Meadville Medical Center is looking at acquisitions in Sharon

Meadville Medical Center (MMC) is interested in acquiring Sharon County Medical Center from its bankrupt parent company, but does not want to invest in doing so.

On Thursday, Don Rhoten, MMC’s vice president of consumer affairs, confirmed to The Meadville Tribune that MMC sent a non-binding letter of interest to Sharon County Medical Center on Monday.

However, the medical center is part of the Chapter 11 bankruptcy process.

On May 6, Steward Health Care LLC of Dallas, a for-profit health care company owned by Sharon Regional, filed for Chapter 11 protection in the court’s Southern District. federal law in Texas. Sharon County employs about 700 people, with Sharon Medical Center in Sharon as its primary care facility.

Steward operates 31 hospitals in Massachusetts, Arizona, Ohio, Pennsylvania, Arkansas, Louisiana, Texas and Florida. Steward purchased Sharon Regional in 2017 from Community Health Systems Inc. Prior to that, Sharon Regional was a non-profit organization since its founding in 1893.

Rhoten said: “We do not make money. “In order to contribute in any way, we do not intend to damage the financial stability of MMC. If we can play a role in saving Sharon Hospital, then we want to – however, there needs to be some kind of financial investment.”

One thing MMC doesn’t want to do is take over leases on properties associated with Sharon Regional or its facilities, Rhoten said.

Medical Properties Trust, based in Birmingham, Ala., has real estate interests in Steward’s 31 hospitals and other medical facilities. Payments may be denied as part of the bankruptcy process, but they have not been canceled for Sharon Regional.

Rhoten emphasized that MMC will not have any financial investment. “It wouldn’t be,” he stressed. “A thousand percent – there wouldn’t be.”

MMC’s non-binding letter of interest in Sharon County Medical Center has been sent to Cain Brothers, Rhoten said. Cain Brothers is part of KeyBanc Capital Markets Inc., which is providing investment banking services to Steward Health Care as it goes through bankruptcy proceedings.

Meadville Medical Center is a nonprofit organization with 230 licensed beds at its Meadville facilities and 25 beds at Titusville Area Hospital, which is part of the MMC hospital system.

Sharon County Medical Center is a licensed 220-bed, acute care hospital, according to Steward Health Care.

However, the sale of any assets by Steward Health Care – such as a hospital facility – will require the approval of the bankruptcy court.

A bankruptcy court hearing scheduled for Monday regarding the possible sale of Steward hospitals in Pennsylvania and Ohio was postponed to a date to be determined, according to court documents.

Rhoten said MMC is not interested in buying Sharon County Medical Center because of the hiring issue as well as its plant issues.

The bank’s board is already considering Rural Healthcare Group’s $245 million offer to buy Steward Medical Group’s physician practice, which includes physicians affiliated with Sharon Regional Medical Center.

Rural Healthcare Group, based in Nashville, announced the deal on Tuesday. Steward Medical Group, also known as Stewardship Health, oversees nearly 5,000 providers in nine counties, including those affiliated with Sharon and Trumbull County Medical Center in Warren, Ohio.

Rural Health Care Group is affiliated with Kinderhook Industries LLC, a private equity firm in New York City.

The bank’s council approved an inspection of the medical center that was carried out in June and found many defects in the building’s equipment.

According to the Sharon County Medical Center inspection report, the hospital’s backup generator failed in December 2021. The repair bill is estimated at $690,000. “Steward determined that it was cheaper to rent a temporary generator from Penn Power at a cost of $8,100 per month,” the report said.

One of the hospital’s air conditioning units, known as a chiller, failed on May 21, and attempts to repair it were unsuccessful, the report said. The cost to replace the chiller was estimated at $600,000.

Sharon Regional was paying rent on two generators and two chillers that cost about $70,000 a month, the report said. The hospital received government assistance, which helped to repair the chiller to 70 percent of the cooling capacity in the affected building, and the hospital is working to get it to 100 percent.

“We didn’t file a motion or make a formal offer (to the court) — nothing like that,” Rhoten said. “That never worked for us.”

Earlier this month, MMC announced that it will establish a nursing school for registered nurses.

A registered nursing school is happening as the Saron Regional Medical Center School of Nursing in Mercer County plans to close after 125 years.

“With the bankruptcy filing in May (by Steward) we were concerned, and we recently reached out to (take over) the nursing school,” Rhoten said.

Almost all of the faculty and staff of the Sharon school of nursing are expected to become the faculty and staff of the new MMC school of nursing.

In the past two years, Sharon Regional has reduced its workforce from about 1,400 to more than 700, according to previous figures provided by the hospital to the Tribune’s sister paper, The (Sharon) Herald.

Steward — then controlled by private equity firm Cerberus Capital Management — sold most of its hospitals to Medical Properties Trust, which leased the properties back to Steward, between 2016 and 2018, according to the report. in the Wall Street Journal May 5, per day. before Steward declared bankruptcy.

CNHI Information Service