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Cerberus Hospital Gets State Aid to Avoid Shutdown Amid Pandemic

Cerberus Hospital Gets State Aid to Avoid Shutdown Amid Pandemic

(Bloomberg) -- A health-care company owned by private equity giant Cerberus Capital Management received financial aid from Pennsylvania to keep a hospital it owns from shutting down in the middle of the coronavirus pandemic.

Pennsylvania has pledged $8 million to Easton Hospital, which will help it remain open through April at least. The hospital was scheduled to close April 1, according to Robert Freeman, a Democrat in the state’s House of Representatives whose district includes the hospital.

“They were going to close unless they could get an infusion of money from the state to keep it running,” Freeman said, adding that the hospital is critical. “They employ 700 people. It’s a great hospital -- it’s been around for many, many years and the prospect of it closing is not great for the community.”

Easton Hospital is part of Steward Health Care System, which runs 37 hospitals in nine states. Steward is a portfolio company of Cerberus Capital Management, a private equity firm.

Steward originally requested the state either take over operations or provide $40 million for it to stay open.

Continue Negotiations

The sale to another hospital system was also an option, but the pandemic complicated those plans. In the meantime, Steward plans to continue negotiations for funds to keep the hospital open beyond April, the company said.

“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,” Steward said in the statement.

Cerberus declined to comment.

The cash infusion comes as the state prepares to deal with a surge in Covid-19 infections. There were nearly 700 newly confirmed cases and 11 new deaths in Pennsylvania on Monday, pushing the total to 4,087 cases and 49 deaths, according to Governor Tom Wolf’s office.

Easton Hospital has roughly 200 licensed beds, along with ventilators and other emergency equipment that will be helpful during the pandemic, said Freeman.

Pennsylvania must be ready if there is a “need for a significant increase in beds,” according to Nate Wardle, a press secretary for the state’s Department of Health.

“The administration is working to ensure that hospitals and the entire state are prepared for the potential surge of patients from COVID-19,” Wardle said. “We are looking at all options.”

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