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Steward: No qualified bids for local hospitals

WARREN — Bankrupt Steward Health Care has canceled auctions for hospitals it operates in the Mahoning and Shenango valleys, stating in a court filing it has not received qualified bids for the health care facilities.

The detail was contained in a filing Sunday that also states the Dallas-based health care provider accepted bids for hospitals in Hope, Arkansas, and West Monroe, Louisiana.

Steward operates Trumbull Regional Medical Center in downtown Warren, Hillside Rehabilitation Hospital in Howland and Sharon Regional Medical Center in downtown Sharon, Pa.

The company is working with consultants “to evaluate alternatives with respect” to the local hospitals, the filing states.

“No decision has been made with respect” to the Trumbull Regional, Hillside and Sharon Regional, and Steward “will make a further announcement … at a later date,” the filing states.

A sale hearing on the hospitals in Arkansas and Louisiana is scheduled for July 31.

Steward started the Chapter 11 process May 6 in a Houston bankruptcy court, listing billions in debt. Operating 31 hospitals in eight states, it is the largest physician-owned for-profit health care network in the U.S.

Meanwhile, the attorney general’s office in Pennsylvania and the Christian H. Buhl Legacy Trust have jointly objected to a court order approving the bidding and sale procedures.

According to the July 16 filing, Sharon Hospital was operated by the Buhl Trust from 1893 to 2014, when the trust and its subsidiary, Sharon Regional Physician Services, sold the operating assets, including 54 parcels or property to Community Health Systems.

The purchase agreement obligated Community Health Systems to continue Sharon Regional’s policies on charity care and to invest $75 million at the facility over five years. Also, the agreement called for Community Health Systems to receive written permission from the trust for any sale of the hospital’s real estate.

Mercer County Common Pleas Court also approved the purchase agreement.

Then in January 2017, Community Health Systems sought and received permission from the trust to transfer the hospital to affiliates of Steward Health, however, the filing states, neither the attorney general’s office, the trust or common pleas court were information a requirement of the deal was the real estate transfer was to Medical Properties Trust in the form of a sale leaseback transaction, “a clear violation” of the court order.

The filing also states Steward has breached the investment agreement, leading to a $20.2 million shortfall in capital improvements.

Also, since the sale “there has been a material decline in services provided” and Steward owes $501,099 to Pennsylvania in “Medicare credits / offsets,” the filing states.

The attorney general and trust do not object to the sale of the hospital to a “financially and operationally capable buyer that agrees to be bound by the terms” of the Community Health Systems purchase agreement, the court order and the state’s requirement to operate a hospital, the filing states.

They “do object to any proposed sale to a buyer that assumes” the Medical Properties Trust lease or “otherwise saddles itself” and the hospital, with “financially burdensome obligations” for the hospital, the filing states.

The filing also seeks to reinforce the state’s authority if Steward were to close the facility.

It states the Pennsylvania Department of Health requires written notice at least 90 days prior to a closure and the notification must include a closure plan that needs approval by the state health department.

The filing also states U.S. bankruptcy law allows the state health department to “exercise its authority over any proposed closure” of the hospital with court permission or violating an automatic stay, which prevents creditors from taking action during the course of a bankruptcy case.

The filing states “it is the sincere hope” of the attorney general’s office and trust an acceptable buyer will acquire the hospital, however, if Steward seeks closure, “they should be aware that it must be done in accordance with applicable state law.”

Have an interesting story? Contact Business Editor Ron Selak at rselak@tribtoday.com. Follow us on X, formerly Twitter, @TribToday.

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