An agreement is in place that keeps Steward Health Care’s hospitals in Trumbull County — Trumbull Regional Medical Center and Hillside Rehabilitation Hospital — open with Flint, Michigan-based interim operators.

They’re part of a global settlement that includes 13 other hospitals set to remain open with temporary managers approved in court Wednesday by U.S. Bankruptcy Court Judge Christopher Lopez in the health care system’s Chapter 11 case.

“This relief … this is a very good development for Steward, stakeholders, thousands of employees, millions of patients served by this hospital system, that we believe we have a path that hopefully should keep all of the remaining hospitals open and provide much needed liquidity for this company immediately,” Ray Schrock, attorney for Steward Health, said at the start of the approximately 90-minute hearing that was adjourned for an hour to give those involved more time to negotiate terms of the agreement.

According to papers filed ahead of the hearing, Insight Foundation of Trumbull will be the interim manager of Trumbull Regional and Insight Foundation of Hillside will be interim manager of Hillside.

Trumbull County Commissioner Niki Frenchko said she met with Dayne Walling, director of public policy and government relations for Insight, on Wednesday.

She said she spoke with Walling, a former two-term mayor of Flint, about the local region, its needs and demographics.

In fact, the transitions to the interim operators were happening Wednesday, said Emil Klienhaus, attorney for Alabama-based Medical Properties Trust, Steward Health’s landlord. The hospitals elsewhere are in Arizona, southern Florida, Texas and Louisiana.

“From the beginning, our client’s goal has been, as the major hospital landlord and by far the largest creditor of these estates, to find a resolution that meets several objectives,” Klienhaus said, including keeping as many of the hospitals open as possible.

“MPT is in the business of leasing its real estate to hospital operators that serve patients and communities, not taking back closed hospitals,” he said.

According to Schrock and court documents, highlights of the interim settlement include:

l   Accounts receivable generated and accrued prior to 12:01 a.m. Wednesday would remain with Steward Health. After, they would go to the managers to fund operations. Also, Steward Health will continue to operate the hospitals.

“In the near-term, the managers are going to be there with Steward employees operating these hospitals,” Schrock said.

In addition, court papers state the new operators are responsible for “paying all go-forward hospital-level” operating expenses and disbursements.

l   MPT agreed to place $5 million into an escrow account to cover incidental expenses in the near-term.

l   The interim managers and / or MPT funded $9.1 million into a payroll escrow account for employee payroll.

l   The new operators agreed to pay the accrued employee time off. Court papers show that amounts to more than $2.2 million at Trumbull Regional and more than $500,000 at Hillside.

l   The target date to complete the hospital transition to MPT is Oct. 1 with final transfer and release to a designated operator by the end of October.

“These managers would operate the hospitals and will work toward eventually getting bills of sale and transitioning the hospitals as quickly as possible, including ownership of the assets and the like,” Schrock said.

Lopez agreed to a hearing Tuesday for a final settlement agreement.

Steward Health — which just days after filing bankruptcy May 6, citing billions in debt, announced it would try to sell its hospitals — issued closure notices for Trumbull Regional, Hillside and affiliate satellite locations Aug. 21 stating a planned closure of Sept. 20. Leading up to that, the company stated in a court filing it did not receive qualified bids for the local centers.

The closure was put on hold with a development Aug. 30 in the case — that Steward Health and MPT had an agreement in principle for MPT to assume operations at the local facilities and elsewhere.

That agreement was the basis of the interim agreement OK’d Wednesday.

Meanwhile, Western Reserve Health Education Inc., a nonprofit that operates residency programs at Trumbull Regional has submitted a proposal to acquire the hospital, outpatient facilities in Bazetta and Austintown, and a clinic in Hubbard. Hillside was not included in the proposal filed Aug. 29.

The court papers state funding commitments of $20.5 million have been pulled together to keep the facilities open until ownership changes hands. Among the pool of money are separate $3 million conditional commitments by Trumbull County commissioners and members of Warren City Council.

It’s unclear where the proposal stands now. A message seeking comment was left late Wednesday afternoon seeking comment from Western Reserve’s president.

SHARON REGIONAL

Sharon Regional Medical Center is not among the 15 hospitals in the agreement. That’s because Meadville Medical Center, which submitted a letter of interest Aug. 12 to acquire Sharon Regional, is progressing on a plan to acquire the downtown Sharon, Pa., facility, according to an attorney representing the Pennsylvania Attorney General’s Office on Wednesday.

According to a filing Tuesday, the commonwealth has agreed to pay $4.5 million — $1.5 million this month and in October and November — to cover the losses at Sharon Regional in anticipation of a Dec. 1 purchase closing by Meadville Medical Center.

“The debtors worked with us to iron out all of the wrinkles and we hope to work with the debtors and MPT to go forward,” Ray Urbanik, an attorney for the commonwealth, said.

SOME REACTION

Rick Lucas, president and executive director of the Ohio Nurses Association, which represents registered nurses at Hillside, said approval of the interim settlement keeping Trumbull Regional and Hillside open is “lifesaving for the patients and employees of those hospitals.”

“ONA will work with the Insight Foundation of Hillside to ensure the transition keeps patient and staff safety a top priority, hospital operations fully functional, and continues to honor the collective bargaining agreement for our union nurses,” Lucas said.

Said Guy Coviello, president and CEO of the Youngstown / Warren Regional Chamber, “While we were never worried about a lack of quality health care because we have so many good providers, we’re relieved that Warren’s income tax base is protected and the properties in Warren and Howland will not become blighted.

“I’m especially relieved that there is a potential deal for Sharon because there is a real concern about leaving a health care desert in Mercer County,” he said.

Frenchko was critical of the interim settlement agreement, saying it protected Steward Health and MPT “from the consequences of the bankruptcy they caused,” and shares the concerns of the creditors committee that the operator was selected by MPT, but there is good news short-term.

“We have a hospital with full services, patients will be treated, employees are working and doctors will be paid. It just needs to be sustainable,” she said.

WHAT’S NEXT: A hearing is set for 11 a.m. Central Standard time, which is noon Eastern time, Tuesday in a U.S. bankruptcy court in Houston on a final global settlement that allows Steward Health Care to transition most of its hospitals to new operators.