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BOSTON (State House News Service) — Steward Health Care has signed "definitive agreements" to sell four of the six Massachusetts hospitals it has been working to offload since filing for bankruptcy in May, and the company expects Massachusetts state government to kick in an additional $42 million to keep the hospitals open as the sales move ahead.
The company announced Thursday that it has finalized asset purchase agreements for Lifespan to buy Morton Hospital in Taunton and Saint Anne's Hospital in Fall River, and for Lawrence General Hospital to buy the Holy Family Hospital facilities in Methuen and Haverhill. Lifespan is buying the two hospitals for $175 million and Lawrence General could pay as much as $28 million for the Holy Family hospitals, according to court filings.
Steward is still working to finalize agreement related to the sale of Good Samaritan Medical Center in Brockton and the operations of St. Elizabeth’s Medical Center in Brighton to Boston Medical Center, the company said.
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The deals still require U.S. Bankruptcy Court clearance and various regulatory approvals. A sale hearing in Bankruptcy Court is scheduled for Wednesday, Sept. 4, and Steward said it reserves the right to also seek approval of the yet-to-be-detailed BMC deal at that hearing.
In a filing Thursday, Steward said it is seeking court approval of the sales "based on representations made by the Commonwealth of Massachusetts ... that it will provide $42 million in funding to the Debtors to support operations in September 2024, as well as accrued payroll obligations prior to the closing of the transactions." The Healey administration had previously said the state would provide additional financial support for Steward (on top of $30 million that was meant to keep the bankrupt company's hospitals open through August), but declined to say how much more the state contribute.
"We are thrilled to have identified such qualified acquirers for hospitals in the Commonwealth that are critical to the health of underserved populations," John Castellano, Steward’s chief restructuring officer, said. "In Lifespan, Lawrence General Hospital and Boston Medical Center, we have found partners with established track records of treating communities in the northeast United States. Through these transactions, the people of the Commonwealth will continue to receive critically needed care while Steward continues to focus on its ongoing Chapter 11 process."
The finalization of some of the deals comes nearly two weeks after Gov. Maura Healey announced that there were agreements in principle among the array of parties involved. Steward had not confirmed or commented on the governor's announcement until Thursday.
Peter Markell, chief financial officer for Lifespan, said the health system has a deal to buy both the operations and the land and buildings of Morton Hospital in Taunton and Saint Anne's Hospital in Fall River. Lifespan has agreed to pay $175 million for the two hospitals, according to court documents.
"The basic agreement and what we're going to pay is in the asset purchase agreement," he said Thursday morning. "There is a separate agreement with the owners of the property, a [purchase and sale] on the acquisition of the property."
Markell said the agreement for Lifespan to buy the land does not need Bankruptcy Court approval, "but because it's all tied together, the parties involved have had to work things out ... and that has been part of the bankruptcy proceeding."
He said Lifespan is hopeful to have the state and federal regulatory approvals necessary by the end of September. He said the real estate purchase requires a filing under the Hart-Scott-Rodino Act, which generally includes a 30-day federal government review period.
"We are assuming that the authorities in both Massachusetts and the federal government want this to happen and these hospitals to stay open and get going. So we are assuming they will approve, but that is up to them," Markell said. "And we are hopeful that we will have those approvals by September 30, so we can close then."
The Lifespan CFO also said that the system has "committed X amount of money" to making capital investments and improvements in the facilities and digital infrastructure at the two hospitals.
"We don't have any plans for any significant changes now," Markell said. "The goal is to get these places stabilized and serving their communities, and we will do that and evaluate everything as we're going through that. Both these places have, [from] what we can see, good management teams, so we're looking forward to working with them and moving it forward."
Rhode Island’s largest hospital system, Lifespan has ties between its executive suite and Massachusetts.
The company is under the relatively new leadership of President and CEO John Fernandez, who left his job as president of Mass Eye and Ear and president of Mass General Brigham Integrated Care to take over at Lifespan in early 2023. And Markell joined Lifespan around the same time after a career as executive vice president of administration and finance, and chief financial officer and treasurer of Mass General Brigham.
Gov. Maura Healey said Thursday the news "accomplishes our goal of maintaining and protecting access to care and jobs in Southeastern Massachusetts and the Merrimack Valley, while removing Steward Health Care from Massachusetts once and for all."
"I welcome Lifespan, its leadership and team to Southeastern Massachusetts and appreciate Lawrence General Hospital for stepping up to preserve care in the Merrimack Valley. All of us will work hard to bring this over the finish line," the governor said. "We continue to work as quickly as possible to complete the agreement for another qualified operator to take over Good Samaritan, move forward on our plans to take control of St. Elizabeth’s through eminent domain, and support the communities impacted by the upcoming closures of Nashoba Valley and Carney Hospitals."
Written by Colin A. Young/SHNS
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