Sharon Regional sees new ownership

Sale lets hospital tap Ohio market

You might think the pending sale of the Sharon Regional Health System — whose 1,750 staff members make it Mercer County’s largest employer — to Tennessee-based, for-profit Community Health Systems would worry the local citizenry. You would be mistaken. “The reaction has been all positive so far,” Sharon City Manager Scott Andrejchak said this week. “The biggest positive being that — should the sale go through — Community Health Systems says it is going to expand care in the region.”

Sharon Regional, like most community hospitals, has valued and guarded its independence throughout its 117-year history, as well as nurturing its close relationship with Mercer County residents.

But shortly after Jack Janoso took over as president and CEO last year — the third CEO change at Sharon Regional in four years — he and the board realized that the institution had to give up its independence to keep its identity.

After skirting uncomfortably close to red ink in recent years, Sharon Regional fell into negative territory in fiscal 2012, recording a minus- 4.85 percent operating margin. With declining reimbursement from government programs such as Medicare, it seemed a downward trend almost certain to continue.

“We could have remained independent but it would have come at a real cost,” Mr. Janoso said. What he and the Sharon board members saw was a future of reduced services and staff until a once-proud hospital would not be able to meet the community’s needs.

“We weren’t advancing the organization and we were struggling not to retract,” he said. “Every time we take a revenue decrease we have to find some way to make things float.”

What followed was months of deliberation on how to proceed.

“We were open to anything,” Mr. Janoso said, though they ruled out selling the health system to the highest bidder.

They were looking for, he

said, a buyer who “would take a more thoughtful approach as to what’s important to the community.”

They spoke to both UPMC and Highmark, the leading Pittsburgh health care players and current combatants in a battle over where patients can be treated depending on their insurance status.

At one point, rumors of an affiliation with UPMC began circulating. “It was causing a lot of staff problems,” Mr. Janoso said.

While holding both health systems in regard, he said, “Frankly, I don’t want my community in the middle of that fight.” Sharon Regional does have a 10-year partnership with an Allegheny General Hospital radiology group that Mr. Janoso hopes to continue.

Mr. Andrejchak had concerns, too, about Sharon Regional getting swallowed up by a Pittsburgh-based health system.

“I felt the care would collapse and we would see a Balkanization of the hospital,” he said.

Despite initial hesitancy about aligning with a for-profit company, Mr. Janoso said Community Health Systems won them over because it offered capital investment while allowing Sharon Regional to keep local leadership. Services such as obstetrics and open heart surgery will stay and expansion is expected in other services.

“They were very forthcoming and frankly very credible,”

“Quite frankly, as a consumer, with all the things health care companies do anymore, it’s hard to explain how they’re not all for-profit. From where I’m sitting, they are.”

he said. During visits to other Community Health Systems facilities, “We were told that when CHS makes a commitment, they fulfill that commitment.”

The key, though, may have been Community Health Systems’ “strategic alliance” partnership with Cleveland Clinic announced in March, which will allow Sharon Regional to tap into the Ohio clinic’s organizational and clinical expertise.

Without that, Mr. Janoso acknowledged, the sale “most likely” would not have happened.

A final purchase price has not been set, as both sides continue with their due diligence leading up to a final deal later this year.

Community Health Systems manages 135 hospitals in 29 different states, including four in northeast Ohio and 17 in Pennsylvania — though none of the Pennsylvania facilities are located west of Lock Haven, Clinton County.

The hospital’s switch to forprofit

— Scott Andrejchak, Sharon City Manager

status should mean a nice bump for local taxing bodies, though Mr. Andrejchak said they haven’t determined how much.

He said he’s not worried the company will put profits ahead of patients. “Quite frankly, as a consumer, with all the things health care companies do anymore, it’s hard to explain how they’re not all for-profit. From where I’m sitting, they are.”

Mr. Janoso said Sharon management realizes that under new owners it won’t continue to make every decision regarding the hospital’s operations.

But he believes the affiliation with Community Health means Sharon Regional will be around, intact, for a long time to come.

“This just makes sense for our community,” Mr. Janoso said. “I feel very strongly that this is the best option for us to fulfill our mission to the community.”