SHARON, Pa. – Closed less than a week, Sharon Regional Medical Center has new life after a deal was finalized late Friday for Tenor Health Foundation Sharon LLC to purchase the hospital and operate it as a nonprofit.
U.S. Bankruptcy Court Judge Christopher Lopez held an emergency hearing Friday to approve the sale to Tenor Health Partners for $1.9 million, which includes the hospital operations and assets such as furniture and equipment, as well as assumed employee liabilities for the 800 employees, except some portion of payroll for the next few weeks. But Tenor will not own the real estate affiliated with the hospital, according to court documents.
The commonwealth of Pennsylvania and the Christian H. Buhl Legacy Trust also have a say in the Tenor deal to operate the hospital with additional release agreements still to be worked out. Steward Health Care System’s licenses may transfer to Tenor upon the closing of the sale transaction, court documents state.
The deal has the support of the commonwealth and Medical Properties Trust, which purchased the real estate from Steward and then leased it back to the hospital operators. The terms of any lease agreement between Tenor and MPT, which continues to own the real estate, are not known at this time.
The only objection to the deal came from a company that still has medical equipment inside the Sharon hospital, according to an attorney representing the company.
Lopez said he “simply could not be happier” for the “proposed lifeline” for Sharon Regional. The judge acknowledged the hard work of all the parties involved in reaching an agreement and signed the documents shortly after the hearing Friday.
“We certainly appreciate that the parties have not had much time to review the documents. But we do believe that emergency relief is warranted here – really to save and reopen this hospital and stem the bleeding,” said David Cohen, one of the attorneys for Steward Health.
The attorney for the commonwealth, which has been involved in attempting to work out a deal since early on, said Tenor is ready to get to work right away on reopening the hospital, and the Pennsylvania Department of Health reportedly reduced the time usually needed to get approval from 90 days to two weeks.
Yates Medical Group CEO Benjamin Yates was unhappy with the decision to sell the hospital to Tenor, claiming his organization had been attempting since June to purchase not only the Sharon hospital but also the two hospitals that Steward owned in Trumbull County, the former Trumbull Regional Medical Center in Warren and Hillside Rehabilitation Hospital in Howland. The Trumbull hospitals were acquired by Insight Health System in November and renamed Insight Hospital & Medical Center Trumbull and Insight Rehabilitation Hospital Hillside.
Yates laid out for Lopez the timeline of everything his organization had done to secure the hospitals, which he said are close to his heart because he trained in them as a medical student and knows many of the people involved in their operations. He said he doesn’t believe his organization was given a fair shot at making a deal to purchase the hospitals, and he’s concerned that Tenor doesn’t have the financial capital to operate the Sharon hospital. He pointed to Tenor’s request for $10 million in financial help from community groups and foundations, as well as the need to cover salaries and operation costs of the hospital down the road.
“I’m very concerned that if this is given to the other party, which is Tenor, who doesn’t have sufficient capital, that Sharon is headed to either being reduced to being … an emergency room with a few beds, minimum services, which would be devastating,” Yates said. He noted that Sharon is the only hospital in the Shenango Valley with behavioral health and heart catheterization and stroke accreditations.
“Worse case scenario, I am afraid of the hospital closing again,” Yates said, calling that possibility “gutwrenching” for the Sharon community.
Cohen responded that Yates had ample opportunity to acquire the hospital but didn’t provide proof of capital or support from MPT or state regulators.
“He certainly has displayed a lot of passion and desire and interest in having the opportunity to acquire the hospital. But I think the transaction we have before us with Tenor really is the only actionable transaction,” Cohen said.
Steward filed a closure plan with the court Dec. 16 after a deal with Meadville Medical Center fell through. The hospital stopped accepting patients in the emergency room Jan. 5 and closed Jan. 6.
Even as department after department was shut down leading up to the Jan. 6 closure, those affiliated with the hospital and local government officials remained hopeful it would not close or would be able to reopen. That was buoyed by Dec. 31 reports that Robert Rogalski, president of Sharon Regional, had informed employees that Tenor Health Partners had struck a deal with MPT, the landlord of the hospital.
Earlier this week, Sharon City Manager Robert Fiscus said negotiations were ongoing with Tenor, and it included a local commitment of $10 million from municipalities and community organizations, with $500,000 coming from the city of Sharon and more than half of the $10 million from the Buhl Regional Health Foundation.
Late Friday, California-based Tenor issued a statement that acknowledged Sharon Regional is the company’s “inaugural acquisition.”
Said Radha Savitala, founder of Tenor Health, “The hospital, its emergency room, clinics, and other care resources, are needed to ensure access to essential health care services in the region. We are grateful for the support of this wonderful community and the local and state entities that have enabled us to complete most of the steps needed to reopen the hospital. My team and I very much appreciate the resources provided in support of our efforts by the community and the commonwealth of Pennsylvania.”
The Tenor statement included comments from state Sen. Michele Brooks, a leader in the effort to save the hospital.
“Keeping this hospital open ensures the vital capacity needed for our community and limits the need to travel a greater distance for care,” Brooks said. “It is gratifying to know that in addition to the original coalition of support we put together over the past eight months, there have been new partners who have joined the effort to keep this hospital in the community. I would like to thank the governor’s office, the office of attorney general, [Sharon hospital board chairman] Bob Rogalski, Sharon Regional staff, Tenor Health and everyone who has worked to try and give this hospital a future, as well as save hundreds of jobs.”
Steward filed for Chapter 11 bankruptcy May 6, which has resulted in the change of operator or closure of all of its 31 hospitals in Ohio, Pennsylvania, Massachusetts, Florida, Arizona, Texas, Arkansas and Louisiana.