BOSTON — Southcoast Health announced Friday it is considering buying a Fall River hospital owned by financially floundering Steward Health Care, with the goal of preserving care for patients and preventing the facility from potentially closing.
Southcoast Health CEO David McCready said his organization has a “strong interest” in acquiring St. Anne’s Hospital.
“St. Anne’s patients and employees are part of our community; they are our family members, friends and neighbors,” McCready said in a community message Friday, which was posted on the not-for-profit health care system’s website. He said his company’s message to Steward is: “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.”
And in a separate letter concerning Steward, U.S. Sens. Elizabeth Warren and Ed Markey on Friday demanded that CEO Ralph de la Torre explain “years of mismanagement, private equity schemes, and executive profiteering” at the for-profit company he leads.
The senators wrote that Steward has hundreds of millions of dollars in debt, “raising questions about unpaid vendors, patient care, and job losses for front-line health care workers, while creating ongoing uncertainty about whether hospitals will close, and if not, how they will be restructured.”
“You are attempting to make a last-minute deal for your remaining assets that would let you walk away, while leaving Governor Healey and the Executive Office of Health and Human Services to scramble for a solution to preserve care,” the senators wrote to Steward’s CEO.
Southcoast Health operates three hospitals in Massachusetts, including Charlton Memorial Hospital in Fall River, St. Luke’s Hospital in New Bedford and Tobey Hospital in Wareham. The system’s next step is to conduct “thorough due diligence” to determine whether any type of acquisition with Steward is feasible, McCready wrote.
A Steward spokesperson, asked if the company was also interested in the transaction, did not directly address a deal for St. Anne’s Hospital.
“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 spokesperson said in a statement to the News Service. “We are committed to continuity of care in our communities, and we appreciate the strong level of interest we have received from numerous qualified health systems that could facilitate a smooth transition.”
McCready wrote he was alarmed by news that Steward — a for-profit system that’s faced increasing scrutiny over its severe financial distress and incomplete financial reporting to state regulators — plans to sell off its nine Massachusetts hospitals. Gov. Maura Healey’s office last month said it’s time for Steward to leave the Massachusetts health care market.
“As you can imagine, this will be a complex transaction involving multiple parties – with the potential to be truly devastating for these hospitals’ patients and employees if there is an interruption of service,” McCready said. “In the worst case, if Steward and their partners fail to find a buyer, or enough buyers, they may have to close one or more of their hospitals.”
McCready argued Southcoast Health is best suited to take over St. Anne’s Hospital, compared to national health systems that have “much less at stake when it comes to public health and community outreach in the areas where they operate.”
“Ultimately, our goal is to further provide our region with patient-centered, community-based healthcare, and to offer employment opportunities to talented caregivers and healthcare workers currently serving Steward’s patients,” he said.
In their letter to de la Torre, Warren and Markey said they want answers by March 21 outlining the compensation of top Steward executives, and the financial arrangement between Steward and Medical Properties Trust, which is essentially the landlord for Steward hospitals. Their lengthy list of questions also probes Steward’s plan to repay its debt and exit Massachusetts, and past transactions with private equity firm Cerberus Capital Management.
The senators demanded that Steward provide audited financial statements for fiscal years ending Dec. 31 of 2022 and 2023.
“Steward’s Massachusetts hospitals are in deep financial distress and appear to be in danger of closure because of years of mismanagement, private equity schemes, and executive profiteering. You have run this hospital system for 14 years, and reportedly have had access to two private jets while owning two luxury yachts,” the letter states.
MPT is working with Steward and its advisors to strengthen the company’s liquidity, MPT CEO Edward Aldag said in a fourth quarter earnings call on Feb. 21. Aldag said MPT is trying to “significantly” reduce its exposure to Steward and accelerate the collection of unpaid rent.
“This plan contemplates a wide range of strategic transactions, including transitioning certain hospitals to new tenants and selling its managed care business,” Aldag said. “While it will take some time for Steward to execute these steps, we are encouraged by the early progress.”
MPT has provided Steward with $60 million in bridge loan funding, and Aldag said more money could be provided if Steward achieves “significant” rent payment milestones.
Aldag said Steward’s cash collections problems have worsened since the fall and are exacerbated by its backlog of vendor payments. That’s impaired Steward’s ability “to perform higher-margin surgeries that are a key driver of cash flow,” Aldag said.
