Financial troubles and a flurry of planned hospital divestitures have landed for-profit Steward Health Care squarely in the crosshairs of the public and lawmakers.
The physician-owned company, which runs 33 hospitals with 33,000 employees across eight states, was about $50 million behind on its rent to Medical Properties Trust as of the end of the year, the real estate company told its investors near the beginning of January.
After its liquidity was “negatively impacted by significant changes to vendors’ payment terms,” Steward committed to an action plan with MPT to restore its balance sheet by “pursuing several strategic transactions, including the potential sale or re-tenanting of certain hospital operations as well as the divestiture of non-core operations” alongside other plans, MPT said.
A subsequent report from The Boston Globe detailed apparent signs of financial distress within the organization. Steward had been named as the subject of at least 14 lawsuits filed within Massachusetts by vendors and employees related to unpaid invoices since 2022, per the report, and an internal memo obtained by the Globe characterized 2023 as “a tough year” amid various financial pressures.
Though Steward does not publish its financials publicly, a report compiled last summer by public accounting firm BDO USA gauging the financial feasibility of a plan to build a behavioral health facility in Brockton, Massachusetts, projected that Steward would end 2023 with just 10.2 days of available cash and investments on hand. The announcement from MPT in January suggests Steward’s liquidity fared worse than expected in the back half of 2023.
Within Massachusetts, a group of lawmakers have been in contact with Steward in regard to its finances due to their concerns that “the abrupt closure of Steward’s Massachusetts hospitals would significantly limit access to inpatient critical care and inpatient behavioral health care, as well as maternal and newborn health services in eastern.”
One of the lawmakers, Massachusetts Rep. Stephen Lynch, a Democrat, told press that Steward had planned to exit the Massachusetts market and, in the immediate term, hopes to sell off four of its nine hospitals. He and his colleagues worry that any potential closures could overwhelm other healthcare facilities, particularly as demand remains high amid the winter uptick in respiratory infections, he said.
Massachusetts Gov. Maura Healey said her office has been in contact with Steward and, as of Saturday, has “not seen a plan from Steward” yet to address the issue. While the governor said her administration’s goal is to protect patients and employees’ livelihoods, Steward is “not going to get bailed out.”
Friday, Mass General Brigham disclosed that it has pulled “a small number of physicians” who offer facilities at a Steward facility “after hearing that certain surgical equipment may not be available.” The services will be rescheduled at a Mass General Brigham location, it said. The Steward facility, Holy Family Hospital, had recently seen its president step down for a new role at another organization.
In a responding statement given to press, Steward said it has been “challenged” by insufficient government reimbursement for community hospitals as opposed to larger academic medical centers. It also said that “the fact that one of the largest health care providers in Massachusetts rescinded their care underscores the fact that Steward hospitals do not receive the support they need, nor the recognition of the quality care they provide.”
Steward’s plan to turn around its finances also extends to its home state of Texas. This past week, it shared plans to shutdown the Beaumont campus of the Medical Center of Southeast Texas in early February, which it said was due to insufficient utilization.
Steward had already closed a 325-bed hospital in Texas early last year. It had also sold off its non-core laboratory business during the fourth quarter of 2023 and obtained a $60 million bridge loan from MPT.