Steward’s Massachusetts hospitals won’t be shutting down, official says

Steward Health Care System has secured a “significant financial transaction” that an official says will “help stabilize” the company and save some of its Massachusetts hospitals from shuttering.

“This funding will help stabilize operations, including the resumption of virtually all elective cases, and more importantly allows us to continue operations at all of our Massachusetts hospitals,” the company’s executive vice president, Michael Callum, wrote in a letter to employees Friday.

“To be clear, we have no current plans to close any of our hospitals in Massachusetts,” Callum added.

Callum described the transaction as “bridge financing,” the terms of which have been agreed upon and the first tranche is “imminent,” he wrote. Steward is considering transferring one or more of its hospitals to other operators, he added.

The Dallas-based system is the largest private for-profit healthcare network in the country and owns nine Bay State hospitals running the gamut of Eastern Massachusetts, from Haverhill to Taunton.

Four of those hospitals — Nashoba Valley in Ayer, St. Elizabeth’s Medical Center in Brighton, Holy Family in Haverhill and Methuen, and Norwood, which has been closed since a devastating flood in June 2020 — faced the risk of reportedly being closed due to Steward’s financial state.

Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River are also under Steward ownership.

At least one Massachusetts hospital that Steward operates, New England Sinai, will be shuttering. The company announced in December that it’d be closing the Stoughton facility in April after losing $22 million.

Steward reportedly owes $50 million in unpaid rent, according to a press release issued last month by its owner, Medical Properties Trust, Inc. Steward is also the subject of more than a dozen lawsuits in Massachusetts filed by vendors and employees over unpaid invoices since 2022, an issue first brought to light by the Boston Globe.

But in his letter to employees, Callum highlighted how Steward is in an advanced merger-and-acquisition process “that would bring in a significant equity partner to our physician organization, and the Company has already received very significant bids as part of this process.”

Callum added that the bridge financing will lead to the closing of the process and provide  “the necessary capital for a robust national physician group and the time needed for Steward to consider transferring one or more of our hospitals to other operators.”

“We are confident that both transactions will provide us with the necessary funds to get us through this challenging time,” Callum wrote. “In the meantime, we remain dedicated to serving the Commonwealth and the patients in our communities.”

Specifics around the funding and what it exactly means for the future of its Massachusetts hospitals were cloudy Friday.

Because of the lack of details, U.S. Rep. Stephen Lynch said he’s taking a “wait-and-see” approach in determining whether Friday’s announcement is a positive one.

Lynch, the state’s eight other representatives, and U.S. Sens. Ed Markey and Elizabeth Warren, sent a letter to Steward CEO Ralph de la Torre last week requesting a briefing on the company’s financial position and its plan for its Massachusetts facilities.

The company has yet to respond to the request, Lynch told the Herald over the phone.

“I know there are a couple of very large bills out there outstanding,” the congressman said. “I’m not quite sure if this tranche of bridge financing would be used to pay off that pre-existing debt. Again, we don’t have information. They’re not communicating with us directly.”

Nurses across the state felt “relieved” that access to “desperately needed health care services” will be preserved at least for now.

“The loss of any hospital or service at this time would be devastating for the vulnerable communities served by these facilities,” said Katie Murphy, president of the Massachusetts Nurses Association, which represents more than 3,000 registered nurses and health care professionals working in eight of Steward’s nine acute care hospitals in Massachusetts.

“While we appreciate this temporary reprieve,” Murphy continued, “decisions must be made in the coming weeks to ensure the orderly transition of Steward facilities so that these communities continue to receive the care they need and that surrounding hospitals are not overwhelmed by the prospect of potential closures.”

Medical Properties Trust said in early January it had “agreed to fund a new $60 million bridge loan” in a plan that has Steward exploring “several strategic transactions, including the potential sale or re-tenanting of certain hospital operations as well as the divestiture of non-core operations.”

Steward has said 70% of its patients are covered by Medicaid or Medicare, and it employs more than 16,000 nurses, doctors and other healthcare workers. It has cited poor reimbursement rates for Medicare and Medicaid services as a driver behind its financial challenges.

U.S. Rep Lori Trahan slammed Steward’s lack of clarity around these financial shortcomings during a Congressional committee this week, when she called for more transparency into the “disastrous” role of private equity in the financial instability threatening hospitals in Massachusetts.

“For their reasoning, Steward executives have pointed to, you guessed it, low Medicaid reimbursement rate as the cause of their financial distress,” Trahan said. “But earlier this month, it was revealed that the company has missed rent payments to an ‘outside landlord’ that actually owns the property and buildings their facilities operate in.”

Trahan on Friday welcomed the news that Steward has received funding to help it stay afloat but continued to demand transparency from the company.

“I’m glad that families in Haverhill, Methuen, the Nashoba Valley, and beyond can go to sleep tonight knowing their community hospital will still be open in the morning,” Trahan told the Herald in a statement. “These are critical facilities that people depend on for all types of care, and Steward executives owe it to their 40,000-plus patients and 16,000 employees to be absolutely clear about what the next steps are. These families deserve to know the timeline for this bridge funding, the details of this transaction, and what it means for the future of care in the Commonwealth.”