Cloaked in Secrecy: Fate of Hospitals Still Unknown

Colin A Young | SHNS

The Steward Health Care saga will stretch at least into September.

For at least the seventh time, the hearing at which the bankrupt company was expected to seek U.S. Bankruptcy Court approval of deals to sell five of its Massachusetts hospitals was postponed by more than a week Monday. Steward said in a court filing Monday morning that the sale hearing on the calendar for Tuesday afternoon has been unilaterally "adjourned" until Wednesday, Sept. 4 at 11 a.m. ET.

Sept. 4 is at least the eighth day that the sale hearing has been scheduled for. Steward filed for bankruptcy protections on May 6 and the Massachusetts hospital sale hearing (which also includes hospitals in Arkansas and Louisiana) was originally scheduled to be held July 2. Since then, Steward has repeatedly postponed the hearing in the absence of finalized deals. The hearing had previously been slated for July 11, July 31, Aug. 13, Aug. 16, Aug. 22 and Aug. 27.

Though her administration had previously said it would be up to Steward to announce the progress of its bankruptcy-compelled selloff, Gov. Maura Healey announced 10 days ago, on Aug. 16, that deals were in place to sell St. Elizabeth's Medical Center in Brighton and Good Samaritan Medical Center in Brockton to Boston Medical Center, for Lawrence General Hospital to buy the Holy Family Hospital facilities in Methuen and Haverhill, and for Lifespan to take over Morton Hospital in Taunton and Saint Anne's Hospital in Fall River, as long as the deals were finalized and approved (and in the case of St. Elizabeth's, after the state seizes the land by eminent domain).

No additional details of those supposed deals -- or of a reported $700 million public financial aid package seen as key to the transition away from Steward -- have come to light since, and Steward has declined to confirm or comment on Healey's announcement. A Steward lawyer told a Bankruptcy Court judge last week that none of the deals to transfer Massachusetts hospitals to other operators have been consummated and they remain under mediation.

"We have not yet executed asset purchase agreements related to the six hospitals, but again, we are very close to the finish line and are still fully engaged in mediation," Candace Arthur, one of Steward’s lawyers from the firm Weil, Gotshal & Manges, said Thursday. "We hope to be back before the court in very short order in connection with the Massachusetts hospitals and the transition there."

Healey said Aug. 16 that she expected the deals to be finalized "in short order." On Monday, she told reporters that she still thinks "it will be done in short order."

"This is a very complicated deal and a complicated transaction, so not unusual to have a little bit more time ... there have been a few different extensions. The important thing, though, is we're moving forward," she told reporters after an unrelated event at the State House. "I made clear we're moving forward to get these agreements done, to transfer ownership to new operators, to move ahead with the taking of St. Elizabeth's and transfer ownership to BMC. My focus continues to be on patients and our health care workforce."

Massachusetts state government struck a deal with Steward to provide $30 million in advance Medicaid payments to keep hospitals here afloat through August, but a different Steward lawyer suggested in court on Aug. 16 that there could be the need for "emergency relief related to the hospitals in Massachusetts." The lawyer said "we believe we've secured funding, if necessary to close those purchases, at least on the operating costs through September." No further details of that funding have been disclosed in court filings.

The Executive Office of Health and Human Services did not respond Monday to a question about the state's support for Steward hospitals and whether the state would provide additional financial aid to keep Steward's hospitals running as the sale process drags into September. A Steward spokesperson also did not respond to News Service questions about whether the company has the liquidity necessary to keep running its for-sale hospitals and paying Massachusetts employees into September.

[Sam Drysdale contributed to this report.]