Massachusetts is pressuring Steward Health Care to develop a restructuring plan or risk sending the state into a public health emergency, The Boston Globe reported Jan. 19
Dallas-based Steward — which operates 33 community hospitals across nine states, including nine hospitals in Massachusetts — has faced mounting financial struggles for at least three years. Those struggles hit their boiling point in recent months. Since December, Steward has sold its lab assets in Ohio and Pennsylvania; made plans to close a rehabilitation hospital in Massachusetts; and been called out by its landlord, Medical Properties Trust, for owing approximately $50 million in rent.
Now, state regulators are concerned that the cash-strapped system could face sudden closures, which would have a drastic impact on employment and care access in Massachusetts. In the 12 months ending September 2022, Steward's Massachusetts hospitals admitted more than 46,000 patients — 70% of whom are covered by Medicare and Medicaid, the system told Becker's.
Medical Properties Trust had agreed to give Steward a bridge loan of $60 million if the health system pursues "the potential sale or re-tenanting of certain hospital operations as well as the divestiture of non-core operations."
The system has also come to the state of Massachusetts for more funding, though the two have a complicated relationship. Steward has refused to file financial disclosures other hospitals routinely provide, and since 2022, at least 14 Massachusetts vendors and employees have filed lawsuits against the system for unpaid invoices.
In a Jan. 19 statement shared with Becker's, a Steward spokesperson said the system met frequently with the past two governors' administrations, and recently "continued the conversation" with current Gov. Maura Healey and Attorney General Andrea Campbell.
"Steward has been the leading advocate for community hospitals over the past three administrations to enlist support in rectifying this reimbursement disparity so we can collectively continue to serve underserved communities," the statement said.
"While we are pursuing inequities and our aggressive advocacy for fairer reimbursements, Steward 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," the statement continued.
An unnamed source with "direct knowledge of the ongoing conversations" told the Globe that Steward must have this restructuring plan by the end of January. It is unclear whether Steward or one of its lenders imposed that deadline, but the state is pressuring the system for answers, the source said.
Massachusetts could ultimately end up declaring a public health emergency, giving regulators more control over the situation, including the authority to transfer patients.
"If a failure of Steward's Massachusetts hospitals were to occur, the impact for the rest of the healthcare system in the state could be severe," Ellen Lutch Bender, a Boston-based healthcare consultant, told the Globe. "Our hospital system is overburdened now and there's no wiggle room to accommodate for the increased patient demand that would be brought on by shuttering the Steward hospitals."
In its statement to Becker's, Steward said it is "very confident that our hospitals have adequate supplies for us to provide high-quality health care to our patients."