Steward: Bridge Financing Will Stabilize Mass. Hospitals

Despite facing major financial challenges, Steward Health Care is not currently planning to shutter any of its Massachusetts hospitals, a company executive said Friday after elected officials have been sounding the alarm about potential closures that could harm vulnerable residents throughout eastern Massachusetts.

Steward "has agreed upon the principal terms for a significant financial transaction to help stabilize our company," Steward Executive Vice President Dr. Michael Callum said in a message to colleagues. Callum's message was shared by a nurses union and a Steward official confirmed that it was sent to employees on Friday morning.

However, Callum indicated in his letter that some Steward facilities may eventually come under new ownership as Steward continues to grapple with its financial issues, including overdue loan and rent payments.

"This bridge financing and the terms of this transaction have been agreed upon and the first tranche of funding is imminent," Callum wrote. "This funding will help stabilize operations, including the resumption of virtually all elective cases, and more importantly allows us to continue operations at all of our Massachusetts hospitals. To be clear, we have no current plans to close any of our hospitals in Massachusetts."

Steward owns hospitals in Dorchester, Brockton, Haverhill, Methuen, Taunton, Ayer, Norwood, Fall River and Brighton that serve a high volume of Medicaid and Medicare patients. Earlier this week, the Department of Public Health held a public hearing about Steward's previously announced plan to close New England Sinai Hospital in Stoughton in April due to losses incurred there.

"Moreover, the Company is advanced in an M&A process that would bring in a significant equity partner to our physician organization, and the Company has already received very significant bids as part of this process," Callum added. "The bridge financing will get the Company to the closing of the M&A process, and will provide the necessary capital for a robust national physician group and the time needed for Steward to consider transferring one or more of our hospitals to other operators."

Those arrangements should allow Steward to get through "this challenging time," Callum said.

"We are committed to working collaboratively with leaders in the state towards the shared goal of providing exceptional service to our patients," he continued.

Congresswoman Lori Trahan said Steward should disclose more details of its financing plans.

“I’m glad that families in Haverhill, Methuen, the Nashoba Valley, and beyond can go to sleep tonight knowing their community hospital will still be open in the morning," she said in a statement. "These are critical facilities that people depend on for all types of care, and Steward executives owe it to their 40,000-plus patients and 16,000 employees in Massachusetts to be absolutely clear about what the next steps are. These families deserve to know the timeline for this bridge funding, the details of this transaction, and what it means for the future of care in the Commonwealth."

Katie Murphy, president of the Massachusetts Nurses Association, expressed relief over the deal but signaled more discussion is needed to respond to the crisis. The union represents 3,000 nurses and health care professionals at eight Steward hospitals.

"We are relieved to see that a deal has been reached to temporarily preserve access to desperately needed health care services provided by the hospitals owned by Steward Healthcare, as the loss of any hospital or service at this time would be devastating for the vulnerable communities served by these facilities," Murphy said. "While we appreciate this temporary reprieve, decisions must be made in the coming weeks to ensure the orderly transition of Steward facilities so that these communities continue to receive the care they need and that surrounding hospitals are not overwhelmed by the prospect of potential closures."

1199SEIU Executive Vice President Tim Foley said his union's workers also welcomed the news and added that it "will provide additional time to create a long-term solution to preserve community care across the Commonwealth."

"The care provided by the 5000 members of 1199 throughout the Steward system and their co-workers is essential to the communities they serve, sometimes being the only hospital in the area for patients," Foley said. "We must protect community care and avoid exacerbating health inequities. We remain ready to work with the Healey-Driscoll administration, the Massachusetts legislature, and all stakeholders to ensure that Massachusetts patients can continue to receive quality care in the community hospitals they know from the caregivers they trust."

Health and Human Services Secretary Kate Walsh said Friday afternoon that the Healey administration is "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."

"The Healey-Driscoll administration is keeping in close contact with Steward regarding all aspects of their operations, with specific attention to the patient care and access challenges created by their financial situation," Walsh said in a statement released hours after Steward's update. "We are fully committed to ensuring that patients have access to high-quality care across our state, focusing on the local and regional care Steward provides. 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. We know the critically important role our hospitals and health care providers play in our communities."

Since Wednesday, surveyors with the Department of Public Health have been conducting daily on-site visits at three of Steward's hospitals: Good Samaritan Medical Center, St. Elizabeth's Medical Center and Holy Family Hospital, which has campuses in both Methuen and Haverhill. Officials have been reviewing hospital staffing, daily patient census and supplies and services provided, according to the Healey administration.

DPH and the Executive Office of Health and Human Services are also conducting "planning and capacity analysis" that involves determining other providers' capacity for patients and staff, the administration said.

"This includes geographic information (i.e., where patients and staff are coming from) for a comprehensive understanding of regional needs," EOHHS officials wrote in a press release. "The administration is not only looking at data; as future prospects become clearer for different facilities, we will also seek community input to ensure regional needs are met."

Hospital closures in recent years have prompted state lawmakers to rethink the essential services process, including giving the state more authority to keep facilities open if they are deemed essential for patient safety.

The Joint Committee on Public Health solicited written testimony this week on a Rep. Natalie Higgins proposal (H 4230) that would block hospital services from shutting down for three years should the Department of Public Health decide that the proposed closure is "necessary for preserving access and health status in the hospital's service area" following a public hearing.

Higgins filed the bill in response to the controversial closure of a birthing center at Leominster Hospital.

"We were encouraged by the unprecedented steps the Massachusetts Department of Public Health took during the Essential Services Closure process to call out the inadequacies in UMass Memorial’s closure plan and to demand a new plan and a new closure date," Higgins said in her testimony, which she shared with the News Service. "While we thought we had the perfect storm of events to delay the closure of the Birthing Center, UMass did not listen to the concerns of the DPH and closed the unit. Our community was devastated that the DPH did not further intervene."

--SHNS