Commonwealth Health’s hospitals and other health care facilities will remain on the tax rolls and continue generating revenue for local governments and school districts after a nonprofit’s attempt to acquire the health system collapsed late last month.
It’s something of a silver lining for taxing bodies that stood to lose considerable revenue annually if the nonprofit WoodBridge Healthcare was able to complete its planned $120 million acquisition of Commonwealth’s Regional Hospital of Scranton, nearby Moses Taylor Hospital in the city and Wilkes-Barre General Hospital in Luzerne County, along with other health care assets. The deal that many saw as a potential lifeline for the financially struggling hospitals recently fell apart when WoodBridge was unable to secure the necessary bond financing to complete the transaction.
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News of the sale’s collapse disappointed local officials who had been cautiously optimistic about WoodBridge’s planned investments in the health care facilities and the prospect of nonprofit ownership more broadly. Several said last week they hope another buyer emerges, and potentially another nonprofit buyer, arguing the long-term availability of accessible health care in the region outweighs any potential property tax loss.
Wilkes-Barre General Hospital on River Street in Wilkes-Barre. (FILE PHOTO)
Figures provided this past summer suggested taxing bodies in Lackawanna and Luzerne counties — including the counties themselves, the cities of Scranton and Wilkes-Barre and the Scranton and Wilkes-Barre Area school districts — collectively stood to lose more than $5.4 million in annual real estate tax revenue if the Commonwealth properties became tax-exempt. Those taxing bodies should now see at least some of that money next year, and possibly all of it absent a mid-year acquisition by a nonprofit entity.
In Wilkes-Barre, Mayor George Brown acknowledged the city could see about $774,000 in unexpected property tax revenue next year with Wilkes-Barre General remaining taxable. City council there approved late last month Brown’s 2025 budget proposal that doesn’t hike taxes or fees for residents.
“But what I really am concerned about also though is some of the loss in services that Commonwealth Health has taken out of Wilkes-Barre General Hospital for our residents,” Brown said, listing obstetrics and childbirth services as a specific example. “This is really my main concern, and making sure that there’s adequate facilities to take the residents of Wilkes-Barre or visitors in Wilkes-Barre so they can get quality care. And one of the reasons that we were hoping that this sale would go through is that we were promised by WoodBridge that they would be bringing back the services that were taken away.”
Scranton Mayor Paige Gebhardt Cognetti also called health care availability, not tax revenue, her most pressing concern and said her administration will continue pushing for a sale. Scranton officials aren’t banking on the more than $800,000 in 2025 tax revenue Commonwealth properties would otherwise generate for the city coming through in full next year, she said.
“We’re going to continue on with our budget as is and push for a sale,” Cognetti said. “The priority is always the access to health care and that has to be what we continue to push for. … Ultimately I believe that nonprofit health care is a better public service to us. We’ve seen the for-profit health care not work out well here or in most places in America.”
Commonwealth closed some health care facilities and reduced services at others in recent years. In 2022, for example, it shuttered the ER at the former Tyler Memorial Hospital near Tunkhannock and closed First Hospital in Kingston, a private psychiatric facility. The for-profit health system also closed Moses Taylor’s ER last year, consolidating operations at Regional, and ended the inpatient childbirth services at Wilkes-Barre General that Brown referenced when reached last week.
The late July announcement that WoodBridge planned to purchase Commonwealth from subsidiaries of Tennessee-based Community Health Systems Inc. (CHS) came after all three local Commonwealth hospitals — Regional, Moses Taylor and Wilkes-Barre General — lost money in Fiscal Year 2023. They all reported negative total margins for the fiscal year, meaning the money each hospital spent exceeded revenues from patient care and other sources, an annual financial analysis report released in June by the Pennsylvania Health Care Cost Containment Council showed.
Days prior to the sale announcement, U.S. Sen. Bob Casey sent a letter to CHS CEO Tim Hingtgen expressing concern over the company’s business practices. The July 25 letter revealed that CHS executives had “shared plans to close one or both” Scranton hospitals if unable to find a buyer.
When Lackawanna County granted in October the final governmental approval necessary for WoodBridge to proceed with the bond financing plan that ultimately failed, Commissioner Bill Gaughan said the prospect of Regional or Moses Taylor closing was more painful than the revenue hit the county expected to take if they became tax-exempt.
He largely reiterated that view when reached last week while acknowledging tax revenue generated by Commonwealth properties will provide a cushion for the county in 2025.
That revenue could exceed $800,000 but is not reflected in the 2025 budget Gaughan and fellow majority Commissioner Matt McGloin adopted last month over minority Commissioner Chris Chermak’s objections. The adopted spending plan includes a 33% property tax hike meant to help eliminate a structural budget deficit otherwise projected to reach about $29 million next year.
Gaughan said the county isn’t including the potential revenue in next year’s budget because, should the Commonwealth properties ultimately sell to a nonprofit, “we don’t want to budget for something that’s not there.”
“But it will provide us some cushion for next year, which is great, because last year the county ended the year on fumes and we’ve been having some cash-flow problems,” he said. “If everything stays the same, (the revenue) will provide us much-needed relief.”
Luzerne County Manager Romilda Crocamo also said the unexpected revenue will help next year. Figures provided in the summer suggested Luzerne County stood to lose close to $400,000 in would-be revenue if Commonwealth properties became tax-exempt, though Crocamo said last week the actual figure is closer to $1 million.
“That’s always positive for the county when you’re not losing tax revenue,” she said.
Tax money notwithstanding, what the future holds for Commonwealth, its hospitals and Northeast Pennsylvania’s broader health care landscape remains to be seen.
In a press release announcing the collapse of the WoodBridge transaction, CHS said it will “evaluate future options” for the local health system.