With hospitals in Brighton, Dorchester, Brockton, Methuen Haverhill, Taunton, Ayer, Norwood, Fall River, Steward files for bankruptcy in Texas

Colin A. Young

MAY 6, 2024…..[Coverage Developing] Steward Health Care, the operator of the third largest hospital system in Massachusetts, filed for Chapter 11 bankruptcy in Texas, seeking the legal protection to restructure its debt while leaving its hospitals open.

The company, which operates eight Bay State hospitals and has been sinking under a pile of debt to vendors and its de facto landlord, said it does not expect any interruption to day-to-day operations and that the bankruptcy filing was “a necessary measure to allow the Company to continue to provide necessary care to its patients in their communities without disruption.”

In a middle-of-the-night press release, the company said it was finalizing the terms of “debtor-in-possession financing from Medical Properties Trust for initial funding of $75 million and up to an additional $225 million upon the satisfaction of certain conditions acceptable to Medical Properties Trust,” the real estate investment trust that owns the land under Steward hospitals.

Steward also said the move will make it easier to transition its Massachusetts hospitals to another company.

“Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment. Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees, and communities at this time,” Steward CEO Ralph de la Torre said. “In the past several months we have secured bridge financing and progressed the sale of our Stewardship Health business in order to help stabilize operations at all of our hospitals. With the delay in closing of the Stewardship Health transaction, Steward was forced to seek alternative methods of bridging its operations. With the additional financing in this process, we are confident that we will keep hospitals open, supplied, and operating so that our care of our patients and our employees is maintained.”

In late March, state regulators said they had received word that Steward planned to sell its physician network to for-profit insurer Optum, with Steward describing the anticipated effective date of the deal as the second quarter of 2024 “following receipt of all required approvals.” State regulators say Steward has failed to file information it needs to review the transaction.  

State government on Friday announced that it had launched an incident command system to track and respond to the situation.

“Today, Steward Health Care moved forward with a bankruptcy filing under federal law – an action for which the Healey-Driscoll administration has been preparing. Steward hospitals remain open, and patients should not hesitate to seek care. The Healey-Driscoll administration is working with Steward and any potential partners to support an orderly transfer of ownership that protects access to care, preserves jobs and stabilizes our health care system,” Health and Human Services Secretary Kate Walsh said.

On Friday, Gov. Maura Healey, who plans a Monday morning press conference on the Steward news, said that Steward will be exiting Massachusetts, calling that a “very good thing based on their completely unscrupulous behavior.” She’s repeatedly accused de la Torre of financial mismanagement and shielding financial documents from state regulators.

“So great, get them out of town, but in the meantime, it’s like, how do you manage that orderly transition?” Healey said. “Who’s going to come in and take over? What is that going to look like? And it’s something that we are committed to making sure that we manage as thoughtfully as possible, and that we work with our network of existing other hospital providers and other physician networks to make sure, again, that patients are covered, that workers are protected, and that the stability of the market is in place.”

In a statement early Monday, the Mass. Nurses Association and 1199 SEIU said Steward’s bankruptcy filing “provides an opportunity for other stakeholders to take long-awaited action and center the voices of caregivers and patients.”

“As such, the bankruptcy declaration should only embolden the administration, the legislature, the healthcare industry, and all those who value the health of our communities to immediately take whatever steps are needed to ensure the preservation of these facilities and the safe transition to more stable and responsible not for profit ownership,” the unions said.

Steward operates eight hospitals in Massachusetts: St. Elizabeth’s in Brighton, Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen and Haverhill Hospital in Haverhill, Morton Hospital in Taunton, Nashoba Valley Medical Center in Ayer, Norwood Hospital, and St. Anne’s in Fall River.

Lora Pellegrini, president and CEO of the Massachusetts Association of Health Plans, said insurers “understand the uncertainty raised by Steward Health Care’s action today to file for Chapter 11 bankruptcy” but emphasized that patients can continue to receive care at Steward facilities. 

“MAHP member plans will continue to provide coverage at Steward facilities. If any health plan member has immediate concerns regarding coverage or access, they should contact their health plan’s member services department for further assistance,” said Pellegrini.