New Castle News

Closer Look

February 7, 2014

Community Health to buy Sharon Regional

SHARON — Sharon Regional Health System has reached an agreement to be purchased by a unit of for-profit Community Health Systems of Nashville, Tenn.

No sale price was given in the prepared statement issued Wednesday by Sharon Regional.

A hearing in Mercer County Orphan’s Court is set for Feb. 26. Both the Pennsylvania Attorney General’s Office, which conducted a hearing Thursday, and the court must approve the deal.

Reaching a final sales agreement completes five months of negotiations after a tentative deal was announced Aug. 27.

Sharon Regional noted the deal calls for Community Health to invest a minimum of $75 million in “facilities, services and medical technology’’ over the next five years.

The agreement also outlines continuation of growth of essential services such as medical/surgical, critical care, open heart and vascular surgery, emergency services, and obstetrics.

Employees “in good standing’’ would maintain their same posts at the same rate of pay with their years of service recognized, it stated.

In addition, a local advisory board of Sharon Regional’s medical staff and community leaders will be in place and the schools of nursing and radiography will continue to operate.

“This is a great day for both Sharon Regional and the community, and one we are very proud to announce,” William Strimbu, Sharon Regional board chairman, said. “CHS has an outstanding reputation for high quality and patient satisfaction, and we’re excited to move forward with an organization that will help position Sharon Regional for future long-term success.”

“I am very excited to move forward with our affiliation with CHS,” John R. Janoso Jr., Sharon Regional’s president and chief executive officer, said in the prepared statement.

Ed Newmeyer, a Sharon Regional spokesman, said the sale is expected to be completed by the end of April.

Sharon Regional’s board said previously it had taken a year to review the future of the nonprofit health-care provider by looking at a variety of partnerships.

Based in the Nashville suburb of Franklin, Community Health is one of the largest publicly traded hospital companies in the country. It also is a leading operator of general acute-care hospitals in nonurban and midsize markets.

Through its subsidiaries, the company owns, leases or operates 206 hospitals in 29 states with about 31,000 licensed beds. They include the former Forum Health hospitals in Mahoning and Trumbull counties now part of Valley Care Health System of Ohio.

Shares in Community Health are traded on the New York Stock Exchange under the symbol CYH.

Sharon Regional is among Mercer County’s oldest institutions, providing health care services for more than 115 years. With just under 1,800 employees, it is Mercer County’s largest employer.

It operates a 241 licensed-bed acute care hospital in Sharon. Its revenues in fiscal 2013 were $175 million.

State and federal regulations require a series of conditions be met before the deal can be finalized.

Guidelines set by the state attorney general’s office require full disclosure when a nonprofit is sold to a for-profit institution.

Among the things the agency requires be revealed before it gives its blessing to a sale are:

•The sale price

•A list of ongoing litigation at Sharon Regional

•How health care in the community will be affected

•All of Sharon Regional’s operating agreements and management contracts

•Independent valuations of Sharon Regional’s assets

•All relevant business contracts involving Sharon Regional

•Bylaws and endowment information relating to Sharon Regional.

Also, the attorney general’s office requires a fair price be paid for assets.

If a new foundation is created for use of the sale proceeds, it must be independent from any oversight by the for-profit purchaser. It also must be clear how the proceeds of the sale will be used to benefit the community.

Other state agencies that require certain filings include the departments of welfare and health.

Federal review of the deal also would be required to ensure no anti-trust laws are violated.

One clear beneficiary of the deal is the city of Sharon, which collects no taxes on Sharon Regional’s main asset — its hospital on East State Street, because the health care provider is non-profit and its assets are therefore tax-exempt.

Once the for-profit Community Health buys Sharon Regional, the hospital will eventually be added to the tax rolls.

Hermitage would benefit as well, because Sharon Regional’s Diagnostic and Imaging Center and other buildings are located there.

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