Community Health Systems to Sell Pennsylvania Hospitals to Tenor Health Foundation

Community Health Systems (CHS) has signed a letter of intent to sell its three-hospital portfolio in Pennsylvania to Tenor Health Foundation, a nonprofit organization specializing in hospital turnarounds. This development comes approximately nine months after a previous sale attempt to WoodBridge Healthcare fell through.

Deal Structure and Hospital Portfolio

The proposed transaction involves the sale of Commonwealth Health System, which includes Regional Hospital of Scranton, Moses Taylor Hospital, and Wilkes-Barre General Hospital, along with their affiliated care sites. While specific financial details have not been disclosed, the previous deal with WoodBridge Healthcare was valued at $120 million.

CHS spokesperson Tomi Galin described the letter of intent as "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."

Financial Challenges and Community Support

The three hospitals have been facing significant financial difficulties in recent years. Regional Hospital of Scranton, which operates under the same license as Moses Taylor, reported a -20.6% operating margin last year, while Wilkes-Barre General posted a -6.2% margin.

In response to these challenges and concerns about potential hospital closures, a coalition of five local foundations stepped in to provide financial support. Laura Ducceschi, president and CEO of the Scranton Area Community Foundation, confirmed that the coalition "invested millions of dollars" beginning this spring to sustain employees' salaries and give CHS time to find a new buyer.

Tenor Health Foundation's Background and Strategy

Tenor Health Foundation, formed in 2022, positions itself as a turnaround specialist for financially challenged hospitals in rural and suburban markets. The nonprofit's CEO and owner, Radha Savitala, brings extensive experience in hospital acquisitions from her previous role at Prime Healthcare.

Tenor's track record includes the recent acquisition of Sharon Regional Medical Center in Pennsylvania for approximately $1.9 million. The foundation aims to improve hospital operations through "focus on efficiency of revenue cycle, enhancing service lines as appropriate and expense management in areas such as salaries and benefits, professional services, purchased services and supply chain."

As this proposed transaction moves forward, local stakeholders and healthcare experts will be closely monitoring its progress and potential impact on patient care and community access to medical services in the affected Pennsylvania regions.