State May Pay $$ For Steward Bankruptcy Deal

Filings have poured into U.S. Bankruptcy Court in recent weeks, including this one addressing the company's lease agreements.

Michael P. Norton -- State House News Service

A proposed order filed in the Steward Health Care bankruptcy case outlines a "commitment" from state government in Massachusetts to provide $30 million to support Steward hospitals "as they are transitioned to new operators in the near-term."

The proposal was filed by Steward as an emergency motion and seeks approval of the payment agreement, authority to close Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, and procedures related to closures.

The draft order states the relief is requested by 1 p.m. Wednesday, the same time a court hearing is scheduled on the order in a Houston, Texas bankruptcy court. In another new filing seeking relief from lease agreements as part of efforts to sell six Massachusetts hospitals, Steward said it lost nearly $100 million operating Massachusetts hospitals in the first five months of this year.

The order seeks an expedited Aug. 31 closure of the two facilities and features a timeline calling for a public hearing by the state eight days before the planned closures, and for the state to issue a determination allowing the hospitals to close at least five days in advance of the planned closure. Closing the facilities with about a month of notice conflicts with state regulations calling for a roughly four-month period before health care closures.

The order states that Steward, which filed for bankruptcy in May, received "binding bids from high-quality local operators to acquire a large majority of their Massachusetts hospitals, as well as a commitment from the Commonwealth of Massachusetts to provide approximately $30 million of funding support for the hospitals' operations as they are transitioned to new operators in the near-term."

Steward is in active discussions with "reputable bidders to sell and transition the operation" of Saint Elizabeth’s Medical Center, Saint Anne’s Hospital, Good Samaritan Medical Center, Holy Family Hospital – Haverhill, Holy Family Hospital – Methuen, and Morton Hospital, according to the order. The order describes these facilities as “Massachusetts Going Concern Hospitals” and says the $30 million in relief is for these hospitals under a payment agreement being negotiated with the state.

The proposed order also seeks approval of procedures to allow Steward "to close additional facilities in a timely manner that ensures public health and safety, should it become necessary to do so." However, the order says the $30 million will support operations in August at the "going concern" hospitals "while the parties work towards consummating sale transactions."

The order calls for $11.3 million to be paid Thursday, Aug. 1, and for $18.7 million to be paid on or around Aug. 15.

A schedule outlined in Friday's filing by Steward attorneys also speaks to payments to the two hospitals targeted for closure - $4.85 million for Carney Hospital in the first tranche of payments, and just over $2 million to Carney Hospital and just under $270,000 for Nashoba Valley Medical Center in the second tranche.

Karissa Hand, a spokesperson for Gov. Maura Healey, said Sunday night that the Healey administration "has committed to advance $30 million to ensure that all of Steward’s hospitals in Massachusetts can continue to operate through the end of August." The funds will not require a new legislative appropriation, Hand said.

Hand added: "Because of Steward and Ralph de la Torre’s greed and mismanagement, these hospitals are in bankruptcy and starved of the resources needed to keep operating for another month. This funding will ensure that patients can continue to access care and workers can keep their jobs until Carney and Nashoba Valley close and the remaining five hospitals are transitioned to new owners."

The governor's office described the payments as "advances" on Medicaid funds that the state owes Steward, and said they are being provided contingent upon an orderly movement toward new ownership, conditioned on hitting transition-related milestones, and cannot be used for rental payments to Medical Properties Trust, debt service or management fees.

Without naming the possible buyers, the order said the state is working with "certain bidders to provide financial support to allow such bidders to acquire and assume responsibility for operating the Massachusetts Going Concern Hospitals, which would save thousands of jobs and allow these hospitals to continue providing quality health care in the communities they serve."

In the order, Steward also said it can't effectuate the sale and transfer of Massachusetts hospitals to new operators without cooperation from landlords Medical Properties Trust and Macquarie "to facilitate the sale or lease of the real property underlying such hospitals."

"The Debtors explored other alternatives for keeping the Closing Massachusetts Hospitals open, including seeking interim funding from MPT and the Commonwealth," the order said. "However, no one party has agreed to provide funding to continue the operations of such hospitals (either to the Debtors or to new operators)."

The order said Carney Hospital has 903 employees and Nashoba Valley Medical Center has 562 employees.