Financial terms of the purchases were not disclosed, but they are expected to be included in bankruptcy court filings next week. Steward filed for bankruptcy on May 6 and is working to sell assets in Massachusetts and five other states to pay off creditors.
At a news conference Friday, Gov. Maura Healey, flanked by state Health and Human Services Secretary Kate Walsh and Public Health Commissioner Ruby Goldstein, said Steward left a legacy of greed, mismanagement and chronic underinvestment in his hospitals.
“Today, I am pleased to say that we have closed the book on Steward once and for all in Massachusetts,” Healy said.
Healy said the move to take over St. Elizabeth’s ownership comes because the state, despite “endless rounds,” has been unable to reach an agreement with the hospital’s landlords on leases. Steward sold the hospital’s land and buildings in 2016, then paid a large dividend to its shareholders, most of which went to CEO Ralph de la Torre.
De La Torre, the founder of Steward who moved the system’s headquarters from Boston to Dallas in 2018, “deserves to be investigated, prosecuted and held accountable,” the governor told reporters Friday.
A Steward spokesperson said the company had no immediate comment on the state’s announcement.
Two of the previous owners, Medical Properties Trust and Macquarie Infrastructure Partners, handed the properties over to their mortgage lender, Apollo Global Management, earlier this month. But negotiations to sell the hospitals have been stalled over long-term leases, with landlords demanding more than buyers can afford.
MPT, Macquarie and Apollo “have repeatedly chosen to put their own interests above the health and well-being of the people of Massachusetts,” Healey said in a statement.
“Enough is enough,” the governor said, accusing the three investment firms of taking tough negotiating positions that prevented a deal to sell the flagship hospital. “Our administration will take control of St. Louis-Elizabeth through eminent domain so we can facilitate the transition to a new owner and keep this hospital open.”
Haley said her administration plans to issue an order to take control of St. Louis Hospital. Elizabeth’s property from Apollo, offering what she said was a fair market value of $4.5 million.
As part of the deals, the Haley administration is providing $30 million in bridge funding to keep hospitals running through the end of the month while state leaders work with buyers on transition plans. That will include more than $80 million annually in additional state and federal funding that will go directly to the new hospital operators.
There was no immediate comment from Boston Medical Center or Lawrence General, but Jessica Wharton, a spokeswoman for Lifespan, confirmed that the Rhode Island-based system is “continuing to finalize” the deal with Steward and Apollo.
Two other Steward hospitals in eastern Massachusetts — Carney Hospital in Dorchester and Nashoba Valley Medical Center in the north-central Massachusetts town of Ayer — are scheduled to close by Aug. 31 after Steward said they failed to attract qualified bids.
At her press conference Friday, Haley blamed Steward for mismanaging those hospitals so badly that no other hospital was willing to take them over at this point, and acknowledged the toll their communities would face.
“The news today is good, but not for everyone,” she said. “And as a governor, I understand that.”
A major health care union on Friday applauded Haley’s move to steer most of Steward’s hospitals into better hands than Steward’s, but said they still hope she can do the same to keep Carney and Nashoba Valley open.
“This is exactly the kind of aggressive action that the health care workers at 1199SEIU have been demanding from our state leaders,” said Tim Foley, executive vice president of 1199, which represents 80,000 health care workers in Massachusetts. “We need the same level of aggressive commitment to patients and workers at Carney and Nashoba Valley that we’ve seen from the state when it comes to other Steward hospitals.”
Steve Walsh, president and CEO of the Massachusetts Hospital Association, praised the deal and said he hoped it would help stabilize a state hospital system that had been bracing for the worst if more Steward hospitals were forced to close or cut services.
“We are very encouraged to see that trusted health systems are on track to take over Steward Hospitals in Massachusetts and have every confidence in their ability to restore normalcy,” he said in a statement. “In turn, we hope this process will help alleviate the pressures felt by other health care facilities and give Massachusetts a unique opportunity to create a more responsive system for the future.”
Shortly before Healy’s announcement, at a hearing Friday morning in U.S. Bankruptcy Court, Steward’s attorney, Ray Schrock, said the two sides had made “very significant progress” in negotiating the sales, but had not yet finalized the deal. Schrock said he hoped to have asset purchase agreements signed by Monday.
Bankruptcy Judge Christopher Lopez set a hearing for next Thursday to ask him to approve the hospital sale. At Friday’s hearing, he approved a separate deal to sell Stewardship’s physician network, Stewardship Health, to Rural HealthCare Group, a private equity subsidiary of Kinderhook Industries, for $245 million in cash.
About half of the 5,000 primary care physicians and specialists represented by the oversight work in Massachusetts.
This is a developing story, check back soon for more.
Globe Staff’s Alexa Gagosz contributed to this report.
Robert Weisman can be reached at [email protected]. Jason Laughlin can be reached at [email protected]. Follow him @jasmlaughlin.
