Governor says Steward should sell Mass. facilities, accuses company of dishonesty

A two-story building with a driveway in front

Image | Courtesy of Google Maps A Steward Health Care facility located in Brockton

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By Chris Lisinski | State House News Service

Escalating her administration's response to a potential health care crisis, Gov. Maura Healey on Tuesday suggested Steward Health Care transfer its Massachusetts hospitals to new operators "as soon as possible" and demanded long-sought financial information about the for-profit system in the next few days.

Healey penned a three-page letter to Steward CEO Ralph de la Torre, which her office publicized, alleging that his team has "not been forthcoming, truthful or responsive" about the apparent financial distress the hospitals are facing.

The governor demanded Steward provide the state with information about its finances -- which all hospitals by law are required to submit to regulators -- by the close of business on Friday. She also called on the system to properly staff and supply all of its Massachusetts facilities, comply with increased on-site state monitoring, and allow someone else to take over its hospitals in the Bay State.

"The time has come to move past our many months of discussions and begin executing a safe, orderly transition of your seven licensed facilities in Massachusetts to new operators as soon as possible," Healey wrote. "This begins with your commitment to fully disclose the financial information we have requested by close of business on February 23, 2024. Your continued refusal to do so, particularly at this moment, is irresponsible and an affront to the patients, workers, and communities that the Steward hospitals serve. It also leads to a further breakdown in trust and creates a major roadblock to our ability to work together to resolve this effectively."

A Steward representative said Tuesday evening that the hospital system "gave regulators in the Commonwealth the audited financial documentation they had requested" in late 2023 and early 2024 "and is continuing to cooperate closely."

"For more than a decade, Steward hospitals have served as a key healthcare provider to some of Massachusetts' most vulnerable citizens and communities," a Steward spokesperson said. "As such, we have been working closely with state officials -- including providing extensive financial records as requested as well as on-site monitors and cooperation with the Department of Public Health and others."

"We look forward to working cooperatively with the Governor on a solution we all agree must be found to guarantee continuity of care for more than one million patients in the vulnerable communities we serve throughout the Commonwealth," the spokesperson added.

Steward owns Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Haverhill and Methuen, Morton Hospital in Taunton, New England Sinai Hospital in Stoughton -- which it plans to close -- Nashoba Valley Medical Center in Ayer, Norwood Hospital in Norwood -- which is closed due to flood damage -- St. Anne's Hospital in Fall River, and St. Elizabeth's Medical Center in Brighton. (A Healey spokesperson said the governor's letter only referenced seven licensed facilities because Norwood is closed and Sinai is slated to close in April.)

Healey's letter and its razor-sharp tone represent a new forcefulness in the administration's response to Steward since the system's fiscal problems burst into public view last month, largely due to reporting in the Boston Globe.

Steward is allegedly behind on rent to the landlord that owns hospital property and faces lawsuits from several vendors claiming it has not made payments. Leaders of the for-profit system have said many of their issues stem from serving a higher share of Medicaid and Medicare patients, for whom services are typically reimbursed at a lower rate than patients with private insurance.

Steward officials announced on Feb. 2 they had agreed to "bridge financing" to help stabilize the system, and they hinted at the potential of transferring one or more hospitals to other operators. However, the extent of the problems -- or the path forward -- remains unclear.

Health care regulators have long complained that Steward has failed to submit required financial information to the state. Healey said the system for years has "refused to engage in the same level of basic transparency that every other system in Massachusetts offers by not releasing [its] audited financial statements."

Her office noted Tuesday that in 2017, when she was attorney general, Healey represented the Center for Health Information and Analysis in litigation over Steward's refusal to provide financial information. A Suffolk Superior Court judge ruled last year that CHIA can demand access to Steward's financial statements, but the case is tied up in an appeal, according to Healey's office.

"Yet you have refused to comply with the court order and continued to delay and obfuscate," Healey wrote to de la Torre. "During that time, there have been reports of mismanagement, unpaid vendors, legally questionable practices and exorbitant profits for your equity partners and yourself, all while your hospitals continued to struggle financially."

"Massachusetts law requires disclosure of hospitals' system-level audited financial statements to help us avoid precisely the situation you have created: we have no insight into your allocation of resources across operating units or states, and therefore no clear sense of the financial viability of the hospitals serving Massachusetts residents," she added. "You have kept your hospitals' financial condition in a black box, and you have kept us in the dark as well, defying state law and a court order in the process."

Healey told de la Torre to provide the requested financial information by the end of the day Friday. She did not say what steps the state would take if Steward does not comply.

"Your continued refusal to do so, particularly at this moment, is irresponsible and an affront to the patients, workers, and communities that the Steward hospitals serve," Healey wrote. "It also leads to a further breakdown in trust and creates a major roadblock to our ability to work together to resolve this effectively."

She also demanded Steward provide "full collaboration and compliance" as the Department of Public Health expands its monitoring activities to all Steward hospitals. The state might intervene, Healey said, if Steward fails to provide enough staffing and supplies in each facility.

"If appropriate staffing and supply levels cannot be met, we will take all actions necessary -- in consultation with hospital leadership -- to protect patients, including freezing admissions, closing beds, canceling procedures, and transferring patients to other hospitals," Healey wrote.

The governor copied Attorney General Andrea Campbell and Acting U.S. Attorney Joshua Levy on her letter to de la Torre.

Last week, House Democrats declared they would not bail out Steward, in the process lobbing criticism at both the company and also de la Torre himself.

"We are not in a financial position to commit to financing anything to bail these people out," said House Speaker Ron Mariano, who lives in Quincy, where Steward closed Quincy Medical Center in 2014 due to significant financial losses. "I've been so close to this because Ralph was at Quincy when Quincy closed. I've been dealing with Ralph for a long time and I am suspect of everything he tells me."