Pennsylvania Attorney General Michelle Henry shared in an Aug. 22 bankruptcy court notice, obtained by Becker's, that Dallas-based Steward Health Care is seeking $1.5 million from the state by Aug. 23 or the health system will submit a closure notice for Sharon (Pa.) Regional Medical Center.
While the state is considering Steward's request for funding, there has been a delay due to Steward not agreeing to give the state any financial information regarding the request, the notice said.
During an Aug. 22 bankruptcy court hearing, U.S. Bankruptcy Court Judge Christopher Lopez granted a relief process allowing Steward to exercise its business judgment regarding what to do with the status of its hospitals. Mr. Lopez also approved a deadline of Aug. 30 for the state to come up with funding with no extension.
"I'm just making its really clear, come August 31, that notice could be filed [for the hosptial to close]," Mr Lopez said.
James Donahue, Pennsylvania First Deputy Attorney General, suggested during the hearing that it could take the state around two weeks to secure the funding for Steward, a timeline that Steward representatives argued could be detrimental to the hospital's operations.
The notice revealed that while Meadville (Pa.) Medical Center has been located as a potential purchaser for Sharon Regional, with a letter of intent also submitted to Steward on Aug. 16, state funding is being "demanded" by Steward's lenders, who are also "demanding hospitals be closed immediately."
A spokesperson for Meadville Medical Center told Becker's in a statement that while they have not formally placed a bid, there are terms in the LOI that need to be met for Meadville to "have a long-term interest in Sharon Regional Medical Center."
The state's notice also called Steward's conduct "egregious" and shared that Sharon Regional's property has been neglected by Steward.
"It needs an enormous amount of deferred maintenance due to the debtors' [Steward] gross neglect, incompetence, and mismanagement," the notice said. "The debtors also breached their commitments to patient care and community care. Pennsylvania reserves any and [all] rights to proceed with all of its regulatory powers, claims and causes of action against all responsible parties."
A potential closure of Sharon Regional would make this the fifth hospital that Steward plans to shutter since the for profit health system sought Chapter 11 bankruptcy on May 6.
Steward shared Aug. 21 that it would close Trumbull Regional Medical Center and Hillside Rehabilitation Hospital, both in Warren, Ohio, and six satellite facilities on or around Sept. 20. Steward also received court approval to shut down Boston-based Carney Hospital and Ayer-based Nashoba Valley Medical Center, by Aug. 31.
Steward's landlord Medical Properties Trust said in a Aug. 22 statement shared with Becker's that it has introduced solutions that would let Steward keep its Ohio and Pennsylvania hospitals open, which include new lease terms with multiple 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 Medical Properties Trust spokesperson said.
Editor's note: This story has been updated as of Aug. 22 at 4:15p.m. CT.