State criticizes Steward’s sales plan
Says it’s too complex with system bleeding money
‘As with all things Steward, this too was horribly mismanaged. Despite the constant urging by Massachusetts to Steward to progress the sales process, it has simply dragged on.’ OFFicE OF
AG AndREA cAmPBELL
massachusetts officials said bankrupt hospital operator steward healthcare has created an overly complicated plan to sell its eight facilities in the state at a time when the system is rapidly running out of money.
Attorney General Andrea campbell’s office complained in a new filing in the bankruptcy proceeding that steward has separate sales processes for its hospitals that preclude a bidder from offering to buy all in one transaction, and had even excluded some potential buyers from participating.
“As with all things steward, this too was horribly mismanaged,” campbell’s office wrote. “despite the constant urging by massachusetts to steward to progress the sales process, it has simply dragged on.”
And steward, the state points out, doesn’t have much time. Although its financial problems have been building for years and spiraled into a crisis last year after it fell behind on hundreds of millions of dollars in rent and payments to suppliers, steward could run out of money to operate its hospitals as soon as the week of June 14, the company disclosed in its bankruptcy filing monday. it received a court-approved $75 million loan this week, but the company said it would need additional backing to continue operating.
Only days into its bankruptcy proceeding, steward is already under the gun. The company’s lawyer on Tuesday warned the federal judge overseeing the bankruptcy that a deadline to sell the massachusetts hospitals by late June may be unfeasible. The aggressive timeline was a condition of a $75 million loan steward will receive while it reorganizes its debts.
A spokesperson for steward did not respond to a request for comment.
in massachusetts, Steward’s hospitals include St. elizabeth’s medical center in brighton, carney Hospital in Dorchester, good Samaritan in brockton, Holy family in methuen and Haverhill, morton Hospital in taunton, nashoba Valley in Ayer, and Saint Anne’s in fall River. it also runs norwood Hospital, which has been closed since 2020 due to flooding.
Steward has hired multiple investment banks to sell different groups of hospitals; its two hospitals in the northern part of the state, for example are being marketed by one bank, while another is handling the hospitals in the southern tier.
in its own filing, Steward said it has heard from multiple potential buyers for some of its massachusetts hospitals, but not for those in the northern part of the state, which are struggling financially.
the company has “received indications of interest from multiple potential buyers for its southern massachusetts, Arizona, and texas hospital operations,” Steward said.
but as to its northern massachusetts facilities, the company said only that it was “in discussions with various third parties interested in operating the company’s hospitals . . . as well as with state officials and regulators to facilitate the transition of such hospitals to new operators.”
the company has said it owes more than $9 billion to various creditors including escalating rent payments over the coming years. in its filing, the attorney general said rent payments on the eight massachusetts hospital alone amount to $110 million a year.
the hospital real estate is owned by medical properties trust, which bought it from Steward in 2016 and leases it back to the system. that ownership picture could further complicate a speedy sale of the hospitals, as some bidders may want to buy mpt’s real estate holdings as part of any deal. that could lead to fight with other Steward creditors about the distribution of proceeds from the sales.
At health care systems across eastern massachusetts, hospital leaders are struggling with whether to bid for Steward’s hospitals, said marc bard, president of mb2, a national health care consultant based in Holderness, n.H. bard advised Steward in its early days but said he no longer works with the company.
“At some level, it’s a business decision,” he said. “but at some level, it’s a moral decision. the dilemma for all the health care systems in massachusetts is to what degree do they take responsibility for patients in their area who need care and whether that could detract from their primary mission of running their own hospitals. it’s an awful dilemma.”
Whatever they do, both patients and medical staff will almost certainly end up at nearby hospitals if Steward’s hospitals reduce types of patient care or shutter operations, bard said. the question is whether other hospitals will have enough beds and resources to accommodate more patients, he said.
Some hospitals in areas where Steward operates are already seeing an increase in patients.
Dr. Abha Agrawal, chief executive of lawrence general Hospital, said the volume of patients in its emergency room has ticked up 13 percent over the past two months.
She attributed the increase partly to uncertainty over the future of Steward-operated Holy family Hospital, which has campuses in Haverhill and methuen, and partly to a new accelerated care unit lawrence general recently opened to triage acute care patients.
on monday, the day Steward filed for bankruptcy, Agrawal said lawrence general activated its internal incident command center. She also reached out to Dr. gregg meyer, who runs the state Department of public Health’s new command center, to ask how they could work together to assure patient access to care.
“it is important for a community like lawrence, and other communities in the merrimack Valley, that the health care should be delivered locally,” Agrawal said. “for many of our residents, there are cultural issues, there are transportation issues.”
Agrawal declined to comment on whether lawrence general might bid for Holy family. but she noted that while her hospital accommodates 65,000 to 70,000 patients annually in its emergency department, Holy family also gets roughly 65,000 emergency room visits a year at its two sites.
Similarly, about 1,400 babies are delivered each year at lawrence general, and about 1,100 at Holy family, she said.
“the real issue is having the staff and the supplies to make sure hospitals can manage an additional influx of patients,” Agrawal said. “We need a solution for maintaining capacity for local access to care.”
campbell’s filings also shed some new light on the state’s investigations into patient care at Steward hospitals.
Among the information disclosed in the document were details of the state’s inquiry into the death of a new mother who died last year at Steward’s St. elizabeth’s medical center. medical equipment that could have been used to treat her emergency had been repossessed by a vendor for nonpayment, the state found. the globe first reported the incident in february.
“Steward enters bankruptcy with its hospitals in massachusetts compromised by fiscal and operational mismanagement, the nature and scale of which it actively concealed from both the government and the public,” campbell’s office wrote. “Steward’s mismanagement has threatened to endanger patient health and safety.”
‘Steward enters bankruptcy with its hospitals in Massachusetts compromised by . . . mismanagement, the nature and scale of which it actively concealed.’
ATTORNEY GENERAL ANDREA CAMPBELL’S OFFICE