Steward Health Care’s dire financial footing and reportedly unpaid bills exploded into the public spotlight this month, but hospital system officials had been warning that community hospitals were at risk since at least last year.
When Steward submitted testimony to the Health Policy Commission for the autumn cost trends hearing, it urged policymakers “to make bold actions to correct a hospital marketplace that has been functionally broken since the 1990s.”
The four pages of material made no explicit reference of the scope of the problems Steward faces, which now include reports that it’s $50 million behind on rent and lawsuits over unpaid bills to vendors. They did, however, raise some of the same points the company’s leadership has been arguing in the past two weeks.
Related
“Consolidation and predatory business practices has resulted in a two-tiered system of health care where brand and market power allow a select few provider systems to leech the vast majority of health care resources in the Commonwealth,” Steward wrote in its cost trends hearing testimony. “The remaining community hospitals are forced to increasingly do more with less. In order to break this paradigm, the Commonwealth needs to make major disruptive actions that solve market failure in the present as well as structurally for the future.”
Community hospitals, like those in Steward’s system and outside of it, typically serve higher shares of Medicare and Medicaid patients, which offer lower reimbursement rates than private insurers, whose patients often seek out care at academic medical centers.
Steward, which operates St. Anne’s Hospital in Fall River, plus eight other hospitals in Massachusetts and two dozen hospitals in other states, said in the fall that many of its pressures stem from ongoing labor shortages. Hawthorn Medical Associates in Dartmouth is affiliated with the Steward Health Network.
Impact of Steward crisis is unclear for Hawthorn Medical patients
By Grace Ferguson
DARTMOUTH — As a financial crisis unfolds at Steward Health Care, a local medical group tied to the company says it has “no plans to go anywhere” but otherwise is tight-lipped on the potential impact to patients.
Hawthorn Medical Associates in Dartmouth identifies itself as an “affiliate” of Steward. The group has not responded to questions about its relationship with the struggling for-profit Steward and what the crisis could mean for its patients.
Steward, which runs St. Anne’s Hospital in Fall River and eight other hospitals in Massachusetts, is at a dire financial tipping point. The company is months behind on rent and other bills, and it’s at risk of having to sell or close its hospitals.
A spokesperson for Hawthorn released a two-sentence statement on Friday in response to The Light’s request for an interview.
“Hawthorn is open and we have no plans to go anywhere,” wrote Kathleen Murray, Hawthorn’s head of marketing, in an email. “Regardless of the name on the facility, our providers are here to care for patients in our community and that is the most important thing.”
Murray did not respond to follow-up requests for an interview or a detailed list of questions sent on Monday.
The statement did not directly address how Steward’s financial health is impacting staffing and services at Hawthorn — at one Steward hospital, medical devices were repossessed for unpaid bills, the Boston Globe reported. Hawthorn’s statement also did not address how the medical group would cope if Steward closed St. Anne’s Hospital.
Hawthorn says on its website that the affiliation “allows us to expand our services, gain access to a greater scope of health plans, and join with a strong partner invested in our community.”
Steward did not respond to a request for comment.
“We continue to train nurses and staff at our hospitals only for them to leave after 6 to 12 months for higher pay at a large academic medical center or a hospital backed by such an entity. Good Samaritan Medical Center today has nearly its entire Emergency Department staffed by traveling nurses and temporary staff and despite significant investment we still struggle to meet staffing demands,” Steward wrote. “ED wait times are increasing, patients are leaving without being treated, and staff are burning out. Unfortunately, these issues are magnified due to the inequity of resources within our system.”
Steward’s unsigned testimony called for the Legislature to “recreate a community hospital reinvestment fund,” which would redistribute resources to better support community hospitals.
House Speaker Ron Mariano has long favored changes in state oversight of major hospital expansions that can crowd out smaller facilities, but the topic has not picked up any momentum in the Senate, where top Democrats have been focused on their own proposals to rein in prescription drug prices.
The sudden revelation of Steward’s financial concerns could now ramp up the pressure on Beacon Hill, or derail other legislative priorities.
Medical Properties Trust, which in 2016 purchased Steward’s hospitals and began leasing them back, announced on Jan. 4 that it was working to collect about $50 million in unpaid rent from the company, which excludes about $50 million more in deferred rent related to the reconstruction of Norwood Hospital, which is closed due to flood damage.
