While we applaud both the governor and the Massachusetts Legislature on the new oversight bill, they should have noticed the alarm bells ringing well before Steward and Heywood declared bankruptcy.
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In the closing moments of the 2024 legislative session, Gov. Maura Healey signed a healthcare reform bill, which will increase oversight of hospitals, spike penalties for non-compliance, and scrutinize and somewhat limit the role of private equity firms in the industry. The oversight bill is largely in response to the bankruptcy of Texas-based, for-profit Steward Health Care, which impacted its eight hospitals across Massachusetts, including the closure of Nashoba Valley Medical Center in Ayer and Carney Hospital in Dorchester.
Healey’s signing of the bill on Jan. 8 came days after the release on Jan. 3 of State Auditor Diana DiZoglio’s audit of the Massachusetts Center for Health Information and Analysis. While CHIA strongly refutes some of the findings, the audit said the watchdog agency failed to collect financial information and impose necessary penalties in 2021 and 2022 as hospital systems across the state were spiraling into financial distress, particularly Steward’s hospitals and Heywood Healthcare’s hospitals in Gardner and Athol.
Heywood would later replace its CEO, declare bankruptcy in October 2023, halt a planned expansion, and eventual exit bankruptcy in a stronger financial position in September 2024, all while keeping its hospitals operating. With Steward, on the other hand, state government officials didn’t know enough about the extent of its problems until it was far too late. During the health system’s bankruptcy and expedited closure of Nashoba Valley and Carney, Gov. Healey repeatedly said there was nothing she could do to prevent the closures or keep the facilities operating under a different owner or agency.
While we applaud both the governor and the Massachusetts Legislature on the new oversight bill, they should have noticed the alarm bells ringing well before Steward and Heywood declared bankruptcy. Many hospitals suffer under increased costs and low reimbursement rates, particularly from government-run insurance programs, while finding themselves in the midst of a workforce crisis. Hospital executives have been sounding the alarm since the COVID pandemic, but it took the closure of key hospital facilities for state officials to stand up and do something. Now, the Nashoba Valley area has lost its emergency room and 77 hospital beds, and fire chiefs across the region are saying the emergency response system is on the verge of collapse, since first responders must drive much further to get patients to healthcare facilities.
While hospitals are businesses, they also serve the public good. Just like communities need water, roads, police, and fire, they need hospitals. Local, state, and federal officials need to work hand-in-hand with our hospital systems to ensure their financial health and long-term viability. Increased oversight is part of this, but the most important part of this partnership is when healthcare executives ask for help, they should receive help. Just like any other industry, healthcare has its mix of good and bad players. Whether operators are nonprofit or for-profit, they all provide a needed public service. Ensuring their success should be everyone’s priority.
This editorial is the opinion of the WBJ Editorial Board.
