DALLAS - According to an objection filed in bankruptcy court by the state attorney general, Steward Health threatened to close Sharon Regional Medical Center unless it received $1.5 million from Pennsylvania. However, the Bankruptcy Court in Dallas rejected that deadline and gave the potential group looking to buy the hospital until August 30 to raise the funds to purchase the facility.

But Judge Christopher Lopez was clear that this was the final extension.

Pennsylvania Chief Assistant Attorney General, James A. Donahue III testified via phone during a Thursday afternoon hearing in U.S. Bankruptcy Court in Dallas, that if Sharon Regional closes, it would be damaging to the area.

Donahue said it would be much harder to get the hospital reopened if the medical professionals left. He explained to the court that Pennsylvania doesn't have county or state hospitals.

Donahue also said he would not be able to have everything needed to meet the Friday deadline for the parent corporation, but the state is working with a potential buyer and believes they could have the deal ready within two weeks.

He told the court that the hospital employs 750 workers and is the county's largest employer. 

When pressed if he could get the interim emergency funding needed, Donahue paused but said he was optimistic.

The lawyers representing the debtors said the hospital is not profitable and loses $1 million to $1.5 million monthly.

Donahue said the group looking to purchase the hospital would need 60 to 90 days to take over control of the facility.

It was also brought up that the hospital needs a new roof, air conditioning unit and other repairs.

Donahue told the court he wasn't aware of the facility's recent monthly deficit.

The concern was that Steward lacked the funding to keep the facility open and that the entity looking to buy didn't have the funding ready to take over operations.

Another concern was that the hospital was deteriorating, especially in 2024,  and new revenue was reduced coming into the facility.

The question came down to the details of whether an additional 90 days of funding would be needed to keep the doors open and where it would come from.

The debtors told the judge they weren't demanding a decision today and that they would continue to work with Pennsylvania, but they also made it clear that a plan for the funding needed to be presented in the coming days.

Donahue asked for a two-week abatement, to which the debtor's attorneys objected to the point, asking the judge who would be responsible for the additional debt that would occur. 

The Buhl Trust, which sold the hospital in 2014, asked the judge to give the commonwealth more time to complete the purchase. It was mentioned that Steward sent closure notifications to Trumbull Regional Medical Center and Hillside Rehab on Wednesday.

The Buhl Trust said that if the WARN notice is filed, that would be a bullet that would be hard to stop.

The debtors' attorneys said that allowing Sharon to stay open would impact other facilities, and this should be decided by those paying those debts, not the commonwealth.

The judge said today was just procedure and he granted the new deadline to August 30.

Meanwhile, Medical Properties Trust (MPT) has issued a statement to 21 News saying they have tried working with Steward to come up with ways to keep its hospitals in both Pennsylvania and Ohio open, but haven't had any luck.

"MPT has brought solutions to the table that would enable Steward’s hospitals in Ohio and Pennsylvania to remain open, including new lease terms with multiple high-quality prospective operators. Steward alone is responsible for the closure of these facilities as bidders were unwilling to agree to their demands around the hospital operations.”

THE FILING

The document filed on Thursday says members of the Attorney General’s office have been working “around the clock” on efforts to enable Meadville Medical Center to take over the operation of Sharon Regional.

Efforts to raise funding to acquire Sharon Regional have been spearheaded primarily by Pennsylvania State Senator Michelle Brooks, according to the document.

Saying that Steward’s “conduct has been egregious,” the attorney general says the Sharon Hospital property has been “badly neglected” by Steward and needs “an enormous amount of deferred maintenance” due to what the state alleges are gross neglect, incompetence, and mismanagement.”

Accusing Steward of breaching its commitments to patient and community care, the Attorney General hints that the state could take certain unspecified actions if acquisition efforts are not successful.

The document says the state has informed Steward that it appears as though acquisition funding has been preliminarily “worked out.”

However, the Attorney General says Steward is now trying to have the state “gift’ the funds to them on an emergency basis or they will still close Sharon Regional.

According to the Attorney General, Steward demanded “interim emergency funding” from Pennsylvania with the following message printed in all capital letters:

 “WE REQUIRE $ 1.5 MILLION FROM PENNSYLVANIA BY FRIDAY AUGUST 23, 2024 – OR WE WILL SEND A CLOSURE NOTICE.”

The motion says Stuard claims its lenders are demanding the funding and also want the hospitals closed right away.

“The demand for funding is heavy-handed and seeks to exploit the situation of the damages that ensue when a closure notice is sent,” according to the Attorney General’s objection which goes on the claim that “Pennsylvania is receiving daily threats of a closure notice to Sharon hospital unless it immediately funds at least $1.5 million to get to the end of September.”

Although the state calls the demands unreasonable, the Pennsylvania AG says the state is considering Stuard’s request and may agree to the funding based on certain conditions.

The document says that to consider the funding request, Stuard will need to provide comprehensive and detailed financial information including a 60 to 90-day “go forward budget” for Sharon Hospital. The information is needed so that the Attorney General's office can present the information to other agencies to determine if the funding can be obtained.

The state says the process may take at least two weeks, which would make it impossible to meet Steward’s deadline of Friday, August 23.

The state wants the judge to order Steward to cease all demands for funding until Pennsylvania can secure the requested funding and order Stuard to stop threatening to close Sharon Regional Medical Center and prevent closure without prior court approval.

Steward announced on Wednesday that it plans to close Trumbull Regional Medical Center in Warren, Ohio, Hillside Rehabilitation Hospital in Howland, as well as four satellite facilities.