Pennsylvania is coming to the rescue of a roughly 200-bed hospital whose private equity-owned operator announced plans to shutter the facility amid the deadly COVID-19 pandemic.
Gov. Tom Wolf's office has agreed to hand over $8 million in emergency funding to Easton Hospital in Easton, roughly 70 miles north of Philadelphia. The hospital's operator, Steward Health Care, has in exchange agreed to keep the hospital open until the end of April. Steward is owned by the private equity firm Cerberus Capital Management, which has more than $42 billion in assets under management.
It's far short of the $40 million Steward had originally requested in a letter to the governor's office as part of a broader plan to keep the hospital open, said Robert Freeman, a Democratic state representative whose district includes Easton. Steward had previously announced plans to close the hospital as of April 1. The governor's office has indicated that some of the forthcoming money from the federal COVID-19 stimulus could also go to the hospital, he said.
"You can't close down a 200-bed facility with all the equipment and trained personnel at a time like this," Freeman said. "That's just irresponsible."
Wolf's office directed media inquiries to the state health department, which did not respond to a request for comment.
Pennsylvania had recorded more than 4,800 positive cases of COVID-19 and 63 deaths as of Tuesday morning, according to the state's health department. Easton is located in Northampton County, which had 245 cases and five deaths as of Tuesday. Just over 300,000 people live in the county.
Freeman said the hospital has an intensive care unit, ventilators—which are critical for COVID-19 treatment—and about 700 employees, many of whom are "very skilled" medical personnel. He commended the governor for agreeing to send the relief money, especially prior to the crest of cases in Pennsylvania.
St. Luke's University Health System had been in talks to purchase Easton Hospital, but Freeman said the status of that deal is unclear. St. Luke's did not return a request for comment.
In a statement, Steward spokesman Darren Grubb wrote that the company is encouraged that the governor's office has agreed to provide emergency funding to keep the hospital open for at least the next four weeks.
"At the end of this period, we will work together with the Governor to secure funding to keep the hospital open on a month-to-month basis as long as the crisis continues or St. Luke's completes the proposed transaction," Grubb wrote.
At the end of the period of proposed emergency assistance, Steward will return any taxpayer funds that exceeded documented hospital operating expenses, the company said.
Easton Hospital has operated at a steep loss for years, including a 26% operating loss margin in 2019. Data from annual reports the hospital filed with the CMS show it lost $32.7 million on $128 million in total operating revenue in 2019, according to HMP Metrics. That's up from an $8 million loss on $72.6 million in revenue in 2018.
New York-based Cerberus has assets under management across complementary credit, private equity and real estate platforms. The company did not return a request for comment.
Modern Healthcare is providing COVID-19 coverage for free as a public service and a show of gratitude for the frontline workers. Support essential journalism. Please subscribe here.