Sun. Jul 14th, 2024

State aid is part of conversations about Steward Hospitals in northern Massachusetts. – NBC Boston

By Vaseline May31,2024

New documents in Steward Health Care’s bankruptcy proceedings have shed some more light on the involvement of the Massachusetts state government as the financially floundering network looks to shed its hospitals, and the company’s proposal to make a bid for its assets suffers some setback. of the US Department of Justice.

Gov. Maura Healey, Attorney General Andrea Campbell and other state leaders want Steward out of Massachusetts, but the company has failed to secure buyers for its Bay State hospitals in the months since its financial situation came to light. Since filing for bankruptcy protection on May 6, Steward has outlined the process it plans to use to sell or auction its 31 hospitals nationwide in early July.

Steward is proposing to sell its physician services network, Stewardship Health, along the same timeline. Before filing for bankruptcy, Steward reached an initial agreement to sell Stewardship Health to Optum, but that transaction has not progressed. A hearing on the proposed schedule is scheduled for Monday.

There are two investment banks working with Steward to market their hospitals in Massachusetts and elsewhere.

Cain Brothers manages the “Southern Massachusetts” hospitals (Good Samaritan Medical Center in Brockton, Morton Hospital in Taunton and St. Anne’s Hospital in Fall River), while Leerink Partners manages the “Northern Massachusetts” hospitals (St. Elizabeth’s Hospital in Brighton, Carney Hospital in Dorchester, Holy Family Hospital in Methuen and Haverhill Hospital in Haverhill, and Nashoba Valley Medical Center in Ayer.) Norwood Hospital, which was rebuilt after a 2020 flood, is not mentioned in the latest documents.

In separate documents filed Monday, representatives from both Cain and Leerink described how these efforts have gone, and the information suggests that Steward’s hospital transitions in Massachusetts will not all be handled the same way.

Municipal, state and federal lawmakers are discussing the impact of Steward Health Care’s financial crisis following the healthcare giant’s bankruptcy announcement.

Cain described a fairly simple process for the hospitals it markets. The company said it has contacted 45 parties to gauge potential interest in purchasing Steward’s hospitals in the southern part of Massachusetts, with 20 of those potential buyers agreeing to sign nondisclosure agreements to gain access to “diligence materials ‘. The company also said it has “received a number of indications of interest (‘IOIs’) that … describe the proposed transaction structure and value range for some or all of the debtor’s assets located in the Southern Massachusetts market.”

Leerink’s filing described a slightly different process and spoke directly to the state government’s involvement. While the company said it initially contacted five groups in late February that it determined might be interested in acquiring the hospitals, the company later turned to “a broader marketing effort with a particular focus on hospitals without profit motive (NFP). owners or systems.”

In total, the company said it has contacted 40 potential buyers, including at least 25 nonprofit hospitals, “to gauge their interest in a transaction to acquire or otherwise assume ownership of Steward’s hospitals in northern Massachusetts. Thirteen potential buyers have signed non-disclosure agreements and received diligence materials, the filing said.

“In addition, the debtors have entered into discussions with the Commonwealth of Massachusetts to secure a buyer to continue operating the hospitals in Northern Massachusetts with the support of the Commonwealth,” the company wrote. “In this context, Leerink Partners has entered into discussions with potentially interested parties and such discussions are still ongoing.”

A woman whose four-year-old daughter died after being rushed to a Steward Health Care facility in 2016 has filed a wrongful death lawsuit, but the case has been postponed several times.

There was no similar language included in Cain’s filing about the efforts surrounding the other Massachusetts hospitals, but a spokesperson for the Executive Office of Health and Human Services told the News Service on Wednesday that the state’s role is the same for Steward’s hospitals statewide.

“Massachusetts is using all available resources to protect patients, ensure access to care and preserve jobs through the transition of all Steward facilities across the state. “If Steward enters into a transaction to sell some or all of its hospital assets, state procedures and standards for reviewing the proposed transaction would apply,” the spokesperson said in a statement shared in response to questions about what type of state aid is discussed.

