Commonwealth Health eyes $120M sale of Scranton, Wilkes-Barre hospitals to nonprofit WoodBridge

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Commonwealth Health eyes 0M sale of Scranton, Wilkes-Barre hospitals to nonprofit WoodBridge

Community Health Systems wants to sell its money-losing hospitals in Scranton and Wilkes-Barre to a recently formed Bucks County-based nonprofit with past ties to private equity investors.

The proposed deal with WoodBridge Healthcare, announced Tuesday afternoon, calls for the sale of Moses Taylor Hospital, Regional Hospital of Scranton and Wilkes-Barre General Hospital, which operate under CHS’ for-profit Commonwealth Health System.

They would revert to nonprofit status, with local board representation, releases issued by the two groups said.

Also included in the deal would be Commonwealth Health’s ambulatory surgery centers, emergency departments, imaging centers, laboratories, outpatient rehabilitation, sleep care centers, walk-in clinics, wound care centers and physician network.

The $120 million sale is scheduled to be complete in the fourth quarter this year, a release said.

“We are pleased to announce that these hospitals were a catalyst for establishing WoodBridge, which aims to enhance and preserve access to not-for-profit care in local communities,” Joshua Nemzoff, chairman of the WoodBridge Board of Directors, said in a release.

“The Commonwealth Health System has a long and proud history of serving the Scranton and Wilkes-Barre region and we will strengthen and enhance that tradition for years to come,” Nemzoff added.

WoodBridge spokesperson Letitia Fecher said the acquisition will require hospital licensing approval, but not approval by the Federal Trade Commission or state Attorney General’s Office.

Hospitals losing money

If the sale is approved, WoodBridge will have a significant challenge on its hands.

All three hospitals lost substantial amounts of money in fiscal year 2023, according to the Pennsylvania Health Care Cost Containment Council 2023 fiscal year report.

Wilkes-Barre General is the largest of the three, with 369 beds. Regional Hospital of Scranton has 186 beds, and Moses Taylor has 122 beds.

Expenses outpaced revenues by 24.1% at Moses Taylor; 9.5% at Regional and 15.7% at Wilkes-Barre General, according to the council report.

How CHS came to NEPA

The sale would substantially eliminate the footprint of for-profit local hospital ownership that began more than a decade ago.

In May 2009, Tennessee-based Community Health Systems, operating as Commonwealth Health, bought Wilkes-Barre General, an acute care hospital in Wilkes-Barre, First Hospital Wyoming Valley, a behavioral health center in Kingston, and other outpatient and related services for $178.9 million. At the time, Wilkes-Barre General became the system’s 10th affiliated hospital in Pennsylvania.

Two years later, Community Health set off major change in Scranton.

In 2011, in a span of three months, all three Scranton hospitals changed hands.

In May, Community Health Systems announced its purchase of Moses Taylor and Mid-Valley Hospital in Blakely for $164.2 million in cash plus the assumption of $9.4 million in outstanding loans, making the deal worth $173.6 million.

Two months later, the system bought Regional Hospital, once known as Mercy Hospital, Tyler Memorial Hospital in Tunkhannock and Special Care Hospital in Nanticoke for $150.8 million and assumed $12.3 million liabilities while gaining a $2.1 million credit, making the worth $161 million.

Only hours after the Regional sale announcement, Geisinger Health System announced its purchase of Community Medical Center.

Over the next few years, Commonwealth Health planned an elaborate expansion of its Scranton hospitals. The system spent hundreds of thousands of dollars buying at least 15 properties on the block between the hospitals and demolished several homes. A new three-story medical center was planned for the block.

Some of the plan happened, including consolidating the hospitals’ top management and its separate licenses, but the new building never materialized. The land sits vacant, with an occasional vehicle parked there.

Community Health Systems, a publicly traded company, had expanded rapidly, but began experiencing major financial problems as the 2010s wore on.

Since 2020, the company has sold off or announced the sale of 28 hospitals nationwide, including Berwick Hospital in 2020, Becker’s Hospital Review, an online publication, reported Friday.

The company also closed Tyler Memorial and First Hospital Wyoming Valley in 2022.

Once the owner of at least 130 hospitals, Community Health now owns 71.

In a February earnings call with investors, CEO Tim Hingtgen said the system was evaluating interest in sales with a potential value of more than $1 billion, Becker’s reported.

Kosierowski, Cartwright ‘optimistic’

News of the sale quickly drew responses from elected officials in the region.

State Rep. Bridget Kosierowski (D-Waverly) said she began calling potential suitors to buy the Scranton hospitals more than a year ago.

Kosierowski said Community Health had failed to invest in either and feared the region would lose access to emergency room, orthopedics, long-term, radiological and other specialty care.

“I heard from people that they (specialists) were leaving, not because they wanted to leave the patients that they cared for, but … because (they were) finding it more difficult to practice in a place that wasn’t being invested in,” she said.

She said she called officials at Geisinger, the Lehigh Valley Health Network, Guthrie and Wayne Memorial Hospital, but WoodBridge came forward on its own.

“I’m very optimistic. I’m grateful. I think they have a good vision. I think they … want to turn this around. They want to make this place a mecca again — like it used to be — of good quality care,” she said. “I also am aware of the challenges that they’re going to face …, but I believe that they are up for the challenge and … I feel that we’re in good hands.”

U.S. Rep. Matt Cartwright agreed.

“I’m 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, Cartwright (D-Moosic) said.

“I’m particularly grateful for the tremendous work of state Rep. Bridget Kosierowski, who took the lead on this issue and immersed herself in this effort to make sure local patients receive the quality care they deserve while keeping my office updated throughout ongoing discussions.”

Scranton Mayor Paige Cognetti said the planned sale is “very positive news” for our community.

“I am cautiously optimistic that WoodBridge will fulfill their commitment to invest in these hospitals and improve access to healthcare in NEPA,” Cognetti added.

“State Rep. Kosierwoski deserves a tremendous amount of credit for pushing for Regional Hospital to remain a going concern. It’s been an honor to work alongside her to advocate for the health and safety of our community,” the mayor said.

Who is Woodbridge?

According to nonprofit directory Guidestar, WoodBridge was granted IRS nonprofit status this year, with its address listed as a post office box in Lahaska, Bucks County.

Becker’s Hospital Review described WoodBridge as a sister organization to New Hope-based StoneBridge Healthcare, a “hospital turnaround firm.”

Spokesperson Fecher confirmed that StoneBridge founder and CEO Nemzoff is the chair of both StoneBridge and WoodBridge, but said the two organizations are separate entities.

An email sent to WoodBridge earlier Tuesday bounced back as undeliverable from a StoneBridge address.

StoneBridge was founded in 2020 “to buy, save and turn around deeply distressed hospitals in the cities and suburbs of America,” according to a press release issued at that time, with Nemzoff as CEO.

According to his website, Nemzoff’s “primary area of expertise is the development and implementation of acquisition, divestiture and merger plans for hospitals and hospital systems.”

The 2020 release indicated StoneBridge’s funding comes from a finance group that includes Medical Properties Trust (MPT), Oaktree Capital Management and other nationally known debt and equity sources.

Medical Properties is a $20 billion real estate investment trust that owned almost 400 acute care hospitals, the release added, while Oaktree Capital specializes in “alternative investments.”

Becker’s and the Philadelphia Business Journal reported that StoneBridge and WoodBridge previously made several unsuccessful attempts to purchase West Reading-based Tower Health.

Nemzoff told the Philadelphia Inquirer on Tuesday that StoneBridge will have no role in managing the NEPA hospitals, adding that “this is a WoodBridge deal.”


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