Steward To Close 2 Hospitals As Asset Sales Plan Goes Awry
Steward Health Care has been working to sell hospitals and avoid closures since filing for Chapter 11 bankruptcy in May, but it was unable to find buyers for two Massachusetts facilities and announced Friday it would be shuttering their operations.
The Dallas-based operator plans to close the Carney Hospital in Boston's Dorchester neighborhood and the Nashoba Valley Medical Center in central Massachusetts, Steward announced Friday.
The company said it received no qualified bids for the two hospitals ahead of a July 31 hearing in which a bankruptcy judge will review bids. It did receive bids for six other Massachusetts hospitals in Brighton, Brockton, Taunton, Fall River, Methuen and Haverhill.
Steward also this week said it received bids for hospitals in Arkansas and Louisiana. The company operates more than 30 hospitals across several states.
Steward said in a statement it is working to ensure a smooth transition for those affected, and it described the closures as “a challenging and unfortunate situation."
Massachusetts Gov. Maura Healey said in a statement Friday the Carney and Nashoba Valley hospitals will go through an "orderly and regulated closure" after the bankruptcy judge approves the motion to close. She said the state is working to ensure a smooth transition for patients and employees, and she called on Steward to finalize deals to sell its remaining hospitals to ensure they stay open.
“This is not over. It’s regrettable that [CEO] Ralph de la Torre and Steward’s greed and mismanagement are resulting in the closures of Carney and Nashoba Valley hospitals," Healey said in a statement. "These hospitals have long served their communities — their closures are about more than the loss of beds, doctors, and nurses."
The closure announcement comes one day after the U.S. Senate formally opened a bipartisan investigation into Steward and voted to subpoena its CEO.
Steward's hospital operations aren't the only assets it is looking to shed to get out of bankruptcy. It had reached a deal to sell its physicians group to UnitedHealth Group's Optum, but Optum walked away from the purchase agreement last month, the Boston Globe reported.
The monthslong Steward saga has dragged down the finances of the largest U.S. hospital landlord, publicly traded REIT Medical Properties Trust. Steward is MPT's largest tenant after the hospital system sold its land to the REIT and leased back the properties — a transaction many blame for Steward's ultimate collapse.
MPT has also lent the company hundreds of millions of dollars that it has since written down as a loss. Its executives have told investors it hopes the bankruptcy sale process will lead to a new operator who can start paying rent. The REIT reported a $736M loss in the first quarter, largely as a result of the Steward writedowns.
Sens. Elizabeth Warren and Ed Markey of Massachusetts in April said MPT's business model of charging rent to operators while lending them money has the appearance of a "Ponzi scheme."
Steward has also come under fire for spying on its critics. The Boston Globe reported earlier this month that Steward's executives spent $7M between 2018 and 2023 on firms that provide surveillance services, intelligence gathering and other research. Steward later revealed it has paid $1.6M this year to a London private intelligence firm, The Wall Street Journal reported.
One of the targets of that intelligence gathering, short seller Viceroy Research, said in a statement after the Globe report that it was "outraged by the unlawful surveillance and harassment," and that the actions were "in retaliation for the publication of reports critical of Steward’s landlord Medical Properties Trust."
MPT's stock is down more than 50% from this time a year ago, but its share price has risen more than 10% this week.
