New Castle News

Closer Look

August 29, 2013

Sharon hospital to be sold

SHARON — Nonprofit Sharon Regional Health System has reached a tentative agreement to sell itself to for-profit Community Health Systems Inc.

The announcement was made Tuesday.

With 1,800 employees, Sharon Regional is Mercer County’s largest employer. The employees were told of the pending deal in meetings Tuesday.

Under the agreement, a non-binding letter of intent, the healthcare providers will hammer out a final deal, expected to take 60 to 90 days.

In a statement issued by Sharon Regional, the health system said the deal would result in capital investments and other resources to give it long-term success. Also, Cleveland Clinic would participate in clinical program development, quality improvement and branding through its alliance with Community Health.

About three years ago, Tennessee-based Community Health bought Forum Health, which includes Trumbull Memorial, Hillside and Northside hospitals in the Youngstown and Warren, Ohio, market.

If the deal is completed, Sharon Regional said, it would retain existing employees “in good standing’’ at the same compensation with their years of seniority recognized. Current medical staff also would be maintained.

Tuesday’s announcement runs counter to comments made in a June Sharon Herald interview with John Janoso, Sharon Regional’s chief executive officer, and Bill Strimbu, board chairman.

In that interview Janoso acknowledged Sharon Regional had conducted talks with University of Pittsburgh Medical Center about creating joint alliances or “models.” But he said the center wanted Sharon Regional essentially to merge with its local affiliate, Horizon. The offer was flatly rejected, he said, because, “... it didn’t meet with our guiding principles.”

Janoso was adamant Sharon Regional hadn’t put itself up for sale. He is the third chief executive officer in less than two years.

“We are not actively for sale,” he said. “We are not seeking a buyer.”

But it’s obvious Sharon Regional didn’t whip up this deal in a few hours, said Dick Miller, who owns Keystone Research Inc. in Greenville. Miller managed a healthcare trust for several years and was a consultant in healthcare cost containment.

“This is unbelievable,” Miller said. “They’ve been telling everyone they weren’t for sale. Well, you don’t come up with this kind of agreement in two days. The lies have been going on for six months.”

It’s also clear the decision wasn’t made from a position of financial strength, he said.

“It’s safe to conclude they are unable to continue as an independent hospital.”

Miller said Sharon Regional had little choice.

“This is probably the only thing that will save independent hospitals,” he said of the pending sale.

Sharon, Jameson in New Castle and Grove City’s hospital “are all in the lurch.”

Sharon Regional said the good things about the pending deal included that local control would be maintained over healthcare decisions.

Also, it would have a local board of trustees.

But Miller said if the deal goes through the board would be subservient to Community Health.

“If you buy them, you control them. The board can say ‘We want to build a new addition.’ But you can only do it if Community Health gives you the money for it.”

Sharon Regional said the pending deal was a year-long process of reviewing its strategic options.

Community Health is one of the largest publicly traded hospital companies in the U.S. It’s also a leading operator of general acute-care hospitals in non-urban and mid-size markets nationwide.

Through its subsidiaries, the company owns, leases or operates 135 hospitals in 29 states with about 20,000 licensed beds.

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