Community Health Systems Strikes Deal to Sell Pennsylvania Hospitals to Tenor Health Foundation

Community Health Systems (CHS) has signed a letter of intent with Tenor Health Foundation to sell its three-hospital portfolio in Pennsylvania, marking a significant development in the ongoing saga of these financially troubled facilities. This proposed transaction comes approximately nine months after a previous deal with WoodBridge Healthcare collapsed due to funding issues.

The Deal and Its Implications

The proposed sale includes Regional Hospital of Scranton, Moses Taylor Hospital, and Wilkes-Barre General Hospital, collectively known as Commonwealth Health System. These facilities have been struggling financially, with Regional Hospital of Scranton and Moses Taylor Hospital (operating under the same license) posting a -20.6% operating margin last year, while Wilkes-Barre General Hospital reported a -6.2% margin.

Tomi Galin, executive vice president of corporate communications and marketing at CHS, stated, "This is the first step in a process that we all hope will result in a completed transaction and preserve the healthcare services provided by Commonwealth Health." The deal's specifics, including the timeline and purchase price, have not been disclosed.

Tenor Health Foundation: A New Player in Hospital Turnarounds

Tenor Health Foundation, the potential buyer, is a relatively new nonprofit organization formed in 2022. Led by CEO Radha Savitala, who has extensive experience in hospital acquisitions from her time at Prime Healthcare, Tenor bills itself as a turnaround specialist for financially challenged hospitals in rural and suburban markets.

The foundation has already made its mark in Pennsylvania, having purchased the former Steward Health Care-owned Sharon Regional Medical Center in January for approximately $1.9 million. This acquisition was partly financed through a deal with hospital landlord Medical Properties Trust.

Community Support and Concerns

The potential sale comes amid growing scrutiny of corporate players and out-of-state interest groups in Pennsylvania's healthcare ecosystem. Recent hospital closures, including Crozer Health this spring, have fueled discussions about responsible hospital ownership.

In response to the uncertain future of these hospitals, a coalition of five local foundations stepped up to offer financial support. Laura Ducceschi, president and CEO of the Scranton Area Community Foundation, told Healthcare Dive, "We invested millions of dollars beginning this spring to sustain employees' salaries and offer CHS breathing room to find a new buyer."

The local community appears cautiously optimistic about the proposed deal. Ducceschi added, "We are just getting to know the Tenor team and learning of their plans for the hospitals and healthcare in the community. Much of those discussions will focus on our goals of preserving jobs, and maintaining — and even improving — care for patients."

As this transaction moves forward, all eyes will be on Tenor Health Foundation and its ability to turn around these struggling hospitals, preserving crucial healthcare services for the communities they serve.