SHARON, Pa. – Steward Health Care System plans to close Sharon Regional Medical Center on Jan. 6, 2025. The date was announced in a court filing late Monday and followed the announcement by Meadville Medical Center that it would not purchase the hospital. The actual document cited the year of the Jan. 6 closing as 2024, an apparent typo.
Steward filed the notice of closure and abandonment of the property in the U.S. Bankruptcy Court in Houston. According to the document, any objections must be filed within three days.
Meadville announced its decision in a statement Monday afternoon, saying inadequate funding to financially stabilize the hospital for the long-term was unable to be secured.
Pennsylvania Attorney General Michelle Henry also issued a statement Monday:
“This is another example of a private equity buyer valuing dollars over people and communities,” Henry’s statement said. “We are disappointed that, despite best efforts from our office and the Governor’s Office, an immediate solution was not attainable.”
The AG said that time and again in Pennsylvania and across the country, private equity acquisitions of health care systems harm residents and families who depend on those facilities and their staff for essential services.
“My office is an advocate for affordable and accessible health care, and we worked around the clock with the parties involved to try to salvage a financial arrangement that keeps Sharon Hospital’s doors open and staff employed at their respective locations,” Henry’s statement said. “We expect to be in court Thursday regarding our civil complaint filed against MPT/CHS.”
Meadville’s decision comes after the Buhl Regional Health Foundation offered it an $11 million loan to buy the Sharon Regional property.
Jennifer Barborak, foundation executive director, said extensive discussions occurred late last week when the foundation board met with representatives from Meadville Medical, the governor’s and attorney general’s offices and other entities. Meadville at that time said it was $6.8 million short to buy the property, but the foundation was asked to provide a $25 million grant.
“And so to facilitate that transfer of the property, we felt that it would be in our best interest to help Meadville Medical Center get set up for success, and we let the attorney general’s office and the governor’s office know that we were committed to an $11 million low- to no-interest loan,” she said.
Sharon Regional is part of Steward Health Care System, which is in bankruptcy and trying to sell its facilities.
The property is owned by Medical Properties Trust.
“I mean, when you’re looking at this, it’s absolutely unreal what Steward has done here in this situation,” Barborak said. “So we were optimistic that what we’re doing – and to be honest with you, it is the single largest contribution of any entity that is providing support to this – and I truly believe that it would set them up for success.”
The foundation’s loan offer also came with the requirement that other community organizations involved in the process match the $11 million. Barborak said the foundation was told the community did have the match.
The medical center could draw the full amount immediately, and the parties would work out the payback terms. The medical center wouldn’t have to begin paying back the loan until it was set, she said.
“And we felt that really the best way to set Meadville Medical Center up for success is to get them to own the property,” Barborak explained. “I mean, the property has been the biggest, you know, game changer in this whole process.”
But the board didn’t feel comfortable granting any additional requests at this time, she said, adding that Meadville could return with additional requests later.
Meadville Medical Center’s statement said a tremendous amount of effort and resources were dedicated to keeping SRMC open and serving the community.
“On behalf of MMC, we want to acknowledge those individuals and organizations who went above and beyond to support this worthy effort to preserve essential healthcare services for the Sharon community,” it said. “We also want to acknowledge the over seven hundred dedicated employees at SRMC and the hospital leadership for their efforts to continue to provide exceptional care to their community during this most difficult time. Their collective efforts can only be described as heroic.”
The statement also thanks Gov. Josh Shapiro and his senior staff, Henry and the attorney general’s office senior attorneys and state Sen. Michele Brooks, R-50th, for the time and resources they dedicated to keep SRMC serving the Sharon community in recent months.
“Without these extraordinary efforts, the hospital would have likely closed months ago,” the Meadville statement reads. “In addition, we want to acknowledge those local community foundations, Penn-Northwest, city and county officials who committed funding support toward the effort to preserve SRMC.”
Meadville said that after a Friday afternoon meeting with the Buhl Regional Health Foundation, “we came to the realization that adequate funding to financially stabilize the hospital would not be forthcoming, and our efforts to preserve SRMC were no longer viable.”
It said the MMC team also invested substantial time and resources in the effort and are incredibly disappointed in the outcome.
“MMC has remained consistent as to the amount of funding it would take to stabilize SRMC for the long term,” the statement reads.
But without adequate funding, proceeding any further would be irresponsible, it said.
“We genuinely want what is best for the community and remain willing to support SRMC and to preserve essential healthcare for the Sharon community,” Philip Pandolph, MMC CEO, said in the statement.
After the medical center requested the $25 million grant, the board asked Meadville for a business plan, a sustainability plan and a market analysis, Barborak said. Meadville didn’t have a market analysis or a sustainability plan and reported that its business plan and financials included many assumptions.
Barborak said the foundation has been asking for additional information since meetings began last June.
“We received nothing in writing,” Barborak said.
The $25 million grant request came at the 11th hour, she said.
The foundation, after the board did its due diligence, offered the loan.
As a private foundation, “we have a fiduciary responsibility – and we take it very seriously – to ensure that we have collected as much information as we possibly can before we make a decision certainly of that magnitude,” the foundation executive director said.
The $25 million grant would have wiped out about half of the operations provided by the foundation. When discussions started in June, the medical center requested $45 million from the foundation, which at that time had about $47 million in operations, she said, “so it would have essentially closed the foundation.”
The foundation provides dental clinics, youth grief camps and grants to community-based organizations that meet social determinants of health needs in Mercer County among its services. Also, since Sharon Regional closed its obstetrics department, the foundation has provided funding for UPMC’s doula program.
Barborak said the foundation’s money is the community’s money, and it must ensure it’s distributed equitably to meet a variety of social determinant health needs in the community.
“And I do think we do an excellent job of doing that,” the executive director said. “We are committed and definitely concerned about the situation with the hospital as well, but I just don’t feel that we’ve been given enough information to justify any further contributions” at this time.
Last week, the commonwealth of Pennsylvania and Medical Properties Trust agreed to nonbinding mediation regarding the value of the hospital real estate that MPT owns. The Buhl Legacy Trust contends the property was improperly sold to MPT through previous transactions.