Court records indicate that Steward is also facing pressure from other entities. In December, salary.com sued Steward in Suffolk Superior Court alleging Steward owed it nearly $95,000 for its subscription services. And on Friday, Canopy Partners filed another lawsuit in Suffolk Superior Court against the hospital system, claiming that Steward owes it almost $140,000 for radiology assistant services.
U.S. Rep. Stephen Lynch told WCVB on Friday that Steward is considering the sale of St. Elizabeth’s Medical Center in Brighton, Nashoba Valley Medical Center in Ayer, Holy Family Hospital in Haverhill and Methuen, and Norwood Hospital.
“Those are the four they described as urgent cases that need to be moved quickly,” Lynch said.
A Steward spokesperson did not respond to a News Service inquiry on Monday.
State officials say they remain in close contact with Steward, but it’s hard to discern what exactly those discussions entail. Gov. Maura Healey said Friday that the administration formally has “not received any plan” and are awaiting information about how Steward and its lenders want to proceed.
At this point, it’s not clear what kind of support Steward might be seeking from Beacon Hill or regulators, but Healey signaled she is not interested in a financial rescue operation. Asked on WBUR’s “Radio Boston” if the state would fulfill a hypothetical Steward request for a bailout, Healey replied, “No, Steward is not going to get bailed out.”
“I think what’s important for folks to know is that this is something that we have been, our administration has been, in communication with Steward about their financial situation for some time now, and we are exploring all of our options,” she continued. “What I want listeners to understand is that there are a number of hospitals at issue. We are focused on making sure that patients are protected, that they are able to maintain access to care, that workers are protected — you know, these places employ a lot of people, and we want to preserve jobs — and to make sure that our whole health care system is stable and stabilized during any time of transition.”
The Boston Globe reported on Jan. 19 that Steward asked for state funding to help it navigate the crisis. Last week, Steward Executive Vice President Michael Callum told staff in an email the system had “not asked the state and currently do not believe we need any form of government bailout,” according to WCVB.
Steward’s interactions with Beacon Hill power players might be colored by a strained relationship with regulators.
The for-profit health system has apparently been failing to provide the Health Policy Commission with the full suite of financial information hospitals are required to submit under state law.
In the most recent annual report about the financial performance of health and hospital systems in Massachusetts, published in September, the Center for Health Information and Analysis noted that “Steward Health Care did not submit the required system-level audited and standardized financial statement data.” A subsequent quarterly report published Jan. 4 featured hospital data from Steward, but pointed out that the system “did not submit the required HHS or physician organization data.”
The reporting shortfalls prompted HPC Executive Director David Seltz to accuse Steward executives of disregarding Massachusetts law, according to WBUR, which also reported that the system is in litigation over submitting financial documents to the state.
“Transparency is about trust, and it’s about having the information so that policymakers and the public can understand the performance of our health care system,” Seltz said Friday, according to WBUR. “The obstinate refusal by Steward corporate leadership to hand over these legally mandated reports is a grave disservice to the public, to the patients that are served by that system and to the workers of that system.”
An HPC spokesperson did not respond to a News Service inquiry on Monday.
Senators have been privately discussing financial challenges roiling the Steward Health Care system, according to South Boston Sen. Nick Collins, and are looking to obtain more detailed financial information from Steward as they evaluate potential interventions to safeguard access to hospitals.
“I don’t think anyone wants these hospitals to fail,” Collins said. “It’s not an option.”
Collins said he visited St. Elizabeth’s Medical Center in Brighton and Carney Hospital in Dorchester, which is in his district, last week. He said hospital employees are stressed by the company’s financial problems but are committed to serving their communities.
“What would happen if those two hospitals failed would be catastrophic,” Collins said. “Having one of them not exist would be an absolute disaster. They deserve to get the support they need to succeed.”
(State House News reporter Alison Kuznitz contributed to this story.)
Steward is a global company ; according to the Wall Street Journal, it accounts for one third of the properties owned by Medical Properties Trust, a REIT. Why should the citizens of Massachusetts be on the hook for these hospitals?
Someone at Steward Health Care is fattening their pockets combined with inept leadership are the culprits. We had a similar situation in our community.