Why is Healey pretending everything at Steward will be OK?

Steward has a long and sorry record of deception.

Ralph de la torre, the CEO of bankrupt Steward Health care, has been less than candid in his claims that the eight Steward hospitals in massachusetts will continue delivering good care while the for-profit chain goes through bankruptcy. “Steward does not expect any interruptions in its day-to-day operations,” he said monday. “Steward’s hospitals, medical centers and physician’s offices are open and continuing to serve patients and the broader community and our commitment to our employees will not change.”

But as Steward’s lawyer told the bankruptcy judge on tuesday, Steward owes vendors about $1 billion in unpaid bills. not surprisingly, its hospitals have had to juggle necessary staff and supplies. this act goes back months and in some cases years, causing care to deteriorate.

Steward has a long and sorry record of deception. governor maura Healey put it well at her monday press conference: “One of the good things about bankruptcy is that Steward and its ceO and its management team will no longer be able to lie.”

So you have to wonder why the Healey administration is echoing de la torre’s happy talk. “i want to be very clear in telling the public that these hospitals will remain open and folks should continue to keep their appointments and seek care as needed, including if you need to see an emergency room,” the governor said at her monday press conference.

But as the globe’s reporting has made clear, as Steward went into a financial tailspin and stopped paying vendors, quality of care has severely suffered. in January, the globe reported that a new mother, Sungida Rashid, had died at Steward’s St. elizabeth’s Hospital last October because, according to hospital staff, a device needed for her emergency surgery had been repossessed due to Steward’s failure to pay overdue bills.

Here’s the balancing act behind the Healey administration’s misleading reassurances. Healey has long said that her goal is to keep the hospitals operating until they can be sold and to prevent a state bailout. Steward’s lawyer, Ray Schrock, told the bankruptcy judge tuesday that the chain hopes to auction off most of its hospitals, including those in massachusetts, by June 28.

in the meantime, Healey shares with de la torre the goal of preventing a financial death spiral in which patients desert Steward hospitals, there is less money coming in from patient bills and insurance claims, and staff layoffs ensue. that would make it even harder for the hospitals to find buyers. it would also put pressure on other nearby hospitals, many of which are already overwhelmed.

this explains the Healey administration’s need for some kind of soft landing (or even a crash landing) and her reassuring words that seem at odds with good medical advice. Despite the governor’s reassurance that “these hospitals will remain open and folks should continue to keep their appointments and seek care as needed,” i would not seek care there. i’m not sure that the governor would either.

Here’s the other problem. Bankruptcy law doesn’t protect hospital operations. it protects creditors. Attorney general Andrea Joy campbell has been granted status at the bankruptcy hearings to represent the interests of the commonwealth and Steward staff and patients.

Shedding debts will help Steward’s balance sheet somewhat, but it won’t produce enough money to ensure these hospitals provide acceptable medical care. this will increase pressure on Healey to put some taxpayer money into the pot to attract a decent buyer.

there’s a better place to look for the money that these hospitals need. that would be court-mandated restitution from the various players who have looted Steward hospitals for their own enrichment. those include de la torre, the partners of cerberus capital, who took $1.25 billion out of hospital operations in the 2016 sale-leaseback deal with medical Properties trust, as well as MPT executives.

there are plenty of grounds on which to launch a criminal investigation, including what may be illegal self-dealing and fraudulent conveyance. for the moment, Healey and de la torre have the same short-term interest — keeping Steward hospitals open and finding a buyer. But their interests soon diverge. Healey’s is to avoid a state bailout. De la torre’s is to avoid prosecution if any criminal and/or civil charges are filed and hold on to some of his ill-gotten wealth.

major restitution could be part of a settlement of a criminal prosecution. Healey is a former attorney general. though the current Ag has been circumspect in her public statements about possible prosecutions, it’s hard to believe that a criminal investigation is not already in process.