Steward Health Care got bankruptcy court approval Friday to sell Sharon Regional Medical Center to Tenor Health Foundation Sharon LLC.
Per the deal, Tenor Health Foundation is to pay $1.9 million in cash and take on, among other things, certain “unexpired leases’’ that were held by Steward. But the deal still has to be finalized and the state must approve the transfer of licenses to Tenor.
In a thick sales agreement approved by the court, it noted Tenor made a $1 million advanced payment to Steward on Jan. 6. The sale includes Sharon Regional’s local clinics, medical practices and other operations.
Tenor Health Partners, a for-profit health care management company headed by Radha A. Savitala, created the nonprofit Tenor Health Foundation. They will shoulder operations for Sharon Regional as a nonprofit hospital, which includes board members from the local community, a news release issued by the company said. This is Tenor Health Foundation’s inaugural acquisition.
“The hospital, its emergency room, clinics, and other care resources, are needed to ensure access to essential health care services in the region,’’ Savitala said in a news release. “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.’’
Savitala is identified in the news release as Tenor Health Foundation’s founder. She thanked the local community and the state for their work in getting the sales agreement approved.
Regarding when the hospital would open, it wasn’t immediately clear.
“The efforts to reopen the hospital continue as we work with the regulatory agencies,’’ the news release said.
Previously, Sharon city manager Bob Fiscus said he expected the hospital would open gradually.
State Sen. Michele Brooks, (R-50) has shepherded Sharon Regional’s financial plight and sale through state agencies and other departments. Brooks said in the release the sale is a relief for many families in the community, as it will continue to allow Sharon Regional to provide local health care.
“It is thanks to the passionate staff and their unwavering commitment to both the institution and the patients they serve that the hospital has remained a critical part of our community during the lengthy period of uncertainty and transition,” Brooks said in the news release. “Keeping this hospital open ensures the vital capacity needed for our community and limits the need to travel a greater distance for care.’’
She said this was an eight-month effort to save the hospital. Brooks also thanked the governor’s office and the Attorney General’s office, along with Bob Rogalski, Sharon Regional’s president.
Like other real estate deals, Sharon Regional’s sales agreement has typical clauses such as the buyer agrees to accept properties “as is.’’
Steward filed for bankruptcy in May and has been selling off or closing its 31 hospitals. Sharon Regional was among the very last where a final decision was made.
A crucial part of Sharon Regional’s future survival has been tied to Medical Properties Trust lease agreements. Steward, like its other hospitals, sold much of Sharon Regional’s real estate to MPT. The state Attorney General’s office said the lease terms for Sharon Regional were financially burdensome.
The sales agreement left the status of those leases a bit murky as it indicated a deal awaits to be struck on that matter.
In the agreement, which refers to Steward as the “debtors,’’ states:
“The closing shall not occur, and no party shall have any obligation to provide health care services at Sharon Regional Medical Center (and such hospital shall not provide health care services), until the Commonwealth of Pennsylvania and the Christian H. Buhl Legacy Trust, on behalf of themselves and their respective affiliates, shall have entered into a release agreement with Medical Properties Trust, Inc., and its applicable affiliate (MPT) and the Debtors relating to Sharon Regional Medical Center, in form and substance satisfactory to MPT and the Debtors (as applicable).
Buhl Legacy Trust, a separate and unrelated nonprofit group from the Buhl Foundation, has an ongoing court battle with MPT, saying it is the rightful owner of the property. Buhl Trust sold Sharon Regional to another for-profit company, which, in turn, sold the hospital to Steward.
Two years ago Sharon Regional employed 1,400, but as Steward’s finances dwindled, the staff was cut to 700 towards the end of summer, and was left with a skeleton staff until it closed on Monday.
The hospital stopped accepting new in-patients by late December and its emergency room stopped treating patients just before it closed.