The Health and Human Services spokesperson pointed out that the transactions being considered would be between private parties and noted that Massachusetts offers support to safety net providers, including Steward Hospitals, and any eligible successors.

Two weeks ago, Steward’s attorneys described the role of the Massachusetts state government somewhat differently, saying that Steward was “in discussions with several third parties interested in purchasing and operating the debtors’ hospitals in Northern Massachusetts, and also with state officials and regulators to facilitate the transition of such hospitals to new operators.”

Healey, House Speaker Ron Mariano and Senate President Karen Spilka have all ruled out a bailout for Steward. But their comments also do not rule out that the state may need or want to provide a different kind of help to ensure a smooth transition from Steward to other operators.

The company’s lawyers and Massachusetts state officials have acknowledged that selling the hospitals could be difficult thanks to the sale-leaseback transaction in which Medical Properties Trust (MPT) bought the land beneath the Steward Hospitals in 2016.

Steward Health Care, which is teetering on a financial crisis that could put several hospitals in Massachusetts at risk, is a “house of cards and a charade,” Gov. Maura Healey said a week ago as she continued to lash out at the for-profit health care system. system that is one of the state’s largest employers. Follow NBC10 Boston on… Instagram: TikTok: Facebook:

The day after Steward filed for bankruptcy, one of its lawyers told the court that the company faces a June 25 deadline to auction off its hospitals in Massachusetts and other states except Florida under the terms of a loan it got from its landlord, MPT, worth up to $300 million. But he also said that timeline was “not feasible.” The company’s lawyer told the court that “too much emphasis cannot be placed on the fact that time is of the essence” in the sale process, as Steward’s ability to keep its hospitals open depends on the loan (also called debtor- called in-possession). or DIP financing) from MPT.

“Access to the DIP facility is critical to the debtors’ ability to continue operations and manage their bankruptcy estates through the completion of the sale process. Failure to meet the milestones could jeopardize the debtors’ access to cash under the DIP facility and, in turn, jeopardize the debtors’ Chapter 11 strategy and ability to maximize recoveries for creditors ” according to Steward’s filing. “In light of the foregoing, the Debtors believe that the proposed timeline is both reasonable and necessary under the circumstances of these Chapter 11 cases.”

But that timeline, especially as it applies to the sale of Stewardship Health, is not entirely acceptable to the U.S. government. The Justice Department on Tuesday filed a “limited objection” to Steward’s proposed sale schedule, saying the milestones Steward agreed to with MPT would “prevent the exercise of U.S. regulatory rights with respect to any proposed sale of the Debtors’ assets.” could disrupt, such as an ongoing antitrust investigation of the proposed Stewardship sale.

“The ongoing review by the United States is in its early stages and may require extensive production of documents and data before the United States decides whether to oppose the transaction,” the federal government wrote. “The DIP milestones make no mention of this review and could, in fact, be interpreted as undermining the regulatory rights of the United States by allowing MPT to impose hasty sales procedures for Stewardship Health and terminate financing if the debtors fail to complete the sale in a timely manner.” date acceptable to MPT.”

The Justice Department added: “In addition, it is questionable whether the debtors properly exercised their business judgment in agreeing to the milestones as they clearly do not allow sufficient time for compliance with the antitrust review prior to the sale hearing on July 2, 2024.”

Although the Justice Department has asked the bankruptcy judge to ensure that any order approving Steward’s DIP financing and sale scheme includes a provision recognizing that Stewardship Health’s sale is subject to the federal government’s enforcement rights, the filing suggested also that the DOJ could take some action. its own, depending on how the transaction unfolds.

“At a minimum, the United States reserves the right to conduct a full antitrust review and, if necessary, bring an enforcement action with respect to the proposed sale, regardless of any milestones agreed to by the Debtors and MPT” , the Justice Department wrote.

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