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WARREN -- The nonprofit group that operates residency programs at Trumbull Regional Medical Center has submitted a proposal to acquire the hospital and other sites from Steward Health Care, and says it has pulled together commitments of $20.5 million to keep the facilities open until ownership officially changes hands.
Western Reserve Health Education Inc. filed the proposed asset purchase agreement late Thursday as part of an amended objection to the planned closures of Trumbull Regional, Hillside Rehabilitation Hospital and satellite facilities Sept. 20.
The group also requested an emergency hearing before U.S. Bankruptcy Court Judge Christopher M. Lopez no later than 10 a.m. Central Standard Time on Tuesday, which is 11 a.m. Eastern time.
The hearing, however, it looks like, isn't going to happen.
Lopez during a hearing Friday paused setting one for Tuesday in light of what he called a "positive step in the right direction" regarding a lease agreement dispute between Steward Health and its landlord, Birmingham, Alabama-based Medical Properties Trust (MPT) that involves multiple hospitals, including those in the Mahoning Valley and Sharon Regional Medical Center in Sharon, Pa.
Steward Health had asked Lopez to reject the agreements, a move its attorneys argued would make it easier to sell the facilities. Medical Properties Trust objected and the matter went to mediation.
Steward Health attorney Ray Schrock reported at Friday's hearing the sides have agreed in principle on "broad outlines" to settle the lease dispute and asked for a hearing Sept. 10 for Lopez to address the agreement, which still needs completed.
As it stands now, starting Sept. 11, Medical Properties Trust would assume the operational expenses for most Steward Health hospitals, excluding those in Massachusetts. Steward Health agreed to prepare a forecast of estimated operating expenses weekly and will keep accounts receivable until Sept. 11. After that date, accounts receivable would transition to Medical Properties Trust.
"They're (Medical Properties Trust) going to be moving quickly to work with interim operators and try and get those hospitals transitioned as quickly as possible," Schrock said. "I would want to note that I believe in Pennsylvania and Ohio, MPT let us know those deals are not done yet, but from the debtors' perspective, our hope is that all of these hospitals remain open."
Transition agreements, too, still need to be completed.
The settlement, Schrock said, "provides a basis for the estates to move forward, have a stabilizing action, keep the hospitals open, continue to have the community served and importantly have a stabilized basis" for Steward Health and other parties to consummate a Chapter 11 plan.
Rick Lucas, president and executive director of the Ohio Nurses Association, which represents nurses at Hillside, said although the "potential agreement" is a "positive development, it is only a small step in the right direction."
"For these hospitals to remain viable and effectively serve the community, Steward Health must resume full operations immediately. The reduction in patient numbers at Hillside alone is staggering, going from 28 patients when the closure was announced to an anticipated 11 patients by the end of the weekend, underscoring the urgency of the patient care crisis unfolding in the Mahoning Valley," Lucas said.
LOCAL PROPOSAL
Filed with the amended objection is a proposed memorandum of understanding that "memorializes the mutual understandings" between Western Reserve and Steward Health as well as lists the facilities included in the deal -- Trumbull Regional, outpatient facilities in Bazetta and Austintown and a clinic in Hubbard. Hillside is not included.
It also includes committed funding sources and the amounts -- Warren, a $3 million grant; Trumbull County, a $3 million grant; 717 Credit Union, a $6 million loan; $1 million in public donations; a $2.5 million from the state; and a $5 million loan from Huntington Bank.
The Trumbull County Commissioners and Warren City Council on Aug. 23 approved conditional letters of support to commit up to $3 million each to keep the facilities open.
Eric Lanham, spokesman for the credit union, said 717 has been in talks with the city and county, "expressing our willingness to support the hospital and keep the 1,000 local jobs."
"Anything that 717 would be able to regulatorily would have to be viably guaranteed by the city and county and ultimately approved by 717's board of directors," Lanham said. "We are awaiting a viable turnaround plan that has buy-in from the city, county and all other local parties."
An email seeking comment was sent Friday to Huntington Bank.
Dan Tierney, spokesman for Gov. Mike DeWine, said the state has been examining ways to help the group trying to save the facilities through general grant programs. Ohio, he said, doesn't have specialized programs to provide funding for hospitals in distress or help with an acquisition.
"We have identified grants these groups can apply for," Tierney said, adding, "I know we would move swiftly once we have the information to move forward on such grants."
The document states once the MOU and asset purchase agreement are executed, Western Reserve would put $9 million into an escrow account. The money would be used for operating expenses until the court and "related governmental entities" approve Western Reserve's purchase.
It also calls for Steward Health to "maintain the ordinary course of business," and not stop providing care, including closing the emergency department, urgent care or off-site clinics.
Thursday's motion states Western Reserve was still "awaiting a response" from Steward Health on the proposal.
Joining the objection were Warren, Trumbull County and Warren City Hospital. Much of the amended objection contains the same arguments as one filed Aug. 27 by groups that also asked for additional time to submit a bid and extend the closure deadline from Sept. 20 to Nov. 20.
New in Thursday's objection is Western Reserve was informed Thursday by the Accreditation Council for Graduate Medical Education that "its accreditation was in jeopardy" based on the
Sept. 20 closure date.
Western Reserve Health Education operates residency programs in family medicine, internal medicine and general surgery as well as a fellowship program at Trumbull Regional. The nonprofit was told, the motion states, a decision on whether to pull the accreditation would be made no later than Wednesday.
There are 76 residents in the program -- 18 in family medicine, 39 in internal medicine, 14 in general surgery and five in the rhinology fellowship.
The emergency hearing on the objections to the closure notice and request to extend the closure deadline are needed, because, the motion states, without the relief Western Reserve "faces an almost certain loss of its accreditation" and the MOU and proposed asset purchase agreement "would be rendered moot."
Steward Health "will not be prejudiced by the relief or extension" requested, but closing the hospitals Sept. 20 "will certainly prejudice the health care needs" of patients and the community, and their closures will "create an irreparable harm to the rural areas of this community as there are no other hospitals in the near vicinity," the court papers state.
Funding
commitments
Committed funding sources to acquire Trumbull Regional Medical Center and other facilities, according to papers filed in a Houston bankruptcy court.
• Warren: $3 million grant
• Trumbull County: $3 million grant
• 717 Credit Union: $6 million loan
• Public donations: $1 million
• Ohio: $2.5 million grant
• Huntington Bank: $5 million loan
Residencies
Western Reserve Health Education operates residency programs in family medicine, internal medicine and general surgery as well as a fellowship program at Trumbull Regional Medical Center. There are 76 residents, including:
• 18 in family medicine
• 39 in internal medicine
• 14 in general surgery
• 5 in the rhinology fellowship