical’s representative said the community hospital originally believed it would not be responsible for some of the debts and only learned within the past couple of weeks that would not be the case.
A status conference is scheduled for Dec. 20.
Sharon Regional has more than 750 employees, generates an economic impact of $115 million for the local community and has served the region for more than 125 years.