Distressed Steward Health may have a buyer for St. Anne’s Hospital in Fall River

Southcoast Health has become the first Massachusetts health care provider to express interest in acquiring a hospital from Steward Health Care, the troubled for-profit company looking to exit the state.

Southcoast is targeting Steward’s St. Anne’s Hospital in Fall River. The health system operates Charlton Memorial Hospital in Fall River, St. Luke’s Hospital in New Bedford, Tobey Hospital in Wareham and several medical practices serving residents of southeastern Massachusetts and Rhode Island.

In a statement Friday, Southcoast chief executive David McCready said he’s concerned about the possibility of Steward hospital closures.

“As we engage with Steward, our message to them is clear,” McCready said. “The best option for St. Anne’s Hospital, its patients, its employees, and our community, is for St. Anne’s to join the Southcoast Health family.”

It’s unclear if other health systems are interested in acquiring St. Anne’s. McCready argued that Southcoast, as a local nonprofit organization, is more dedicated to the region than its larger competitors, which include Boston-based Mass General Brigham and Providence-based Lifespan.

“Large Boston- or Providence-based health systems provide exceptional care, as we do, but they would likely require or direct patients to travel to their cities for specialized treatment, increasing the cost of care while reducing access to care for all communities,” McCready said in the statement, which was reported earlier by The Boston Globe.

Data from the state Center for Health Information and Analysis shows Southcoast lost money on operations in 2022, the most recent year for which data is available, while St. Anne’s Hospital was profitable. However, it’s unclear how St. Anne’s fits into Steward’s broader financial picture because Steward has failed to file the kind of audited financial statements that other hospital systems submit annually.

Steward, one of the largest hospital systems in Massachusetts, said earlier this year that financial challenges were challenging its ability to continue providing services. The privately-held for-profit company owns nine hospitals in Massachusetts, among dozens nationwide.

St. Elizabeth's Medical Center, a Steward Health Care family hospital in Brighton, Mass. (Robin Lubbock/WBUR)
St. Elizabeth’s Medical Center, a Steward Health Care hospital in Brighton, Mass. (Robin Lubbock/WBUR)

Steward has come under fire from public officials. They accuse Steward executives of mismanagement that is triggering a crisis at a time when health care providers across the state are already struggling to keep up with demand from patients who need care.

By January, Steward was $50 million behind on rent to its landlord, an Alabama real estate firm called Medical Properties Trust, or MPT, according to statements by MPT — and it has failed to pay numerous vendors over several years, according to court records.

On Friday, U.S. Senators Elizabeth Warren and Ed Markey of Massachusetts sent a letter to Steward Chairman and CEO Ralph de la Torre demanding answers about his role in a series of transactions they called “troubling.”

“You have run this hospital system for 14 years, and reportedly have had access to two private jets while owning two luxury yachts,” the Democratic lawmakers wrote. “Meanwhile, suppliers were unpaid, the system piled on debt, and patients in Steward hospitals … suffered because of inadequate care.”

Gov. Maura Healey has called Steward a “house of cards” and a “charade” and said the company should transfer its hospitals to other owners and leave Massachusetts. Healey administration officials on Friday called Southcoast’s announcement “a positive step.”

Steward executives have said they’re cooperating with public officials and working on a plan to stabilize finances, including lining up a $150 million bridge loan and trying to sell some assets. They are moving to close New England Sinai Hospital in Stoughton, and the company’s Norwood Hospital has been closed since flooding in 2020.

Steward officials have not announced any other closures. But many health care leaders and public officials say the situation feels precarious. The Department of Public Health has deployed officials to monitor safety in Steward hospitals.

Steward officials on Friday declined to comment on talks with other health care providers.

“Steward Health Care is working with state officials and others to transition ownership of the Massachusetts hospitals in a way that everyone agrees is best for patients, our employees, and the Commonwealth,” the company said in a statement. “We appreciate the strong level of interest we have received from numerous qualified health systems that could facilitate a smooth transition.”

Any deal is likely to be complicated. Steward employs doctors and other workers who provide care, but the company doesn’t own its hospital buildings. Steward sold its real estate to MPT in 2016, using the returns to pay back investors and expand nationally. More recently, MPT sold a 50% stake in its Massachusetts Steward properties to another company, Macquarie Asset Management.

Steward originated in Massachusetts in 2010, with private equity backing from Cerberus Capital Management of New York.

This article was originally published on March 08, 2024.

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