Report: Plan to rescue Steward Hospitals may cost Massachusetts taxpayers $700 Million

Michael P. Norton

AUG. 25, 2024…….Gov. Maura Healey’s plan to rescue five bankrupt Steward Health Care hospitals could cost Massachusetts taxpayers $700 million by 2027, the Boston Globe reported Saturday, citing “people with direct knowledge of the bailout plan.”

Nine days ago, Healey held a press conference where she announced a financing plan was vetted with legislative leaders and would help “save” several hospitals as they transition to potential new buyers. The governor’s office at the time said the plan involved cash advances, capital supports and maximizing federal matches, but didn’t offer many additional details.

“Those are the three sources and we’re working with the acquirers to make sure they have the funds available so they can meet their bids,” Health and Human Services Secretary Kate Walsh said on Aug. 16, adding that the state funds involved would continue for three years to help with staffing and capital investments. 

While Healey publicly disclosed the plan and said it was a “win for Massachusetts” and “closed the book on Steward,” her team since then has declined to elaborate on taxpayer costs or estimate the sum of the aid package.

Healey was asked Aug. 16 about where the money was coming from for the hospital deals and she said she was “working that out” with her finance team. Walsh also said the administration was working on “sources of funds” and neither Walsh nor Healey estimated a total.

None of the hospital deals have been approved in federal bankruptcy court, with the next court hearing date coming up on Tuesday. 

“At this time, we cannot comment on financial terms or discussions due to ongoing negotiations,” Olivia James, spokeswoman for Health and Human Services Secretary Kate Walsh, told the News Service on Friday, Aug. 23, a statement that suggests terms may be evolving. 

Healey’s office and Walsh on Saturday did not directly address a request to confirm or deny the reported $700 million cost of the plan, and it’s unclear how hospital rescue plan costs will impact other health care spending in Massachusetts.  

“The details here are really going to matter,” Massachusetts Taxpayers Foundation President Doug Howgate said Saturday afternoon.

Howgate said he could imagine that some of the funding could be secured within the MassHealth system but also that some might require “statutory action” from the Legislature. Understanding the components of the plan “sooner rather than later,” he said, will be helpful and enable people to understand state versus federal funding splits, for instance, or short-term versus long-term costs.

“Until we see more of that, it’s hard to really assess what the plan really is,” said Howgate.

In a Saturday afternoon statement to the News Service, Walsh didn’t confirm an estimate of the state’s funding plans, and repeated some of the points the administration previously made about their behind the scenes efforts to keep Steward hospitals running into the future.

“The state has been working to support the bidders as they seek to acquire the right to continue operating these hospitals,” Walsh said. “To have a smooth transition of ownership at these hospitals and ensure that patients continue to access care, the state will provide some financial assistance, including advancing some of the funds the hospitals would receive anyway by caring for MassHealth patients. The net additional cost to the state will be significantly lower than the total package. The state’s financial assistance will not require additional legislative appropriation. Details of any state commitments will be made available when the deal is completed.”

Gov. Healey on Aug. 16 announced deals were in place to sell St. Elizabeth’s Medical Center in Brighton and Good Samaritan Medical Center in Brockton to Boston Medical Center, for Lawrence General Hospital to buy the Holy Family Hospital facilities in Methuen and Haverhill, and for Lifespan to take over Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River, as long as the deals were finalized and approved. The St. Elizabeth’s deal also involves the state state seizing land through eminent domain proceedings.

The bankruptcy court has approved Steward’s plans to close Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer by Aug. 31 and barring a surprise intervention, those two facilities appear to be entering their final week of operations.