Updated at 3 p.m. ET on Aug. 1
A federal judge cleared the way for embattled Steward Health Care to close two of its eight Massachusetts hospitals, Carney Hospital and Nashoba Valley Medical Center, by the end of August.
U.S. Bankruptcy Judge Christopher Lopez called the decision "painful" during a hearing Wednesday but he said Steward met the legal standard for shutting down the two hospitals, WBUR, Boston's NPR News Station reported.
“To keep those hospitals open, based upon the evidence before me, threatens the entire hospital system in Massachusetts,” the judge said, WBUR reported from the two-and-a-half hour hearing.
Hugh McDonald, a lawyer representing Massachusetts, said state officials are disappointed about the closures but will work with Steward officials to relocate the patients at Carney and Nashoba Valley, WBUR reported.
“We have seen this coming,” McDonald said. “We have prepared for this. We are trying our very best to make sure, through cooperation, we are going to get these patients into safe facilities.”
Dallas-based Steward filed for Chapter 11 bankruptcy in the Southern District of Texas in early May. The health system has been working to sell off its 31 hospitals and physician group, Stewardship Health.
The bankrupt health system announced last week it planned to close the two hospitals saying it lacked the funds to keep them open and failed to receive qualified bids.
Carney Hospital is located in Dorchester, and Nashoba Valley Medical Center is in Ayer, Massachusetts.
According to court filings, the two hospitals operate at a loss and serve a limited patient population. Carney, which employs about 903 people, has accrued a loss of $14.7 million in earnings before interest, taxes, depreciation and amortization (EBITDA) from January to May, according to the July 26 filing. Nashoba Valley employs 562 people and had a year-to-date EBITDA loss of $2.3 million.
The other six Massachusetts hospitals operated by Steward have accrued EBITDA losses of more than $63 million from January through May, the filing states.
The health system's other hospitals in Massachusetts are Morton Hospital in Taunton, Good Samaritan Medical Center in Brockton, Holy Family in Methuen and Haverhill, St. Elizabeth’s Medical Center in Brighton and St. Anne’s Hospital in Fall River.
Massachusetts officials have offered $30 million in advance Medicaid payments to help the hospitals continue operating — but only if Steward signs sales agreements for its remaining five hospitals, WBUR reported. The funding offer will be discussed at a hearing scheduled for August 6.
July 26
Steward Health Care plans to close 2 Massachusetts hospitals by end of August
Bankrupt Steward Health Care plans to close two of its eight Massachusetts hospitals, Carney Hospital and Nashoba Valley Medical Center, by the end of August after failing to receive qualified bids, the health system said Friday.
In a statement provided to Fierce Healthcare, the private, for-profit health system said it was a "challenging and unfortunate situation."
"The effect it will have on our patients, our employees, and the communities we serve is regrettable. We will do all we can to ensure a smooth transition for those affected while continuing to provide quality care to the patients we will continue to serve."
The two hospitals will close on or around Aug. 31.
Earlier last week, Gov. Maura Healey told reporters that Steward received qualified bids for all the Bay State hospitals up for sale, according to Boston 25News. The health system's other hospitals in Massachusetts are Morton Hospital in Taunton, Good Samaritan Medical Center in Brockton, Holy Family in Methuen and Haverhill, St. Elizabeth’s Medical Center in Brighton and St. Anne’s Hospital in Fall River.
Carney Hospital is located in Dorchester, and Nashoba Valley Medical Center is in Ayer, Massachusetts. Steward's Norwood Hospital closed in 2020 and is not included in the sale process.
"Over the past several months, Steward Health Care has been actively working to sell or transition all its Massachusetts hospitals and we are in active final negotiations to sell six of them. Despite the extensive sale process, which involved close coordination with lenders and regulators, there were no qualified bids for two hospitals," Steward Health Care said in the statement issued Friday.
Dallas-based Steward filed for Chapter 11 bankruptcy in the Southern District of Texas in early May. The health system has been working to sell off its 31 hospitals and physician group, Stewardship Health.
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 hearing is scheduled for Sept. 12.
In a statement issued Friday, Healey blamed the closures on "greed and mismanagement" by de la Torre and Steward leadership. She also demanded that Steward Health Care finalize deals for the remaining five hospitals in Massachusetts.
“These hospitals have long served their communities—their closures are about more than the loss of beds, doctors, and nurses. We want to assure the people of Massachusetts that we have prepared diligently for this moment and will take all available steps to help facilitate a smooth transition for impacted patients and employees," Healey said.
Steward received several bids to not only maintain but improve five of its hospitals in three key regions, Healey stated. "It is time for Steward and their real estate partners to finally put the communities they serve over their own selfish greed. They need to finalize these deals that are in their best interest and the best interest of patients and workers," she said.
Steward Health Care said it will work closely with its Carney and Nashoba patients to help them find care alternatives and will work with employees and healthcare professionals to assist with their transitions.
"We have notified and are closely coordinating with the appropriate state and federal agencies on the closure process," the health system said.
The next step in the process for two hospitals is for the bankruptcy judge to approve Steward’s motion to close.
"Steward is required to send a notice of closure to the Department of Public Health, which will then facilitate a transition for impacted patients and employees," Healey said.
Last week, the health system canceled auctions for its hospitals in Ohio and Pennsylvania after it did not receive qualified bids for those facilities, according to a court filing. The health system said in a document filed July 21 with a bankruptcy court in Texas that it is working to determine alternatives for those facilities, and expects to make an announcement at a later date.
The system did reveal that it found potential buyers for one facility in Arkansas and another in Louisiana. Pafford Health Systems bid on the Arkansas-based Wadley Regional Medical Center for $200,000, while AHS South LLC is seeking to buy Louisiana hospital Glenwood Regional Medical Center for $500,000.
The bid deadlines have been pushed back as high-profile potential sales have fallen through. Optum, for instance, had signed on to buy Steward's physician group before walking away from the deal amid mounting criticism from lawmakers and others.
A hearing over these potential sales will be held on July 31, according to the court filing.