Financially troubled Steward Health Care filed for bankruptcy Monday morning in a federal court in Texas, where it’s based, saying in a statement that “Steward does not expect any interruptions in its day-to-day operations” during the Chapter 11 protection process.
The company, which operates several hospitals in Massachusetts, has been the subject of withering criticism from the state’s congressional delegation, Gov. Maura Healey’s administration, and others for months for failing to fully disclose the extent of its financial woes.
Under Chapter 11 bankruptcy protection, Steward will remain in control of its business operations while reorganizing its finances through a court-approved plan. The company cited “skyrocketing labor costs,” inflation and insufficient government reimbursement as some of the reasons for its current financial state. It said it has secured $75 million in initial funding to support the Chapter 11 reorganization.
Healey said the bankruptcy filing represents a “step toward our goal of getting Steward out of Massachusetts.” The bankruptcy proceedings will play out in a federal court in Texas, and Healey's Health and Human Services Secretary Kate Walsh said Massachusetts will send representatives there to advocate for the state's interests.
Steward facilities employ roughly 16,000 workers and serves 200,000 patients annually in Massachusetts, Healey said. She said she was notified shortly after Steward's 3:30 a.m. filing, but the state has been preparing for the possibility of bankruptcy. State health officials on Friday launched an incident command system to coordinate care quality and access efforts in eastern Massachusetts.
Healey stressed that Steward hospitals remain open, with Department of Public Health staff onsite to monitor operations, and she urged patients to keep their appointments and continue seeking any needed care. A new state web page will provide updates for patients and employees.
In a joint statement, the Massachusetts Nurses Association and healthcare workers union 1199SEIU warned of the consequences to patients if any of the hospitals that serve the region — located in Boston, Fall River, Ayer, Taunton, Methuen and Haverhill — were to permanently close.
The unions are urging officials and healthcare industry leaders to use the bankruptcy as an opportunity to “immediately take whatever steps are needed to ensure the preservation of these facilities and the safe transition to more stable and responsible not for profit ownership.”
Many of the local hospitals now operated by Steward were taken over in 2010 from a not-for-profit local chain overseen by the Boston Archdiocese.
On Monday morning, Healey addressed the issue of Steward's ownership.
“I don't want to lose sight of the fact that this situation stems from and is rooted in greed, mismanagement and lack of transparency on the part of Steward leadership in Dallas, Texas. I've been clear about that. I'll continue to be clear about that,” Healey said. “It's a situation that should never have happened, and we've been working together to ensure that there are steps taken to make sure this does not happen again.”
Those steps could include new laws. State House Speaker Ron Mariano said in a statement that representatives will debate and vote next week on “comprehensive legislation to address gaps in our regulatory process that Steward exploited, to stabilize the health care system, and to address the rising cost of health care.”
Senate President Karen Spilka said she looks forward to working with the House and the Healey administration to “take the steps necessary to prevent the conditions within our health care system that would cause another acute situation like the one facing Steward today.”
Attorney General Andrea Campbell said she'll advocate to ensure employees receive the wages they deserve and push for the appointment of an ombudsperson to represent patient interests. Bankruptcy proceedings could bring more transparency to Steward's financial dealings, she said.
“I also want to make it crystal clear that I take very seriously any effort for this hospital system to make a profit to the detriment of patients, to strip-mine hospitals for their value,” Campbell said. “And if those efforts have violated the law, those involved will absolutely hear from my office.”
