Steward Health Care has made "significant progress" on deals to sell five Massachusetts hospitals and its physician group to enable the facilities to remain open under new operators, an attorney for the health system said Tuesday.
Steward Health Care, a for-profit that runs 31 hospitals in several states, is currently working its way through bankruptcy proceedings.
The embattled health system is working to restructure and sell its hospitals, including five in the Bay State: Morton Hospital, Good Samaritan Medical Center, Holy Family Hospital, St. Elizabeth’s Medical Center and St. Anne’s Hospital.
David Cohen, with Weil, Gotshal & Manges, an attorney representing Steward Health Care, told U.S. Bankruptcy Judge Christopher Lopez that the bidders for the five Massachusetts hospitals are "high quality, local" hospital operators. Cohen did not name the potential buyers.
Steward also is making headway in the potential sale of its physicians network, Stewardship Health.
"I want to be careful not to say too much because we are in the middle of a live bidding process. We just hope the physicians and the patients will rely on the physician group are comforted by the fact that we are in the midst of a competitive bidding process. We are very encouraged by the bids and how the bidding process is playing out. We do expect to announce a winner very soon," Cohen said during a court hearing Tuesday.
"A lot of work remains to be done, and we certainly have a lot of wood to chop with respect to the hospitals outside of Massachusetts, but we do believe we're making some great progress on the Massachusetts front," Cohen said.
A potential deal to sell Stewardship to UnitedHealth Group’s Optum fell through. The deal, unveiled in March, was a cornerstone of the for-profit’s liquidation plans but had come under fire from prominent lawmakers and other critics of the two companies.
There is a hearing scheduled next week to discuss the Steward hospital sales.
Last week, Lopez cleared the way for Steward Health Care to close Carney Hospital and Nashoba Valley Medical Center by the end of August due to a lack of funds and no qualified bids.
However, Michigan-based Insight Health made a bid to buy all of Steward's Massachusetts hospitals out of bankruptcy, but the bid was rejected as not viable, WBUR reported.
The sales process is complicated by deals that Steward made with real estate investment firm Medical Properties Trust. The health system doesn't own the hospital buildings or the land where its hospitals sit, so potential buyers have to make a deal with the landlord MPT and Macquarie Asset Management.
Steward's attorney said Tuesday that MPT and Macquarie agreed to hand over the real estate those hospitals lease to their lender, Apollo Global Management, to facilitate sales of the hospitals to new owners.
After the agreement was described in court, Lopez said he would authorize a $30 million lifeline from the state—in the form of advanced Medicaid payments—to help the hospitals continue operating. The funding will be divided into two tranches. The first advance payment of $11 million would be made around Friday, with the second payment of nearly $19 million to be made in mid-August.
A bipartisan group of lawmakers wants Steward Health CEO Ralph de la Torre, M.D., to publicly answer for the health system's financial management. July 25, the Senate Health, Education, Labor and Pensions Committee voted to launch an investigation into Steward Health Care's bankruptcy and issue a subpoena to de la Torre to testify at a public hearing. Senators say Steward executives mismanaged finances and put patients at risk.
That Congressional hearing is scheduled for Sept. 12.