Deal to sell three Pennsylvania hospitals collapses: ‘Extremely disappointed’

A few months after announcing an agreement to sell three hospitals in northeastern Pennsylvania, the two parties say the deal isn’t going to happen after all.

Community Health Systems, Inc. and WoodBridge Healthcare, Inc. said this week that they have mutually terminated the agreement, which was announced in August. CHS initially sought to sell Commonwealth Health and its three hospitals to WoodBridge Healthcare in a $120 million transaction.

In a statement posted on its website, WoodBridge says it was not able to put together the financing to buy the hospitals. Joshua Nemzoff, chairman of the board of directors of WoodBridge Healthcare, Inc., said without the bond financing, "the agreement for WoodBridge Healthcare to acquire Commonwealth Health is terminated."

"The entire WoodBridge team is extremely disappointed in this outcome," Nemzoff said in a statement. "We very much looked forward to being part of the Scranton and Wilkes-Barre communities and partnering with the Commonwealth Health staff and physicians on providing the best healthcare in the region."

In the deal, WoodBridge sought to buy three hospitals from CHS: Wilkes-Barre General Hospital in Wilkes-Barre, a 369-bed facility; Regional Hospital of Scranton, a 186-bed facility; and Moses Taylor Hospital in Scranton, with 122 beds. WoodBridge also planned to buy their associated ambulatory surgery centers, clinics, imaging centers and other healthcare locations.

Nemzoff also expressed thanks to CHS for working to complete the sale.

“CHS has gone out of its way to help get this deal done including significant concessions on their part. We appreciate all their efforts to do so,” Nemzoff said.

A nonprofit organization, WoodBridge says it retained Ziegler, an investment firm, to help secure financing by issuing tax-exempt bonds. But WoodBridge says Ziegler “was not able to sell the bonds.”

CHS said in a statement that the company “will evaluate future options for Commonwealth Health in light of the termination of this transaction.”

Elected officials in Pennsylvania had expressed hope that the deal would help the hospitals and offer better care for the communities they serve.

U.S. Rep. Matt Cartwright, a Democrat who represents the Scranton area, said he was “optimistic that these important healthcare assets will be saved and hopeful that this new owner will be more accountable to the patients, to the staff, and to the community it serves.”

U.S. Sen. Bob Casey Jr., a Pennsylvania Democrat and Scranton native, has criticized CHS’ management of the facilities. In a July letter to CHS, Casey said CHS hasn’t invested sufficiently in the hospitals, and he urged the company to find a buyer for the hospitals.

“It is CHS’ responsibility to find a trustworthy buyer who has a strong record and experience in running hospitals in order to provide a pathway to safe, affordable, and accessible care for their patients and to the Northeastern Pennsylvania community,” Casey wrote in the letter.

CHS has been looking to sell some of its hospitals as the company aims to improve its finances, and it has completed a few deals in recent months. Just in the past week, CHS announced an agreement to sell two Florida hospitals, and their associated clinics, to AdventHealth in a $265 million deal.

Also this month, CHS reached an agreement with Memorial Health System in Mississippi to assume full ownership of Merit Health Biloxi, a 153-bed hospital, along with a medical office building, clinics and two imaging centers. Based in Gulfport, Mississippi, Memorial Health System has had a 50% ownership stake in Merit Health.

In August, CHS finalized the sale of Tennova Healthcare-Cleveland, a 351-bed hospital in Cleveland, Tenn., to Hamilton Health Care System, Inc. Hamilton acquired the facility in a $160 million transaction.

CHS operates 69 hospitals and more than 1,000 sites of care in 15 states.