Signed deals emerge for 3 of Steward’s Mass. hospitals
The Rhode Island-based health system Lifespan said Thursday it has signed a purchase agreement to acquire two of Steward Health Care’s hospitals in Massachusetts for $175 million. The price covers both the hospital operations, and the land and buildings, for St. Anne’s Hospital in Fall River and Morton Hospital in Taunton.
Lawrence General Hospital has signed an agreement to take over Holy Family Hospital, which has campuses in Methuen and Haverhill. Court documents indicated a purchase price of $28 million for the hospital operations and real estate.
“The real work begins now,” Lawrence General’s chief executive, Dr. Abha Agrawal, told WBUR in an interview. “These hospitals have been very, very significantly underinvested. Honestly, that’s the root of the problem here.”
The signed deals are the first tangible sign that months of negotiations to determine the future of Steward’s Massachusetts hospitals are bearing fruit.
“This agreement accomplishes our goal of maintaining and protecting access to care and jobs in Southeastern Massachusetts and the Merrimack Valley, while removing Steward Health Care from Massachusetts once and for all,” Gov. Maura Healey said in a statement.
Steward, a Dallas-based for-profit company and the third-largest hospital system in Massachusetts, declared bankruptcy in May, raising questions about what would happen to its hospitals. The company is working to auction dozens of hospitals in a handful of states. They include two other Massachusetts facilities — St. Elizabeth’s Medical Center in Brighton and Good Samaritan Medical Center in Brockton.
Steward said in its court filing Thursday that it was finalizing the terms of a deal for Boston Medical Center to purchase St. Elizabeth’s and Good Samaritan.
The Healey administration has threatened to take St. Elizabeth’s by eminent domain — something the hospital’s property owner is fighting.
According to the court filing, Massachusetts officials will provide $42 million to support Steward hospitals’ payroll obligations and operations until the sales deals close at the end of next month. The state has already provided $30 million in advance Medicaid payments to keep Steward hospitals open this month.
Meanwhile, Steward is closing two Massachusetts hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, on Saturday over the objections of workers and residents.
John Castellano, Steward’s chief restructuring officer, said Steward officials are “thrilled” to find qualified buyers for most of their Massachusetts hospitals. “Through these transactions, the people of the Commonwealth will continue to receive critically needed care while Steward continues to focus on its ongoing Chapter 11 process,” he said in a statement.
The sales are subject to approval by a bankruptcy court judge and state and federal regulators. A hearing on the Massachusetts hospital sales is scheduled for Sept. 4 in federal bankruptcy court in Houston.
Lifespan officials, in an interview with WBUR, said the majority of the purchase price for Morton and St. Anne’s would go toward the hospitals’ land and buildings, which have been a point of contention during the negotiations. The real estate is owned by outside investors who are sparring with Steward over who will get the bulk of the proceeds from hospital sales.
Lifespan is Rhode Island’s largest nonprofit health system, which operates the state’s flagship teaching hospital and children’s hospital. It is affiliated with Brown University, and the system is in the process of rebranding as Brown University Health.
Peter Markell, Lifespan’s chief financial officer, said his team has been in discussions with Steward since the beginning of the year. He said the acquisitions fit Lifespan’s strategy of growing its footprint.
“We do care about these communities,” he said. “We do see them as key to the area we want to serve.”
Some patients have chosen to avoid Steward hospitals this year as the company struggled to pay bills and entered bankruptcy. Markell said Lifespan will work to bring them back.
“We’re going to have to convince the patients in these communities that what they knew before it went into bankruptcy and all that stuff — we’re going to bring back to life and make even better,” he said. “But that’s up to us, to convince the people in the communities.”
Lifespan plans to create an affiliate called Lifespan of Massachusetts to operate Morton and St. Anne’s and will borrow funds to finance the deal. Lifespan officials said they are finalizing a separate agreement to receive “modest” support from the Healey administration to help cover the cost of operating the hospitals “for a limited time frame.”
“I am confident our team has the experience and know-how to rebuild the infrastructure of these two hospitals and operate them as successful and thriving not-for-profit organizations,” Lifespan President and CEO John Fernandez said in a statement.
Lawrence General is a nonprofit community hospital that serves the diverse and working-class city of Lawrence, and surrounding cities and towns. Agrawal said her team is relying on upcoming payments from the state to help them acquire and improve Steward’s Holy Family campuses.
Steve Walsh, president of the Massachusetts Health & Hospital Association, said the sale agreements mark “a new and hopefully brighter chapter for health care in Massachusetts.”
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