Pennsylvania gets five-day extension to find funding for Sharon Hospital

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 an additional five days.

According to Stephanie Morrison, Steward’s attorney, who reported the settlement to U.S. Bankruptcy Court Judge Christopher Lopez on Wednesday afternoon, the commonwealth now has until 11:59 p.m. Monday, Dec. 9, to recover Sharon Hospital’s operating losses to finance.

Although the Pennsylvania attorney general’s office said in an earlier filing that Steward is seeking $3 million to keep the hospital open through December, Morrison said in court Wednesday that the exact amount was still being determined. Morrison said there must be progress on the sale, with terms acceptable not only to Steward but, after consultation with the creditors’ committee, to the other debtors and lenders.

If the Commonwealth cannot fund the hospital’s operations through December, Steward will be given the flexibility to file a notice of closure of the facility if he chooses. The agreement also provides for an accelerated objection period of three days instead of the originally requested ten days. And Pennsylvania and Meadville Medical Center, the nonprofit hospital lobbying to buy the hospital, reportedly will not object.

“What we really need is certainty and the ability to move forward in a timely manner and file a closure notice when we choose to do so and it is appropriate,” Morrison said, adding that Steward understands that the Commonwealth’s continued operation is difficult, ” “very short notice” to find the necessary financing for a sales transaction for the hospital.

Morrison will submit 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 lawmakers, economic development agencies and localities to find funding to cover Sharon Hospital’s operating losses and is working on it Terms of acquisition of the hospital for Meadville Medical.

In addition to negotiations with Steward and Medical Properties Trust Inc, the owner of the hospital’s real estate, Urbanik pointed to a hearing scheduled for Friday morning in Mercer County Common Pleas Court that will mark the start of the process to determine whether the title Ownership of MPT applies to the properties in which the hospital operates.

The Committee of Unsecured Creditors declared itself in favor of the five-day extension. However, Michael Price, the attorney for FILO’s lenders, said he was concerned that it took months to reach an agreement, not only for the Sharon hospital but also for some of the collateral held by the lenders, which is what happened The FILO lenders were not approached to be included in negotiations.

“The FILO parties are an important piece of this puzzle, and we certainly will not simply walk away from our ownership interests,” Price said, adding that expansions would increase operating costs.

A representative for Sodexo Operations LLC, which provides food preparation, housekeeping and other services to Sharon Hospital and previously to several other Steward hospitals, reported to Lopez that Steward owed the company $5 million at the end of October, including $246,000 solely for the operation of the Sharon Hospital. That amount continues to grow, and it was discovered that Sodexo had not been paid despite the $4.5 million the Commonwealth provided to operate the hospital over the past three months, leading to questions about whether Meadville Medical, with the support of the Commonwealth, will be able to foot the bill.

The Meadville Medical representative said the community hospital initially assumed it would not be liable for some of the debts and only learned in recent weeks that it was not.

A status conference is planned for December 20th.

Sharon Regional employs more than 750 people, generates $115 million in economic impact for the local community and has served the region for more than 125 years.

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