Gov. Healey monitors 'evolving situation' at Steward

Gov. Maura Healey said Thursday she's focused on the "evolving situation" at fiscally challenged Steward Health Care, the company that runs nine hospitals in Massachusetts, with the goal of ensuring stability in the Massachusetts health care system.

Carney Hospital in Dorchester is one of the nine hospitals.

"Our first job is to protect patients and to protect access to health care, and also to protect and stabilize our health care system," Healey told reporters following an event in Newton. "I mean, that is what we're focused on. [Health and Human] Secretary [Kate] Walsh and her team and our administration remain in close communication with all involved in this. It's an evolving situation. But our job is to protect patients and access to care as well as the stability of the health care system."

Attorney General Andrea Campbell said she's also ready to act, if necessary.

"Our priorities right now are patients, protecting access to healthcare, as well as the jobs of those who make it possible to provide that care," Campbell said in a statement Thursday. "We’re currently in problem-solving mode, willing to use every power available to us to protect these priorities, while looking to a time in the near future to seriously address how Steward got in this situation."

On Tuesday, members of the Massachusetts Congressional delegation wrote a letter to Dallas-based Steward's CEO Ralph de la Torre to remind him of significant impacts on patients if any of Steward's hospitals were to close in Massachusetts.

In addition to Carney, Steward operates Good Samaritan Medical Center in Brockton, Holy Family Hospital in Haverhill and Methuen, Morton Hospital in Taunton, Nashoba Valley Medical Center in Ayer, New England Sinai Hospital in Stoughton, Norwood Hospital (closed and undergoing construction following a flood), Saint Anne's Hospital in Fall River, and St. Elizabeth's Medical Center in Brighton. The company employs more than 16,000 nurses, doctors and other health care workers in Massachusetts, according to the delegation.

In the letter, the delegation cited a Jan. 19 Boston Globe report indicating Steward is in "grave financial distress," the company's plans to close New England Sinai Hospital, a Jan. 4 Medical Properties Trust report regarding unmet rent and loan payments, and federal charges that Steward St. Elizabeth's Medical Center, Steward Medical Group, and Steward Health Care System violated the False Claims Act.

The delegation also requested a financial briefing from Steward, which has agreed to do that.

"This is an indication of how important our community hospitals are to the state," company spokeswoman Deborah Chiaravalloti said in an email to the News Service on Thursday. "Given that 70 percent our patients are covered by state and federally funded programs, we look forward to briefing the delegation and exploring potential solutions."

Hospital systems across Massachusetts are strained due to a mix of patient demand, workforce constraints and funding challenges. On Jan. 9, Secretary Walsh outlined an agreement among hospitals, nursing homes, insurers and state regulators under which they are voluntarily and temporarily adapting operations in an attempt to ease patient capacity crunches. Lawmakers across the state are watching the Steward situation, and situations at non-Steward hospitals, with an eye on impacts in their districts and possible interventions.

Senate President Karen Spilka, asked Wednesday about the Senate's role in dealing with Steward, said, "Do you have like the next four hours?"

"This is a very complicated issue, and it's unfolding by the day," Spilka said. "So we are working closely with the administration and monitoring it, and finding out what is happening with the various hospitals in the situation."

Asked if officials were assessing the possibility of state receivership or legislative options, Spilka said, "It's too early to say at this point."

A real estate investment trust, Medical Properties Trust, this month cited delayed and partial Steward rent payments and said it has been informed by the company that Steward's "liquidity has been negatively impacted by significant changes to vendors' payment terms."

MPT said its team worked closely with Steward, which operates 33 community hospitals across nine states, to develop an action plan "which, if successful, is designed to strengthen Steward's liquidity and restore its balance sheet, optimize MPT's ability to recover unpaid rent, and ultimately reduce MPT's exposure to Steward."

As part of the action plan, MPT said, Steward is pursuing "several strategic transactions, including the potential sale or re-tenanting of certain hospital operations as well as the divestiture of non-core operations."

The company is also committed to seeking a capital partner for its managed care business, with proceeds to be used in part to repay outstanding obligations to MPT, and Steward has also "intensified measures to improve collections and overall governance, including establishment of a transformation committee comprised of newly appointed independent directors and submission of periodic cash activity and asset sale progress reports to MPT and its ABL lenders," MPT said.

In Newton, a reporter asked Healey about possible roles for the state's two biggest hospital groups, Mass General Brigham and Beth Israel Lahey Health.

"We haven't seen a plan yet from Steward in terms of what they're proposing to do, so I'm not going to comment until we see a plan, but know that it's something we're watching very closely," Healey said.

According to Steward, it is "advancing an action plan to strengthen its liquidity, restore its balance sheet and put the tools necessary in place to continue forward as a key provider of healthcare services to our patients, communities, physicians, and employees."

In 2010, after a five-month review of the proposed transaction between Steward and the faith-based Caritas health care system, Attorney General Martha Coakley endorsed the proposed transfer, with conditions, of non-profit hospitals in Brighton, Brockton, Dorchester, Methuen, Norwood and Fall River to Steward for $495 million.

In a report filed at the time by Coakley, the attorney general's office concluded: "While there are risks to the public intrinsic in any change of control, including a non-profit to for-profit conversion, those risks are outweighed by the previously described risks of not undertaking the transaction. Moreover, and with the additional protections and transparency obtained by the Attorney General, the benefits of maintaining the system as a system, avoiding Caritas Hospital closures, funding the pension liabilities, satisfying the debt, and beginning the process of addressing the deferred capital needs of Caritas are clear and compelling."

In a statement Thursday, Steward referenced its 2010 founding mission of "providing high-quality care for the most-marginalized patient populations" and referenced how it "singularly stepped up to absorb the failing Caritas Christi community hospital system."

The company says it has been challenged by a widening gap between commercial reimbursements to larger academic medical centers and payments made to Steward's community hospitals in Massachusetts that serve large numbers of Medicare and Medicaid patients.

"This gap has only continued to increase and most community hospitals - including Steward hospitals in Massachusetts - are suffering losses that jeopardize their ability to continue to offer services," Steward said. It added, "Steward Health Care is one of many health systems in the state of Massachusetts challenged by the once acute and long-tail impacts of the COVID-19 pandemic. Whether record-breaking losses, significant downsizings or facility closures, the past few years have devasted [sic] the state’s community hospitals."

The company also referenced its advocacy for community hospitals and for reimbursement disparity reforms during the administrations of Govs. Deval Patrick and Charlie Baker and said it has continued talks with Healey and Campbell.

Alison Kuznitz from the State House News Service contributed reporting.



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