The new buyers will be provided with hundreds of millions of dollars in transition aid from the state to integrate the former Steward hospitals into their systems, and make much needed infrastructure upgrades.
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The next chapter in the Steward Healthcare crisis is set to begin this week, with the embattled company's CEO stepping down and hospitals being taken over by other healthcare groups.
Steward, a Texas-based company that filed for bankruptcy in May amid financial crisis, has operated a handful of hospitals in Massachusetts. It recently shuttered the doors of two of them — Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer.
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The state has been heavily involved in managing the crisis, with Gov. Maura Healey's administration announcing that new operators have been secured for remaining Steward hospitals, and transfers of ownership expected to take effect on Tuesday.
Lawrence General Hospital is slated to take over both campuses of Holy Family, in Haverhill and Methuen. Lifespan will take over operations at Morton Hospital in Taunton and Saint Anne's Hospital in Fall River. Boston Medical Center is becoming the operator of Good Samaritan Medical Center in Brockton and St. Elizabeth's Medical Center in Brighton. But closing the deals could cost the state another $5 million.
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The U.S. Bankruptcy Court judge overseeing Steward's case ruled early Monday morning that Massachusetts should "work with other parties" to make an additional $5 million available to the "first in, last out," or FILO, lenders that pumped millions into the company as it headed towards bankruptcy but are not in line to receive a windfall from the hospital sales.
When Judge Christopher Lopez approved Steward's plan to sell St. Anne's Hospital in Fall River and Morton Hospital in Taunton to Lifespan for $175 million; the Holy Family Hospital facilities in Methuen and Haverhill to Lawrence General Hospital for $28 million; and Good Samaritan Medical Center and St. Elizabeth's Medical Center to Boston Medical Center for as much as $140 million earlier this month, he held $17 million in proceeds aside and urged the parties involved to reach an agreement on how that money should be divvied up among the FILO lenders and the owners of the hospital real estate.
But the sides weren't able to come to an agreement and Lopez held a rare Sunday afternoon hearing that featured stretches in recess during which the sides worked towards a solution. Ultimately, the judge gave his blessing to -- and put his signature on an order effectuating -- an arrangement that saw tweaks made to hospital sale agreements and a pledge that the "Commonwealth of Massachusetts will work with other parties on the proposed $5,000,000 of additional adequate protection for the FILO Secured Parties consistent with its representations on the record at the Sale Order Hearing."
Asked about the state's latest financial outlay to address the Steward situation, a spokesperson for the Executive Office of Health and Human Services said there was no agreement for the state to commit the additional $5 million but otherwise did not address a series of questions about the development.
"Bankruptcy is always a long and complicated process. The Healey-Driscoll administration remains confident that these sales will be finalized soon and the five Steward hospitals will transition to new operators," Health and Human Services Secretary Kate Walsh said in a statement.
Massachusetts already paid $72 million to keep Steward's hospitals open through August and now September, and earlier this month confirmed that it has committed to provide at least $417 million to help keep the Steward-sold hospitals open as they transition to their new owners.
The additional $5 million would bump the state's total financial aid commitment to $494 million so far -- more than the cumulative purchase price for Steward's Massachusetts hospitals ($343 million).
Steward CEO stepping down
Also happening on Tuesday, the resignation of Steward CEO Dr. Ralph de la Torre is due to go into effect, after news broke over the weekend that he would be stepping down.
De la Torre has come under fire by New England leaders, who blame his "greed and mismanagement" as a contributing factor in the company's financial issues.
Last week, a U.S. Senate committee investigating the situation voted to hold de la Torre in contempt for failing to testify before a Senate panel. De la Torre did not appear before it despite being issued a subpoena. The resolution refers the matter to a federal prosecutor.
A spokesperson for de la Torre said that he was exercising his fifth amendment rights in not testifying.
A statement from his spokesperson placed blame on Massachusetts for his company's financial issues.
"Dr. de la Torre urges continued focus on this mission and believes Steward’s financial challenges put a much-needed spotlight on Massachusetts’s ongoing failure to fix its healthcare structure and the inequities in its state system," the statement reads.
Meanwhile, the asset management group over St. Elizabeth's is at odds with the Healey Administration, after Healey announced on Friday that the state was seizing the Brighton medical center using eminent domain to ensure that it stays open.
Apollo apparently refused Boston Medical Center's bids for the property, prompting the state to step in.
“While Apollo continues to put its greed ahead of the health and wellbeing of the people of Massachusetts, we are taking action to make sure St. Elizabeth’s remains open. By transferring operations to Boston Medical Center, we will protect access to care for tens of thousands of patients and save thousands of jobs,” Healey wrote in a news release.
The land owner is pushing back against the move by the state, calling the use of eminent domain in this situation "unconstitutional" and vowing to pursue continued litigation.
"Taking the property for a fraction of the assessed value is theft and everyone in Massachusetts--every business owner and homeowner--should be concerned about this threat," a spokesperson for the company wrote.
Meanwhile, patients will surely have to deal with the growing pains that come with the changing of hands at these hospitals that serve Massachusetts communities.
The Healey Administration also announced working groups to look into how to bolster healthcare in places impacted by the recent Steward closures.
The Associated Press and State House News Service contributed to this report.
