Angered over the serious financial challenges at Steward Health Care that could jeopardize the future of safety net hospitals in eastern Massachusetts, top House Democrats insisted Thursday they will not bail out the company, which last week said it doesn't plan to shutter any facilities after securing a new funding stream.
Criticizing past financing deals struck by Steward CEO Ralph de la Torre, House Speaker Ron Mariano and Ways and Means Chairman Rep. Aaron Michlewitz sounded dubious as they discussed the bridge funding deal touted by a Steward executive to stave off the feared hospital closures for now. Steward operates nine hospitals in Massachusetts, serving tens of thousands of patients including many low-income residents who have public health insurance coverage.
"We are not in a financial position to commit to financing anything to bail these people out," said Mariano, a Democrat from Quincy, where Steward closed Quincy Medical Center in 2014 due to multi-million-dollar losses.
"I've been so close to this because Ralph was at Quincy when Quincy closed. I've been dealing with Ralph for a long time and I am suspect of everything he tells me," the speaker said.
Mariano said his biggest concerns are "the patients and are these hospitals going to be here after the new extension Steward seems to pull out of the air whenever the pressure grows too strong."
"This is their second extension of credit since he started talking about shutting hospitals," Mariano told the News Service, referring to de la Torre. "So it seems to me, that whenever the time gets close, he figures out a way to get refinanced."
Citing worries about patients accessing care and treatment near where they live, Mariano didn't offer concrete solutions as the House works with the Healey administration to respond to the situation. Amid hospital closures and industry consolidation in recent years, lawmakers have weighed the essential closure process and establishing a state receivership mechanism.
Mariano brushed off those options when asked about the Legislature's role in managing hospital closures and why Beacon Hill didn't intervene sooner with Steward.
"They're private hospitals -- it's privately run," Mariano said of Steward's model. "It's not a state-run hospital."
While Steward is a for-profit entity, many Massachusetts hospitals are registered as non-profits.
For the first time since Steward's financial distress was reported by The Boston Globe last month, Mariano said he and Michlewitz met Thursday with representatives whose communities are served by Steward facilities. Steward owns hospitals in Dorchester, Brockton, Haverhill, Methuen, Taunton, Ayer, Norwood, Fall River, Stoughton and Brighton.
Mariano said the goal of the meeting was to get lawmakers on the same page, and for Michlewitz to stress that the Legislature lacks the financial resources to come to Steward's rescue should the request arise. Michlewitz said his colleagues understand the state's "difficult fiscal climate" and share an understanding that lawmakers cannot handle a large bailout for Steward.
Steward Executive Vice President Dr. Michael Callum said Friday the company had agreed to "principal terms for a significant financial transaction to help stabilize our company." Callum said Steward is also engaged in a merger and acquisition process to bring in a "significant equity partner."
"We are committed to working collaboratively with leaders in the state towards the shared goal of providing exceptional service to our patients," Callum wrote.
Callum's message to Steward employees also signaled some facilities could eventually come under new ownership as the company deals with overdue loans and rent payments, among other financial problems.
Gov. Maura Healey, in a recent WBUR interview, said that "Steward is not going to get bailed out." Mariano, asked whether the House has been asked to bail out Steward, told the News Service, "Not specifically, no."
"But as the secretary of Health and Human Services negotiates with them, we don't want to be stuck with a bill, based on whatever they negotiate," Mariano said.
The speaker, asked about what those negotiations between Steward and Secretary of Health and Human Services Kate Walsh entail, said, "I'm not privy to them." Michlewitz said "it's too early to tell" what Walsh, the former CEO of Boston Medical Center, may request from the Legislature.
An Executive Office of Health and Human Services spokesperson, asked to clarify the nature of those negotiations and whether the administration plans to provide financial support to Steward, referred the News Service to Walsh's statement from Friday.
"We are working together with Steward to maintain stability for both patients and staff, including safety and quality monitoring by our own Department of Public Health teams on the ground at Steward sites," Walsh said Friday. "We know the critically important role our hospitals and health care providers play in our communities. That's why we’re actively engaged in contingency planning as Steward navigates its financial challenges, not only for Steward as a system but for each specific community where Steward operates in Massachusetts.”
Mariano said he did not feel blindsided by the situation unraveling at Steward.
"If you paid attention to this, you knew this was coming," Mariano said. "When he sold the land underneath the hospitals, you knew there was a game."
Medical Properties Trust, a real estate investment trust that is essentially Steward's landlord, said Steward has millions of dollars in unpaid rent. MPT said last month it was working with Steward 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."
Michlewitz said the Legislature appropriated $54 million to Steward over the last three years, using federal COVID-19 relief money.
"Certainly, you know, we've done our share already, from a financial standpoint, in trying to keep their system afloat. As you heard from the hearing yesterday, you know, our finances are in a much different circumstance right now, and we need to be mindful," Michlewitz said of Wednesday's hearing focused on Healey's fiscal 2025 budget pitch. "So we don't foresee us coming from a financial standpoint to any bailout or any rescue."
In the third round distributing American Rescue Plan Act funding, Michlewitz said Steward received "significantly less" because it did not share financial information with the Health Policy Commission.
"We had no idea exactly what the circumstances were and how deep it was, but we certainly knew there were challenges," he said.
Referring to de la Torre, Mariano said, "We have no idea what his finances look like. We're not going to pour money into a blind hole."