Commonwealth Health System and Tenor Health Foundation signed a letter of intent last week for Tenor to purchase CHS' Regional Hospital of Scranton, Moses Taylor Hospital and Wilkes-Barre General Hospital, according to an internal memo obtained by WVIA News.
Commonwealth Health spokesperson Tomi Galin verified the memo, which was sent from interim CEO David E. Loving to the company's board of trustees, medical staff and employees.
"A letter of intent was signed last week and we hope it will result in a productive and positive step forward that preserves the healthcare services provided by Commonwealth Health. As the process moves forward we will continue to share any major updates," Galin said.
"This is the first step in a process that all hope will result in a completed transaction," the memo reads.
Tenor Health Foundation, a California-based nonprofit, “was formed to identify, own, manage, and turn around financially challenged hospitals,” according to its website.
Loving said in the memo that Tenor Health employees may be seen at the hospitals in the coming days.
The California-based nonprofit recently purchased and reopened Sharon Medical Center in Mercer County, which closed in January after its former owners filed for bankruptcy.
"Tenor Health Foundation is pleased to announce that it entered into a letter of intent to acquire the Commonwealth Health facilities from Community Health Systems. We look forward to working with the communities served by these facilities," Tenor CEO Radha A. Savitala wrote in an email to WVIA News.
Loving is the interim CEO for Commonwealth Health's Scranton operations. Wilkes-Barre General Hospital, meanwhile, announced last month that Michael Clark was named to serve as its new CEO.
Lengthy search for a new buyer
The announcement comes after months of searching for a new buyer, after a deal with Woodbridge Healthcare, Inc. fell through last November. Since then, local foundations stepped in to financially support the struggling hospitals.
Negotiations after the failed sale originally included only the two Scranton hospitals.
However, as the memo reads, "While the newest contemplated transaction was originally to include only the Scranton assets, it became apparent that without the inclusion of Wilkes-Barre, there was not a deal that would keep services in both communities."
The letter does not indicate a final sale.
"When a definitive plan is reached, I will provide an update," Loving said.
Earlier this summer state Rep. Bridget Kosierowski (D- Waverly) named Geisinger, The Wright Center and Tenor Health as the frontrunners in the monthslong fight to save Community Health Systems’ Scranton hospitals.
Financial struggles
All three hospitals have mostly lost money in recent years, according to the Pennsylvania Health Care Cost Containment Council, although Wilkes-Barre General appears to be stemming those losses somewhat.
In fiscal 2023 expenses outpaced revenues by 24.1% at Moses Taylor; 9.5% at Regional and 15.7% at Wilkes-Barre General, according to the council's report for that year.
Regional and Moses Taylor now operate under one license. CHS consolidated the emergency rooms at the Scranton facilities in 2023, closing Moses Taylor’s ER.
According to the council's recently released fiscal 2024 report, expenses outpaced revenues by 20.6% at the combined Regional Hospital of Scranton and 6.19% at Wilkes-Barre General Hospital.
As WVIA News reported in July, a group of community organizations in Lackawanna and Luzerne Counties has contributed "millions of dollars" in recent months to help keep CHS’ struggling Scranton hospitals afloat while talks to find a buyer continue.
Participating in the funding arrangement are The Scranton Area Community Foundation, AllOne Foundation & Charities, Luzerne Foundation, Moses Taylor Foundation, NEPA Health Care Foundation, Allied Services, The Wright Center, and the Scranton Chamber of Commerce.
Charlie Lyons, a spokesperson for the organizations, said Wednesday that the groups are "encouraged" by the prospective sale, "which if finalized would continue the essential health care services the hospitals’ provide."
"We look forward to hearing more about the details of this arrangement and of Tenor Health’s plans," a statement provided by Lyons said.
"The foundations are pleased that our recent investments helped to keep the hospitals operating to give more time for an arrangement like this to begin coming together," the statement added. "We remain committed to working with state and local officials and others in the community to support a long-term solution that can preserve critical services and protect the current workforce at the hospitals for the long-term.”
Rep. Kosierowski 'cautiously optimistic' about letter of intent
Kosierowski has been working to find a new buyer since the failed sale.
"I am hopeful that Tenor, or at this point, any entity continues to negotiate with CHS to keep the doors open," she said. "The collaborative community partners, whether it be state, local, the city, we will continue to be supportive of that entity that comes in to carry this hospital forward."
She said she'll be watching for further updates within the next month.
"This letter of intent is 30 days for those other steps to be taken, so we'll see what happens in 30 days," Kosierowski said.
If Tenor buys the hospitals, the local foundations will no longer need to financially support operations, Kosierowski said. She welcomes Wilkes-Barre General Hospital being a part of this proposed deal.
"Wilkes-Barre general is a profitable system," Kosierowski said. "Wilkes-Barre General has different services than CHS regional. So to partner and keep those entities as one thriving, larger hospital is, to my knowledge, even more beneficial. The more services, the more access, the better."
Kosierowski said there's a sense of urgency to close a deal with incoming changes to Medicaid.
"We know what happens when people don't have insurance and they go into a crisis, they tend to visit the emergency room," she said. "The potential risk of closing an emergency room is catastrophic, to couple what's happening in Washington, D.C. To keep our hospitals open and operational and thriving is of utmost importance to me."
She hopes to see a deal coming soon.
"There's some other steps that need to be taken that are important, but this is an important first step. I'm optimistic, cautiously optimistic," Kosierowski said.
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Editor's Note: WVIA News' Roger DuPuis spoke with Charlie Lyons. Lydia McFarlane conducted the other interviews.
