New York City-based Apollo Global Management, an alternative investment manager, has rejected the $4.5 million proposal from Massachusetts Gov. Maura Healey's administration to take over Dallas-based Steward Health Care's Boston-based St. Elizabeth's Medical Center.
In a Aug. 20 letter, obtained by Becker's, an Apollo lawyer detailed that the offer from the state "significantly undervalues the real property underlying St. Elizabeth's" and argued that the offer price was below the property's fair market value, which is worth more than $200 million in tax-assessed value and sits on 14 acres of land next to Boston's "most prestigious educational institutes," the letter reported.
The letter also shared that the amount offered by the state for the hospital is less than its annual taxes paid, at $5.14 million over the last 12 months.
"There are a number of highly valuable changed uses to the property that would be similarly valuable for the community and for which a developer or educational institution would likely obtain permits," the letter stated.
On Aug. 16, Ms. Healey's administration shared that it had deals "in principle" for four Steward hospitals in Massachusetts, and that the state also planned to take St. Elizabeth's through eminent domain and then hopefully transition the hospital to Boston Medical Center.
Should the deals move forward, Providence, R.I.-based Lifespan would take on Taunton, Mass.-based Morton Hospital; Fall River, Mass.-based St. Anne's Hospital, Boston Medical Center would operate Brockton, Mass.-based Good Samaritan; and Lawrence (Mass.) General Hospital would run Holy Family Hospital in Methuen (Mass.) and Holy Family Hospital in Haverhill (Mass.).
"Steward and Apollo need to stop playing games with people's healthcare," a spokesperson for Ms. Healey said in an Aug. 21 statement shared with Becker's. "We are moving forward with plans to take St. Elizabeth’s by eminent domain."
Steward, which sought Chapter 11 protection May 6, also filed a lawsuit against its landlord Medical Properties Trust on Aug. 19, claiming that the company had disrupted the efforts to sell its remaining hospitals to new operations.
Ms. Healey's office is working to complete the legal work necessary to take over the hospital and to transition ownership quickly, the statement said.
Apollo and Steward did not have a comment for Becker's.
Editor's note: This story has been updated as of Aug. 22 at 8:50 a.m. CT.