Steward buys time, seeks buyers as state makes plans amid hospital crisis – The Boston Globe

In a statement, Steward said it was continuing to work with state regulators. “We welcome their interest and collaboration as we continue to provide high quality care for our patients.”

The health care system, with 33 hospitals in nine states, has been struggling financially for some time. In January, Steward’s landlord disclosed the health system hadn’t paid its full rent for months and was contemplating selling some hospitals.

What that would mean for Massachusetts remains deeply uncertain, with Steward at points requesting aid from the state, voicing a desire to transfer ownership of some hospitals, and warning that it may have to close some facilities, The Boston Globe has reported. Steward has already announced it will close its rehabilitation hospital New England Sinai in April.

Steward had told state officials it had until the end of January to make a plan to satisfy lenders. On Friday, the health system suggested it had found a temporary way forward.

In a memo to Massachusetts employees, Steward Executive Vice President Dr. Michael Callum said the company had entered into “a significant financial transaction” that would stabilize operations, including allowing operations at all of its Massachusetts hospitals to continue.

“To be clear, we have no current plans to close any of our hospitals in Massachusetts,” Callum wrote.

The company also said it received bids for an equity stake in its physician organization, which is a separate line of business from its hospitals.

“The bridge financing will get the company to the closing of the [mergers and acquisitions] 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,” Callum wrote.

Steward declined to specify its partner in the financing, saying the parties had signed a nondisclosure agreement.

Health care analysts were skeptical the financing announced by Steward would necessarily result in a longer-term reprieve.

“I question how bridge financing at this point can help solve the underlying financial problems that run so deep in the system and have accumulated over many years,” said Rosemary Batt, a professor who teaches management at Cornell University and has spent a decade researching Steward Health.

Even in the midst of financing discussions, Steward’s efforts to sell off hospitals in the state had already begun.

According to documents reviewed by the Globe, Steward hired investment bank Cain Brothers to advise the company on the sale of hospitals in the southern part of Massachusetts. South of Boston, Steward has locations in Brockton, Fall River, and Taunton. It also has a hospital in Norwood, though it has been closed since 2020 due to flooding. New England Sinai, in Stoughton, is slated to close.

Hospital executives of other health systems were asked to sign nondisclosure agreements to enter into discussions with Steward, which included a general commitment not to solicit, hire, employ, or engage employees of Steward for a period of two years.

A Steward spokesperson declined to comment on the sale efforts, saying the company does not talk about its consultants. A representative of Cain Brothers also declined to comment.

While Steward has previously said it was interested in transferring ownership of some hospitals in its overall system, the documents are the clearest indication to date that it has the sale of specific Massachusetts properties in mind.

As the financial maneuvering continued, Massachusetts officials acknowledged they are working with other health care providers in the state on a comprehensive understanding of regional needs, to determine capacity for patients and staff.

Officials from the state Department of Health and Human Services also said they were keeping close tabs on Steward’s day-to-day operations. As of Jan. 31, surveyors from the Department of Public Health were conducting daily on-site monitoring visits at Good Samaritan Medical Center, St. Elizabeth’s Medical Center, and the Methuen and Haverhill campuses of Holy Family Hospital. Such monitoring included a review of hospital staffing, daily patient volume, and the supplies and services being provided.

Dr. Eric Dickson, chief executive of UMass Memorial Health, said his system has offered two solutions if the state were to immediately need more beds. Dickson said his organization could either open a field hospital or send hospital staff to nursing homes to provide acute care using any empty beds that are available.

UMass Memorial Medical Center in Worcester is approximately 30 miles from Steward’s Nashoba Valley Medical Center in Ayer.

But should that facility or others nearby close, UMass has limited capacity to take on more patients. Dickson said the medical center is declining almost all requests from other hospitals to transfer their patients to UMass. The medical center counts 750 medical and surgical beds, and was caring for 860 daily patients on average through the month of January.

Even during the peak of COVID, the medical center’s patient numbers only got as high as 790.

“We are completely full, in every surge area,” Dickson said.

Even at hospitals that have received assurances from Steward that closure is not imminent, officials are making plans.

Brockton Mayor Robert Sullivan said he hosted a meeting with executives from Steward’s Good Samaritan Medical Center, Signature’s Brockton Hospital, South Shore Health, and Brockton Neighborhood Health Center this past Tuesday. In those and other discussions, Steward officials told him that its North Shore hospitals are largely the ones that are troubled, and that Good Samaritan Hospital in Brockton is not closing.

Steward said in response that it has no current plans to close more hospitals.

But challenges in the region persist, particularly as Brockton hits the one-year anniversary of the fire that has kept Signature Healthcare’s Brockton Hospital temporarily closed.

Sullivan said he was told during that meeting that the reopening of Signature is expected in June, which would help alleviate pressure on the surrounding health systems.

But that was still five months away.

“I’m concerned about long-term stability,” Sullivan said. “But I’m relying on good faith on what I’m being told.”

Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett. Suchita Nayar can be reached at suchita.nayar@globe.com.