Steward will get $30 million from the Bay State to stabilize hospitals through sale process
The Healey Administration will give bankrupt Steward Health Care $30 million in the coming weeks, according to documents filed in the the embattled company’s bankruptcy case.
The payment, Steward’s attorneys say in an emergency court motion asking a judge to approve the plan, will be used to help keep the company’s Massachusetts properties operational as they transition to other owners.
“The Debtors are pleased to report that, in connection with their robust marketing process to sell their hospital operations in Massachusetts, they have received binding bids from high-quality local operators to acquire a large majority of their Massachusetts hospitals, as well as a commitment from the Commonwealth of Massachusetts…to provide approximately $30 million of funding support for the hospitals’ operations as they are transitioned to new operators in the near-term,” Steward attorney’s wrote in court filings.
Disclosure of the state funding comes as the failing company announced it would close Carney Hospital in Dorchester and the Nashoba Valley Medical Center, in Ayer.
According to court documents the money will be moved in two tranches, the first of which will be paid “on or about” August 1, the second around August 15.
The first round of payments will go to Morton Hospital, Nashoba Valley Medical Center, Carney Hospital, Good Samaritan Medical Center, and Holy Family Hospital. Those five facilities will receive over $11.3 million.
Those hospitals are also included in round two, with Norwood Hospital, Saint Anne’s Hospital, and St. Elizabeth’s Medical Center added to the list. The second tranche payment will also total about $11.3 million, with a further about $7.3 million sent to Steward’s Medicaid Care Network.
The money is an “interim payment” on “Clinical Quality Incentive Program payments, Acute Hospital Rate Add-On payments, Hospital Quality and Equity Initiative payments, and Safety Net Provider Payments,” which the state would have paid to “some or all” of the facilities due to their participation in the MassHealth program.
A Healey Administration spokesperson said the funds were owed to the healthcare company, and should be enough to keep their hospitals afloat for the time being.
“The Healey-Driscoll administration has committed to advance $30 million to ensure that all of Steward’s hospitals in Massachusetts can continue to operate through the end of August. Because of Steward and Ralph de la Torre’s greed and mismanagement, these hospitals are in bankruptcy and starved of the resources needed to keep operating for another month. This funding will ensure that patients can continue to access care and workers can keep their jobs until Carney and Nashoba Valley close and the remaining five hospitals are transitioned to new owners.”
The cash offer carries a few caveats.
Steward cannot spend the money on executive pay, but instead must use it “solely for the purposes of the Hospitals’ working capital, patient care and employee salaries in the Commonwealth,” according to the documents.
The money also cannot be used to pay down Steward’s debts, or to “pay any amounts due to any lenders, agents, or attorneys or their professional fees” and can’t be used to pay for any hospitals’ rent payments. The funds also cannot be used to help pay for the closure of Steward’s Carney Hospital or Nashoba Valley Medical Center.
The agreement becomes null, according to court documents, if Steward’s Chapter 11 bankruptcy proceedings become Chapter 7 proceedings, or if the Texas bankruptcy judge doesn’t agree to the plan.
According to Steward’s legal team, the advance payments will “support the sale and orderly transition of the Massachusetts Going Concern Hospitals to new operators and help neutralize the operating losses the Debtors have been incurring” and will “save thousands of jobs and allow these hospitals to continue providing quality health care in the communities they serve.”
Steward filed for Chapter 11 bankruptcy protections in May, following months of reporting on their in ability to keep up with mounting debts.
Just last week, a committee of the U.S. Senate voted to begin an investigation into what led Steward to bankruptcy and to subpoena the company’s CEO, Dr. Ralph de la Torre.
On Friday, Steward announced it would close Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer. The company also operates Good Samaritan Medical Center in Brockton, Holy Family Hospitals in Haverhill and Methuen, Morton Hospital in Taunton, Saint Anne’s Hospital in Fall River, and St. Elizabeth’s Medical Center in Brighton.
A spokesperson for Steward did not return a request for comment.
Steward CEO Ralph de la Torre (File)