A $120 million deal to sell three Northeast Pennsylvania hospitals to a nonprofit group has fallen through after the proposed buyer could not secure financing.
Community Health Systems Inc. announced Tuesday that WoodBridge Healthcare Inc. will not purchase Moses Taylor Hospital, Regional Hospital of Scranton and Wilkes-Barre General Hospital, which operate under CHS’ for-profit Commonwealth Health System.
“The termination of the purchase agreement was due to WoodBridge’s inability to satisfy the funding requirements in the purchase agreement because of certain developments affecting the expected proceeds available to WoodBridge from the issuance of publicly offered tax-exempt and taxable bonds,” a CHS release stated.
WoodBridge officials said Tuesday that they retained investment banking firm Zeigler to secure deal funding for the acquisition by issuing tax-exempt bonds.
“Zeigler issued a ‘Highly Confident Letter’ to WoodBridge in April of this year. A Highly Confident Letter is not a binding commitment, but rather an indication that Ziegler was highly confident they could sell the bonds,” Woodbridge’s statement said. “Ultimately, Ziegler was not able to sell the bonds.”
“The entire WoodBridge team is extremely disappointed in this outcome,” said Joshua Nemzoff, board chair of WoodBridge Healthcare Inc. “We very much looked forward to being part of the Scranton and Wilkes-Barre communities and partnering with the Commonwealth Health staff and physicians on providing the best healthcare in the region. CHS has gone out of its way to help get this deal done including significant concessions on their part. We appreciate all their efforts to do so.”
Also included in the deal would have been Commonwealth Health’s ambulatory surgery centers, emergency departments, imaging centers, laboratories, outpatient rehabilitation, sleep care centers, walk-in clinics, wound care centers and physician network.
Tennessee-based Community Health Systems Inc. is a publicly traded, for-profit company. Its subsidiaries own or lease 69 affiliated hospitals in 15 states.
WoodBridge Healthcare is a Bucks County-based nonprofit previously described as a “hospital turnaround firm.”
Troubled facilities
The proposed deal with WoodBridge Healthcare was announced in July.
All three hospitals lost substantial amounts of money in fiscal year 2023, according to the Pennsylvania Health Care Cost Containment Council 2023 fiscal year report.
Wilkes-Barre General is the largest of the three, with 369 beds. Regional Hospital of Scranton has 186 beds, and Moses Taylor has 122 beds.
Expenses outpaced revenues by 24.1% at Moses Taylor; 15.7% at Wilkes-Barre General and 9.5% at Regional, according to the council report.
Elected officials react
Scranton Mayor Paige Cognetti called the news “disappointing and troublesome,” noting that she herself relied on Moses Taylor for the birth of her two daughters in the past five years.
Cognetti also pointed out that her city’s police and fire departments make many daily trips to the hospital’s Scranton emergency room with people they serve on their beats, and “the idea that we would lose that ER is really concerning.”
CHS has not publicly mentioned closing any emergency rooms or other facilities connected with the three hospitals, but its pattern of disinvestment raises concerns, the mayor added.
“I think it is pretty well known that CHS has not been investing in these facilities for quite some time, and we know that they’ve already pulled away from their other investments in the Commonwealth,” Cognetti said.
Since 2020, the company has sold off or announced the sale of dozens of hospitals nationwide, including Berwick Hospital in 2020. In 2022 the company also closed Tyler Memorial in Tunkhannock and First Hospital Wyoming Valley in Kingston.
“So you can see the pattern here,” Cognetti said. “We have to assume that they are not going to start investing in these hospitals.”
“We will, however, keep moving forward with discussions with other entities,” Cognetti added, saying that state Rep. Bridget M. Kosierowski (D-Waverly) has been leading efforts to find new ownership for the facilities.
“As a nurse, state representative, and lifelong resident of Lackawanna County, my top priority is ensuring that the healthcare services our community depends on remain accessible and high-quality. While the announcement about WoodBridge’s decision not to purchase CHS hospitals raises questions, my focus is on working with all stakeholders to protect the critical services these hospitals provide,” Kosierowski said.
“I’ll continue to monitor the situation closely and advocate for solutions that prioritize patient care and our community’s health,” she added.
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