Steward Health Care, operator of 8 Mass. hospitals, files for bankruptcy

BOSTON — The financially troubled operator of eight Massachusetts hospitals announced Monday morning that it has filed for bankruptcy.

Dallas-based Steward Health Care says it’s finalizing the terms of debtor-in-possession financing from Medical Properties Trust for an initial funding of $75 million and up to an additional $225 million upon satisfying certain conditions acceptable to Medical Properties Trust.

In a statement, Steward explained that it took this voluntary step to seek relief under Chapter 11 bankruptcy as a necessary measure to allow the company to continue to provide essential care to its patients in their communities without disruption.

All local hospitals under Steward’s ownership will remain open, according to Dr. Ralph de la Torre, Chief Executive Officer of Steward. They are as follows:

  • St. Elizabeth’s in Brighton
  • Carney Hospital in Dorchester
  • Good Samaritan Medical Center in Brockton
  • Holy Family Hospital in Methuen
  • Haverhill Hospital in Haverhill
  • Morton Hospital in Taunton
  • Nashoba Valley Medical Center in Ayer
  • St. Anne’s in Fall River

“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment. Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees, and communities at this time. “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,” de la Torre said. “Steward will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure the continued care and service of our patients and our communities.”

Norwood Hospital in Norwood remains temporarily closed after flooding. Steward Health Care permanently closed New England Sinai Hospital in Stoughton last month.

In late January, Steward said the hospital’s financial performance had decreased by 1,600 percent over the last five years. The healthcare company blamed “skyrocketing expenses” related to labor, material costs due to inflation, and lingering effects of the COVID-19 pandemic on its decision to close the hospital. Steward also said that it owed about $50 million in unpaid rent.

“With the delay in closing 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,” de la Torre added. “By working collaboratively with stakeholders in this court-supervised controlled environment, and having the benefit of our earlier strategic efforts.”

Massachusetts Health and Human Services Secretary Kate Walsh said Gov. Maura Healey had been preparing for the bankruptcy announcement.

“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,” Walsh said.

The Massachusetts Nurses Association said the potential loss of any of these facilities will have devastating consequences for hundreds of thousands of residents from the South Shore to southern New Hampshire.

“The administration, the legislature, the healthcare industry, and all those who value the health of our communities should 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. Inaction would worsen health inequities, create hospital deserts, and weaken the entire healthcare infrastructure for all patients in Massachusetts,” an MNA spokesperson said.

President and CEO of the Massachusetts Association of Health Plans, Lora Pellegrini, noted that member plans to continue to provide coverage at Steward facilities, despite the filing.

“This filing does not mean that the system’s hospitals, medical centers, or physician groups will close; patients can continue to receive care at all Steward facilities. MAHP member plans will continue to provide coverage at Steward facilities,” Pellegrini said in a statement. “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.”

House Speaker Ron Mariano says lawmakers will work to address the rising cost of healthcare in the state amid Steward’s bankruptcy announcement:

“As Steward Health Care begins to reorganize under bankruptcy protection, I have the utmost confidence in Secretary Kate Walsh and the Healey Administration’s preparedness for this scenario, and in their commitment to preserving access to care. I also have every belief in the ability of our hospital leaders to support the state’s response, and in the health care providers who will continue to care for each and every patient that arrives at a Steward hospital in the months to come, regardless of what may be happening at a Texas bankruptcy court. It is the Legislature’s responsibility to ensure that what happened with Steward Health Care never happens again. Next week, the House will take up comprehensive legislation to address gaps in our regulatory process that Steward exploited, to stabilize the health care system, and to address the rising cost of health care.”

Last week, Walsh announced that a Boston doctor will lead the state’s emergency operations plan to ensure clinical quality and healthcare access in eastern Massachusetts amid Steward’s challenges.

What impact will the bankruptcy filing have on you? A healthcare expert weighs in:

This is a developing story. Check back for updates as more information becomes available.

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