MGB isn’t a white knight for Steward
Ever since the full gravity of Steward Health Care’s financial distress became clear, all eyes have been on Mass General Brigham: Would the state’s largest health system step in to rescue one or more of Steward’s hospitals?
MGB hasn’t tipped its hand, at least not publicly. Governor Maura Healey hasn’t said much other than she wants Steward out of Massachusetts.
But last week a local lawmaker created a stir when he said some MGB board members told him they were eager to take over the rebuilding of Norwood Hospital, which Steward ran until a flash flood damaged the facility so badly it had to close in 2020.
At another time and under different circumstances, MGB would probably jump at the chance to add Norwood Hospital to its empire.
Today, however, its leaders are focused on three priorities: the massive integration of their flagship medical centers, Massachusetts General and Brigham and Women’s hospitals; the creation of a cancer center following the end of its oncology partnership with Dana-Farber Cancer Institute; and a much-needed upgrade of the Brigham campus in the Longwood Medical Area.
Still, MGB brass would at least listen to any request from the Healey administration as it seeks to install new operators at some or all of Steward’s hospitals here. But where’s the governor? It’s hard to tell.
Rewind: In a Facebook post on Thursday, Representative John H. Rogers wrote: “Conferred with the owner of MPT and members of the MGB board of directors who love the Norwood project and want the deal done.”
MPT is Medical Properties Trust, which owns Steward’s Massachusetts hospitals in partnership with an Australian investment fund. The Alabamabased company is run by founder Edward Aldag Jr.
In an interview, Rogers, a Norwood Democrat, told me he wants to call attention to the “huge and dangerous vacuum” in the town and other communities southwest of Boston created by the shutdown of the hospital’s 215 patient beds and emergency department.
MGB, caught unawares by Rogers’s comments, couldn’t let them go unaddressed.
“Mass General Brigham is not seeking to purchase Norwood Hospital,” a spokesperson told me on Friday.
Asked about Rogers’s post, a spokesperson for the department of Health and Human Services said: “The Healey-Driscoll administration’s focus is on protecting patient care, preserving jobs, and stabilizing our health care system . . . . The administration will review any proposed sale or legislation that reaches the Governor’s desk.”
Between the lines: Two important things were unsaid.
First, MGB has a lot on its plate and doesn’t want to do anything that might upset its relationship with Healey and Kate Walsh, her secretary of Health and Human Services. Their support is crucial, especially for the new cancer center, which will be at the center of the Brigham overhaul.
Second, the administration doesn’t have any easy options when it comes to putting Steward’s hospitals into more capable hands.
Zoom in: Take Norwood Hospital. It would be risky and expensive for MGB or anyone else to take over the project, which at this point looks like an erector set sitting on a concrete foundation.
Construction ground to a halt months ago because contractors weren’t getting paid. Steward and MPT have been locked in a long battle with Zurich American Insurance over how much their policies will pay to cover rebuilding. It could cost up to $500 million to finish construction and equip the hospital before the first patient could be treated.
That’s a lot of money, even for MGB. Excluding onetime revenues largely related to federal transfers tied to the pandemic, the system posted an operating loss of $48 million last year. That followed an operating loss of $432 million in the previous year. Executives are under pressure to get back into the black.
More broadly, both Steward and MPT are circling the financial drain. The hospitals are locked into costly leases with MPT. Much of their equipment is pledged as collateral for loans Steward might not be able to repay. And Steward is trying to sell the physicians network that refers many of the patients to the hospitals.
It’s a mess that few, if any, hospital operators would want to get sucked into.
Final thought: Mass General Brigham won’t be the white knight that saves the day. The state’s powers are limited. As
I’ve written before, containing the fallout from Steward’s meltdown requires a collaborative effort between the administration and all the state’s hospital leaders. Even then, it will be a tough slog.
In the words of one hospital leader: “There’s no easy way to go forward. It’s going to get much worse before it gets better.”
In other words: prognosis unknown.