“Enough is enough,” Gov. Maura Healey declared Friday as she announced that all the bankrupt Steward Health Care hospitals still up for sale have new owners lined up and that the state is going to assist in the transitions with financing and, in one case, the use of its property-taking powers.
The governor said deals in principle have been struck to transition four Steward hospitals on five campuses to new owners: Lawrence General Hospital will buy the Holy Family Hospital facilities in Methuen and Haverhill, Lifespan will take over Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River, and Boston Medical Center will buy Good Samaritan Medical Center in Brockton, as long as the deals are finalized and approved.
Massachusetts state government will take the fifth for-sale hospital, St. Elizabeth’s Medical Center in Brighton, by eminent domain in order to keep it open before it is also transitioned under BMC’s control, Healey said.
The sweeping transition and health care market restructuring plan that Healey announced Friday is expected to require significant involvement from the Legislature. The governor’s office said it has been working with lawmakers on “a fiscally responsible financing plan that includes cash advances, capital support and maximizing federal matches” to support the transition to new operators.
Healey, Health and Human Services Secretary Kate Walsh and Public Health Commissioner Robbie Goldstein will hold a State House press conference at 1 p.m. Friday.
“Today, we are taking steps to save and keep operating the five remaining Steward Hospitals, protecting access to care in those communities and preserving the jobs of the hard-working women and men who work at those hospitals,” Healey said. “Our team under Secretary Kate Walsh worked day in and day out to secure new, responsible, qualified operators who will protect and improve care for their communities. We’re grateful for the close collaboration of the Legislature to develop a fiscally responsible financing plan to support these transitions.”
Healey said that the sticking point around St. Elizabeth’s was that the hospital’s landlord and its mortgage lender “have repeatedly chosen to put their own interests above the health and wellbeing of the people of Massachusetts.”
“Enough is enough. Our administration is going to seize control of Saint Elizabeth’s through eminent domain so that we can facilitate a transition to a new owner and keep this hospital open,” the governor said, without providing additional details.
Walsh, who has been at the center of the state’s Steward negotiations, is the former president and chief executive of BMC, a job she held for 13 years until Healey tapped her last year to join her Cabinet. She is now a central player in the state’s actions to ensure that another Boston-area hospital is added to the company’s portfolio.
St. Elizabeth’s is a mid-size teaching hospital with 234 staffed beds and more than 1,700 full-time equivalent employees, according to state data from fiscal 2022. With about $446 million in operating revenue, St. Elizabeth’s had more than 25,500 emergency department visits in fiscal 2022, nearly 12,700 inpatient discharges, and more than 115,600 outpatient visits that fiscal year.
The Fifth Amendment to the Constitution gives governments the power to take private property “by eminent domain” — regardless of the owner’s wishes — so long as the government proves the property is needed for a public use and the owner is paid fairly for the property. The taking of private property, though, is likely to require legislative approval.
The state Constitution says the Legislature “shall have the power to provide for the taking, upon payment of just compensation therefor, or for the acquisition by purchase or otherwise, of lands and easements or such other interests therein as may be deemed necessary...” and that the land taken or acquired “shall not be used for other purposes or otherwise disposed of except by laws enacted by a two thirds vote, taken by yeas and nays, of each branch of the general court.”
About 20 minutes before Healey’s office announced the deals in principle, a lawyer representing Steward said in U.S. Bankruptcy Court on Friday morning that the company is “close” to signing purchase agreements for at least five of its six for-sale hospital campuses in Massachusetts.
“I’m pleased to report we’ve made very significant progress with the parties, in no small part to the efforts of the mediator,” Ray Schrock, Steward’s lawyer from the firm Weil, Gotshal & Manges, said Friday. “We’re not quite there yet but we are hopeful that we could close out the remaining issues between, on the one hand the buyers, on the second between the commonwealth of Massachusetts and our stakeholders, as we move forward toward what we hope is a signing of asset purchase agreements on hopefully all of the six hospitals that we’re trying to sell. But certainly at least on five, I know we’re very, very close.”
Steward hopes to be “reporting a favorable result on signing the asset purchase agreements for Massachusetts on Monday,” Schrock said. Healey’s announcement said only that deals in principle had been reached, not that agreements laying out the terms of the sales had been signed.
Schrock said that the outstanding issue related to the sixth hospital was under discussion between the mortgage lender for Steward’s landlord and Massachusetts state government. On Thursday, Healey had called out the lender, Apollo Global Management, and said she has been “very aggressive” about pushing Apollo to sign off on a deal.
“So my hope is that they come to their senses and finalize this so that we can proceed with saving these six campuses,” Healey said.
In the announcement Friday of the “actions to save” the five for-sale Steward hospitals, Healey’s office emphasized that the news does not impact Carney Hospital in Dorchester or Nashoba Valley Medical Center in Ayer, “which will close after not receiving qualified bids.” Steward has already received court approval to close those hospitals by the end of the month.
Nashoba Valley and Carney supporters have been pleading with the state to use its powers and resources to save those hospitals.
