Dallas-based Steward Health Care is at the center of a growing dispute with its former Massachusetts hospitals as it demands higher fees for critical EHR and billing services, The Boston Globe reported Jan. 31.
The conflict arises as Boston Medical Center; Lawrence, Mass.-based Lawrence General Hospital; and Providence, R.I.-based Brown University Health—new owners of six hospitals previously operated by Steward—scramble to maintain essential EHR and technology services. These services cover patient information for radiology, laboratory, pathology, microbiology, and pharmacy operations. In response to Steward's demands, the hospitals have filed motions in bankruptcy court urging Steward to uphold existing contracts.
"If [Steward were to] cut off services…patient lives will be at risk," the hospitals stated in a joint legal filing.
The organizations emphasized that safe and effective operations depend on the continuity of EHR and revenue cycle management, both of which would be severely impacted if services were discontinued.
Despite the increased financial burden, Steward has not provided a clear justification for the higher fees in court documents and declined to comment to the publication. The hospitals maintain that they are being charged more for the same level of service, with invoices revealing substantial hikes in monthly payments. For instance, Boston Medical Center's fee rose by $1.5 million, Brown University Health’s by $1.1 million, and Lawrence General's by nearly $500,000—each representing more than a 30% increase.
State officials have been briefed on the dispute but have no plans to provide additional financial assistance to Steward. Massachusetts Secretary of Health and Human Services Kate Walsh criticized the company's actions, stating, "Steward has been a bad actor for a very long time, and this is the latest move by them to try to get more money from their failed operations in Massachusetts."
Hospital leaders remain hopeful that the court will intervene. John Fernandez, CEO of Brown University Health, called Steward's demands "unbelievable, unconscionable, and ridiculous" but reassured the public that patient care remains the top priority.
Meanwhile, Steward’s leadership has undergone a recent shakeup, with CEO Mark Rich stepping down and John Castellano of consulting firm AlixPartners assuming the role of chief restructuring officer. The company no longer operates any hospitals in Massachusetts, yet its financial troubles continue to have ripple effects on the institutions it previously owned.
The implications of this conflict extend beyond Massachusetts, according to the publication. Healthcare Systems of America, which acquired eight Steward hospitals in Texas, Louisiana, and Florida, has also reported steep markups for IT and staffing services. A bankruptcy filing revealed that Steward was charging the health system a 35% premium, and disagreements over payments nearly led to service termination.
Hospital operators in Massachusetts are actively seeking alternatives to Steward's IT services but acknowledge that transitioning to new providers would be a complex, time-consuming, and costly process. In their court filing, they warned that prematurely severing these services could result in irreparable harm, potentially forcing hospitals to shut down.
A hearing on the dispute is expected to take place by mid-February.
Becker's reached out to Steward Health Care and will update the story if more information is learned.