Steward Health Care plans to close hospital in Stoughton over financial losses

A long-term care and rehabilitation hospital intends to shut down due to multi-million-dollar losses, making Stoughton the latest community to lose a health care facility as part of a growing trend throughout the commonwealth.

Dallas-based Steward Health Care, which describes itself as the largest owner of community-based hospitals in Massachusetts and fourth biggest private employer, plans to close its New England Sinai Acute Long-Term Care and Rehabilitation Hospital (NESH) by early April.

"Nearly 75% of Steward hospital patients are public pay (Medicare and Medicaid) which chronically underpay, sometimes at rates less than the cost of delivering services," Steward said in a press release this week. "As a result of these chronic low reimbursement rates, Steward has lost $22 million from NESH operations and cannot afford to keep the facility open. Unlike 'non-profit' systems, Steward does not have a multibillion-dollar investment portfolio to fall back on."

Hospital staff will now coordinate with patients and families to ensure "appropriate continuing care." Steward said there are more than 150 skilled nursing facilities to accommodate patients within a 25-mile radius of the hospital.

"Today, the current average length of stay at NESH ranges from 41 to 48 days, which should provide ample time to successfully place any existing patients within the 120-day timeframe," Steward said. "Steward Health Care will work closely with impacted employees to help place them at other Steward hospitals in the state where there are currently 820 vacancies."

Steward's other facilities in Massachusetts include Carney Hospital in Dorchester, Good Samaritan Medical Center in Brockton, St. Elizabeth's Medical Center in Brighton, Saint Anne's Hospital in Fall River and Morton Hospital in Taunton. The company also began rebuilding Norwood Hospital last year following a "catastrophic flood" at its old building, Steward said.

There are no immediate plans to close Carney Hospital, but the facility is facing also financial challenges that were worsened by the COVID-19 pandemic, the Dorchester Reporter reported in March.

The Stoughton hospital has 39 rehabilitation service beds and 119 chronic care service beds, according to a notice sent to the Department of Public Health from an attorney representing Steward. The company plans to close the facility on April 2, according to the notice from Rebecca Rodman, senior counsel at Husch Blackwell.

"Please note that in compliance with the Department’s regulations, the Hospital, through separate correspondence, is sending notice to the Hospital’s Patient and Family Council, each staff member of the Hospital, and every labor organization that represents the Hospital’s workforce during the period of the essential services closure process," the notice, which was shared with the News Service, states. "Notice is also being sent to the members of the General Court, as well as appropriate local elected officials."

The hospital plans to submit its formal 90-day notice of the closure, which is required under state law, on or around Jan. 3.

Steward's announcement comes less than a month after state health officials issued a report about the status of essential services in northern Worcester County, fueled by the controversial closure of Leominster Hospital's maternity ward.

The report recommended reviewing the state's essential services closure process, as well as updating state laws and regulations to "better protect patient safety, expand community information and engagement, and sustain access to services overtime." It also called on hospitals to provide earlier closure notices, as well as to submit more information about patient safety and care concerns.

Current state law requires a hospital to notify the Department of Public Health at least 120 days before it intends to discontinue a service.

DPH must also hold a public hearing about the closure, but the agency lacks the authority to order a service to stay open -- even if it is deemed essential. Proposals on Beacon Hill this session aim to change that outcome, such as allowing state officials to block a closure under certain circumstances and establishing a mechanism for state receivership of hospitals or free-standing clinics.

The Health Policy Commission's 2023 costs trends report included a policy recommendation of better equipping the state to monitor and respond to "essential service closures."  The process could be improved "with enhanced financial monitoring of providers who may be at risk, earlier confidential notice of potential reduction in services or closure, broadening the scope of services covered, and allowing for sensitive information to be provided confidentially to better inform regulator response," the report said.

The state received Steward's initial closure notice on Monday, a DPH spokesperson told the News Service.

"The notification has triggered a formal process that involves a thorough assessment of the impact of the closure on the community and the populations served by the hospital," the DPH spokesperson said in a statement. "We recognize that any disruption in health care can be difficult for patients, families and communities who rely on that facility for care and services. The Healey-Driscoll administration is committed to working closely with NESH to ensure appropriate care alternatives and support for staff of NESH."

As Steward announced the closure, it emphasized the company's contributions to the state, including for the Brockton community following the fire at Signature Healthcare Brockton Hospital and Compass Medical filing for bankruptcy. Steward's Good Samaritan Medical Center and other Steward providers treated a 60 percent influx in new patients, the company said.

Steward also said it "is among the top four taxpayers in every community they serve and the taxes they pay contribute directly to their communities by helping fund the employment of teachers, local law enforcement and other key community resources."

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