Judge approves bid deadline for all Steward Hospitals including those in Massachusetts

• Colin A. Young, Alison Kuznitz

JUNE 3, 2024…..A federal bankruptcy court judge on Monday blessed the process that bankrupt Steward Health Care plans to use to sell or auction its 31 nationwide hospitals and physicians network in the coming weeks, including eight in Massachusetts.

“Today we’re just outlining procedures and process, and that is what this motion is really about. We’re not picking a winner today, we’re picking a process that will allow parties’ rights and provide transparency to the process, and that’s what today is really about, and that’s what this motion is requesting,” Judge Christopher Lopez said after hearing about half an hour of arguments, almost entirely in support of the timeline Steward proposed. “So today’s just step one in the process. And I understand that, but an important one. You can’t get to step two without step one, and today I will approve the motion.”

The timeline that Lopez approved Monday sets a deadline for bids on Steward’s Massachusetts hospitals (and hospitals in other states aside from Florida) of June 24 and schedules sale hearings to be held before the judge on July 11. Steward is proposing to sell its physician services network, Stewardship Health, along the same timeline.

In a court filing ahead of Monday’s hearing, Attorney General Andrea Campbell’s office said Massachusetts did not object to Steward’s expedited offloading schedule — “Indeed, Massachusetts supports the arrival of a new operator or operators who can provide high-quality patient care to Massachusetts residents,” the AG’s office said. But a lawyer representing both Campbell’s office and the Executive Office of Health and Human Services chimed in during Monday afternoon’s bankruptcy court hearing to remind the judge that the state officially reserves its rights to review and act on hospital transfers.

“Many of the sales, all of the sales, are going to require some kind of regulatory approval, and the rights that are being reserved include all those rights with regard to regulatory approval. We all support a fair, as-quick-as-possible sort of timeline to move people forward, but whether, when these sales hearings are set, the information and the evaluation that will be required from various regulatory agencies will be in place is, at best, unclear and most likely unlikely if the winning bidders are chosen a mere couple of weeks before a sale hearing,” Andrew Troop, a lawyer who leads the Insolvency & Restructuring Practice Group in the New York office of Pillsbury Winthrop Shaw Pittman, said.

A lawyer for the U.S. Department of Justice spoke during Monday’s hearing to highlight for Lopez how the timeline, especially as it applies to the sale of Stewardship Health, could conflict with the U.S. government’s antitrust review of the transaction. A lawyer for Steward said the company has been talking with the DOJ about ironing out any potential issues.

“It is important, though, to note that while the parties are working very quickly, as quickly as they can, regarding the review, that these reviews are time intensive. A lot of it is coming from papers that the debtor and the proposed purchaser, United, need to get to the United States,” Augustus Curtis said. “And it is not likely, frankly, that a review of these antitrust concerns will be completed by the time of the sale hearing.”

Curtis said he wanted to raise the issue Monday because the DOJ “didn’t want to stand up for the sale hearing and indicate that there were problems that we didn’t let the court know about from the very outset of the case.”

Gov. Maura Healey, House Speaker Ron Mariano and Senate President Karen Spilka have all ruled out a bailout of Steward. But their comments have also not ruled out that the state might need or want to provide some other kind of assistance to make the transition from Steward to other operators a smooth one.

Katie Murphy, president of the Massachusetts Nurses Association, put pressure on top state officials to maintain care at Steward facilities during a press conference in Ayer on Monday afternoon, warning the loss of any hospital would be “catastrophic” for communities and for remaining health care providers.

“We as a state and those in charge of protecting the state have ultimate responsibility to do whatever is needed to protect this and all communities from the loss of any essential health care services. And that means the governor and her administration, the attorney general, and the two leaders of our legislative body cannot be silent and must be active, pushing any and all levels of government power at their disposal to save these hospitals,” Murphy said. “If we can allocate hundreds of millions of state dollars in corporate welfare, with initiatives to help industries like the Big Pharma-driven biotech industry, we can also divert some of those resources to protecting the health of hundreds of thousands of our most vulnerable friends and neighbors, while also preserving the jobs and economic engines that these hospitals provide to their respective communities.”