CHS to Sell Struggling Pennsylvania Hospitals to Turnaround-Focused Nonprofit

Following a failed 2024 deal, CHS has signed a letter of intent to transfer three financially challenged hospitals to Tenor Health Foundation.

Community Health Systems (CHS) has restarted the process to offload three financially stressed hospitals in Pennsylvania, this time finding a buyer known for reviving struggling hospitals.

After previously failing to divest Commonwealth Health System, CHS has signed a letter of intent with Tenor Health Foundation that will transfer ownership of Regional Hospital of Scranton, Moses Taylor Hospital, and Wilkes-Barre General Hospital to the California-based nonprofit.

Last year, CHS pursued a sale of the Commonwealth Health System through a deal with nonprofit WoodBridge Healthcare. The $120 million agreement, announced in July 2024, unraveled months later and was mutually terminated in November when WoodBridge failed to secure financing via bond sales.

The three hospitals have financially struggled in recent years. According to reports by the Pennsylvania Health Care Cost Containment Council, operating margins for fiscal year 2023 were -24.1% at Moses Taylor, -9.5% at Regional, and -15.7% at Wilkes-Barre General.

For fiscal year 2024, those margins were -20.6% for Mason Taylor and Regional, which now operate under one license, and -6.2% for Wilkes-Barre General.

While CHS attempted to find another buyer for the hospitals, a group of community organizations subsidized the facilities’ finances by investing millions of dollars to compensate healthcare workers and keep operations running.

With a new buyer in place, the hospitals could finally gain long-term stability.

“This is the first step in a process that we all hope will result in a completed transaction and preserve the healthcare services provided by Commonwealth Health,” a CHS spokesperson said in a statement. 

Tenor was formed specifically "to identify, own, manage, and turn around financially challenged hospitals,” particularly in rural and suburban areas with moderate to high financial risk and essential community value, according to the organization’s website.

To accomplish that, Tenor’s strategy centers on “efficiency of revenue cycle, enchaining service lines as appropriate and expense management in areas such as salaries and benefits, professional services, purchased services and supply chain.”

Regarding Commonwealth Health, Tenor CEO Radha Savitala said in a statement: “We look forward to working with the communities served by these facilities.”

Tenor entered the Pennsylvania market earlier this year by acquiring Sharon Regional Medical Center, formerly owned by bankrupt Steward Health Care. The hospital had faced months of uncertainty as Steward’s financial collapse forced service cutbacks and raised fears of closure.

After Tenor purchased the facility for roughly $1.9 million, partly through a partnership with Medical Properties Trust, Sharon Regional resumed core services in March before fully reopening in May.