Hospitals at risk of closing? Steward Health Care reportedly owes $50M in back rent

BOSTON — It has nearly 600 beds and a national reputation for cardiac surgery, but is St. Elizabeth’s Hospital In Brighton destined for closure?

Reports indicate that Steward Health Care, which operates St. Elizabeth’s and a handful of other hospitals in Massachusetts, is in deep financial trouble.

Steward Health Care reportedly owes tens of millions of dollars in back rent on properties, including St. Elizabeth’s Hospital and Carney Hospital In Dorchester.

In addition to those company troubles are challenges facing nearly every hospital nationwide: low staffing, high demand, increased costs and decreased or inadequate insurance reimbursements.

Steward entered the Massachusetts market about 14 years ago, when it purchased a group of hospitals that included Carney Hospital in Dorchester. But the company has taken some financial hits in recent years.

In 2020, a flash flood forced the closure of Steward’s Norwood Hospital, which is being rebuilt, but with fewer beds than the old hospital.

Just last December, Steward made the kind of medical history no hospital chain wants to make, by announcing the April closure of New England Sinai Hospital in Stoughton.

In a statement Monday, Steward Health Care said:

“Steward was founded with the mission of providing high-quality care for the most-marginalized patient populations. That mission was conceived in 2010 when we singularly stepped up to absorb the failing Caritas Christi community hospital system from the Archdiocese, consisting of six financially troubled hospitals on the verge of closure. In doing so, we set the course for the company, preserved access to care for thousands of Massachusetts residents in marginalized communities, invested over $1.5 billion in the system, absorbed significant debt, retained 14,000 jobs, guaranteed legacy pensions of nurses and other workers, and most importantly, dramatically improved the quality of patient care.

Steward Health Care is one of many health systems in the state of Massachusetts challenged by the once acute and long-tail impacts of the COVID-19 pandemic. Whether record-breaking losses, significant downsizings or facility closures, the past few years have devasted the state’s community hospitals.

The Massachusetts Center for Health Information and Analysis (CHIA) recently released its report on the financial performance of the state’s hospitals, showing that virtually all community-based hospitals lost money last year.

Steward has been challenged by a payor-mix system-wide that is over 70% Medicare and Medicaid, where reimbursement meaningfully trails commercial reimbursement. Over the past decade plus, there has been a widening gap in reimbursement for all the state’s community hospitals compared to larger, academic medical centers. This gap has only continued to increase and most community hospitals - including Steward hospitals in Massachusetts - are suffering losses that jeopardize their ability to continue to offer services.

Steward has been the leading advocate for community hospitals over the past three administrations to enlist support in rectifying this reimbursement disparity so we can collectively continue to serve underserved communities. We met frequently with Governor Patrick’s and Baker’s administrations and recently continued the dialogue with newly elected Governor Healey and AG Campbell.

While we are pursuing inequities and our aggressive advocacy for fairer reimbursements, Steward is advancing an action plan to strengthen its liquidity, restore its balance sheet and put the tools necessary in place to continue forward as a key provider of healthcare services to our patients, communities, physicians, and employees. Our physicians will continue to deliver excellent care and we are very confident that our hospitals have adequate supplies for us to provide high-quality health care to our patients. At the same time, we continue to be among the largest employers and taxpayers within the state’s lowest-income communities.

We remain committed to making our managed care and physician enterprise one of the strongest in the nation while maintaining our dedication to all patients. That is the mission that we all signed up for and our commitment and focus is unwavering.”

—  Steward Health Care

It is just the fourth time in recent years an entire hospital in Massachusetts is closing.

Last week, Mass General, the state’s largest hospital, warned that it was routinely facing unprecedented crowding.

This is a developing story. Check back for updates as more information becomes available.

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