Tenor Health seeking tax-exempt financing to buy Wilkes-Barre General Hospital

WILKES-BARRE — Tenor Health Foundation is asking Luzerne County Council to approve tax-exempt financing to buy Wilkes-Barre General Hospital from Tennessee-based Community Health Systems Inc.

The nonprofit organization based in California wants to borrow $50 million in tax-exempt bonds and $25 million in taxable bonds, Chief Executive Officer Radha Savitala said. The county and the Northeastern Pennsylvania Hospital and Education Authority would be conduits for the tax-exempt financing and would not be liable to pay back any of the debt if Tenor defaults, authority Solicitor Peter J. Moses told council at Monday’s meeting.

Council could vote to authorize the tax-exempt financing at its next meeting on Nov. 25. Tenor signed an agreement last month with Community Health to acquire the Commonwealth Health network, which includes Wilkes-Barre General Hospital, Regional Hospital of Scranton and Moses Taylor Hospital in Scranton.

Tenor is not seeking financing to buy Regional Hospital of Scranton and Moses Taylor Hospital, both in Lackawanna County, because Community Health is essentially giving them away and is divesting from unprofitable operations, officials explained at Monday’s meeting.

Tenor signed a letter of intent to acquire the Commonwealth Health hospitals in August after a pending sale to another nonprofit fell through last year. WoodBridge Healthcare had announced plans to purchase the hospitals in July 2024, but the deal fell apart in November when WoodBridge failed to secure bond financing to complete the acquisition.

At Monday’s meeting, council members expressed concerns about losing property tax revenue because Tenor is a nonprofit organization that would not pay property taxes.

Last year, officials said the amount of property tax revenue from Commonwealth Health to Luzerne County, the City of Wilkes-Barre and the Wilkes-Barre Area School District totaled $1.9 million and the amount to Scranton, the Scranton School District and Lackawanna County was $3.5 million.

Dr. Patrick Conaboy, the chief medical officer at Regional Hospital and the former chief medical information officer at Wilkes-Barre General Hospital, said he understands the concern about losing property tax revenue. But Community Health “will not continue with Wilkes-Barre General Hospital beyond 2027,” and the hospital would not “continue on the tax rolls” if that happens, Conaboy said.

Wilkes-Barre General Chief Executive Officer Michael Clark told council about the challenges the hospital faces.

“We have everything from equipment needs to infrastructure needs,” Clark said. “We have a very old hospital plant that ages from hundreds of years old up to the most recent additions were in the 90s, but we have needs for replacement equipment. Now I won’t say anything disparaging again about Community Health Systems, but they have let it be known that they no longer want to own hospitals in Pennsylvania. Pennsylvania is a difficult place to operate due to many things. Regulatory agencies are difficult to work with.

The hospital also is struggling to recruit and retain physicians, but is “still profitable,” Clark said.

“So CHS has said they don’t want to be here,” Clark said. “So therefore, they’ve been very stringent when we’re needing capital, or when we’re needing raises, or when we need to do additional recruitment. I feel very confident that with Tenor, they will look at that, and they will make the right choices that they’ll support this hospital, and this hospital can continue to flourish.”

Wilkes-Barre General paid $774,563 a year in property taxes to the city, Mayor George Brown said last year. The Wilkes-Barre Area School District received $807,186 from Commonwealth Health properties, and Luzerne County received $327,994 from Commonwealth Health properties.

Under the agreement with Community Health, Tenor  would acquire the following: Wilke-Barre General Hospital with 369 beds; Regional Hospital of Scranton,186 beds; Moses Taylor Hospital, 122 beds; all of the physician practices and clinics; and the ambulatory surgery centers. Tenor also plans to hire “substantially all employees in good standing,” which is approximately 2,400 employees.

Tenor plans to finance the purchase from Commonwealth with Rosemawr Management as the sole purchaser of both the tax-exempt and taxable tranches of bonds. Closing is aimed for December.