Sales Hearing Delayed Again, State Silent On Payment Complications

The saga around the fate of bankrupt Steward Health Care hospitals here has gone on for more than three months, and now it will continue for at least another three more days.

The U.S. Bankruptcy Court hearing on the sale of as many as five Steward Health Care hospitals in Massachusetts was postponed from Tuesday afternoon until Friday morning, delaying the public release of information about the potential buyers.

The change also appears to affect an agreement between Massachusetts state government and Steward under which the state was to provide a cumulative $30 million to keep Steward hospitals afloat through the end of the month. That agreement makes the state's second and final payment contingent upon sales being approved by Thursday, though state officials suggested that other conditions of that agreement had already not been met.

In an overnight court filing, the company announced that the hearing planned for 2 p.m. Tuesday was being "adjourned" until 11 a.m. Friday, Aug. 16. The sales hearing is a significant step in the bankrupt company's efforts to sell off its physician network, Stewardship Health, as well as hospitals in Massachusetts, Arkansas and Louisiana. The filing did not provide a reason for the postponement and Steward declined to offer one Monday morning.

The latest delay means that the sale of Steward's hospitals here will happen, at the earliest, about a month and a half later than originally expected. The company filed for bankruptcy on May 6 and on May 15 laid out a timeline that called for bids to come in by June 24 and for a sales hearing to be held by July 2.

Steward has already received court approval to close Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, but company officials have told the court that they "received binding bids from local operators to acquire six (6) of their Massachusetts hospitals which includes Saint Elizabeth’s Medical Center, Saint Anne’s Hospital, Good Samaritan Medical Center, Holy Family Hospital – Haverhill, Holy Family Hospital – Methuen, and Morton Hospital."

Massachusetts agreed, and U.S. Bankruptcy Court approved, to a deal under which it plans to provide $30 million in advance Medicaid payments to keep open through August the Steward hospitals that are expected to be sold. The state was to pay roughly $11 million of that sum on or around last Friday, though the Executive Office of Health and Human Services did not respond when asked if that payment was made.

The second round of payments, $19 million in all, could be affected by the postponement of Tuesday's hearing. That payment, under the agreement, is conditioned upon the "execution of agreements to acquire the hospital operations and land of" the Massachusetts hospitals by Aug. 9 and the "issuance of one or more orders by the Bankruptcy Court on or before August 15, 2024, approving the sale of" those hospitals.

EOHHS responded without directly addressing the latest delay. Instead, the secretariat said that it was disappointed that asset purchase agreements for the remaining five for-sale hospitals have not yet been signed, suggesting that the first condition of the state's second round payment was not met by its Aug. 9 deadline.

EOHHS did not respond to questions about how the latest postponement could affect the agreement for the state to provide the $30 million and whether the state still intended to make the payments even if sales are not approved until Friday at the earliest.

"For the avoidance of doubt, there shall be no payment required or made under this Agreement unless and until EOHHS has determined the condition required under this paragraph ... has been satisfied," the agreement says.

A Steward spokeswoman said the company did not have a statement to provide in response to News Service questions about the payment agreement and sales hearing postponement.

The identities of the bidders and the offers they put in for the Steward hospitals have not yet been made public. Court documents made clear that none of the parties that bid on Steward's Massachusetts hospitals offered to take on current lease payments called for under Steward's master lease governing rent payments on the land where it operates hospitals.

The bankruptcy judge last month granted Steward's request to reject the master lease for the Massachusetts hospitals. After that, landlords Medical Properties Trust and Macquarie Infrastructure Partners reached an agreement in principle with their lender Apollo Global Management to hand over the property on which Steward's Massachusetts hospitals are located, an agreement that a Steward lawyer said "removes a significant hurdle that we were facing."

Steward's overnight court filing also moved the sales hearing for hospitals in Arizona, Texas and Florida from Aug. 22 to Sept. 10, and pushed off a sales hearing related to hospitals in Ohio, Pennsylvania and one in Texas until "a date to be determined."