Hospital operators eye Steward Health Care assets as pressure on company mounts

Steward Health Care’s landlord said Wednesday that Steward hospitals have drawn significant interest from other potential operators, the latest hint that facilities might soon be transferred away from the financially floundering for-profit system.

A day after Gov. Maura Healey issued a biting call for Steward to hand off its licensed, operational Bay State hospitals to new parties “as soon as possible,” the firm that owns the hospital real estate suggested there could be a willing market.

“With regard to Steward, we are encouraged by the amount of interest received to date from other hospital operators for these mission-critical facilities, and we expect this real estate portfolio will either resume its contributions to earnings or become additional sources of liquidity as the year progresses,” said Edward Aldag Jr., CEO of Medical Properties Trust.

At the same time, MPT — which in January said Steward owed it about $50 million in unpaid rent — appeared to open the door to steering more money to its tenant.

MPT officials said in a news release about fourth-quarter finances that the firm is negotiating with other “asset-backed lenders” of Steward on $37.5 million in bridge funding, based on the hospital system hitting milestones established in January. The real estate firm said it had already funded $20 million of that request.

Steward’s apparent financial distress, which involves not only the reported unpaid rent to MPT but lawsuits from vendors alleging the system has not paid its bills, quickly took over the spotlight on Beacon Hill and raised fears about the potential consequences on patients.

Other health care providers have been pushed to respond. Dana-Farber CEO Laurie Glimcher released a statement Wednesday to “directly reassure our patients receiving care at St. Elizabeth’s and other Steward facilities that Dana-Farber Cancer Institute is committed to ensuring that they will not experience any interruption in their oncology care.”

Healey on Tuesday criticized Steward’s CEO for a lack of transparency, and she called on the system to transfer operations of its seven licensed, running facilities to someone else. She also demanded access to financial information by the end of the day Friday, leaving open the possibility of state action without specifying consequences if Steward fails to comply.

The fight over access to Steward’s financial information dates back years. State regulations require hospitals to disclose those materials, but Massachusetts officials argue that Steward has long been flouting the mandate.

In 2017, Steward sued the Center for Health Information and Analysis, alleging the agency demanded access to “confidential business information” with no promise that it would remain private. The case spent years in court, and in 2023, Superior Court Judge Catherine Ham ruled that Steward should be compelled to provide financial information to CHIA.

Steward appealed the decision, and the matter is still tied up in the state Appeals Court with briefs due in the coming weeks.

A Steward spokesperson contended Tuesday evening that the system had, in fact, complied with previous state requests for information about its finances.

“In late 2023 and early 2024, Steward gave regulators in the Commonwealth the audited financial documentation they had requested and is continuing to cooperate closely,” the spokesperson said.

Steward did not respond to follow-up questions Wednesday asking for more details on what documentation it provided and whether it is different than what Healey demanded by the end of this week.

According to CHIA, which collects and crunches data from Massachusetts hospitals, Steward in December 2023 submitted some financial information covering 2018 to 2020. 

Officials with the regulatory watchdog said those submissions, however, featured information that was already publicly available through documents MPT filed with the U.S. Securities and Exchange Commission. The filing covering 2019 also lacked notes explaining financial statements, according to CHIA.

CHIA said it still has not received Steward’s audited financial statements for 2021 and 2022, nor audited consolidating schedules, which include details like balance sheets and statements of operations for each hospital and physician organization.

“The state has requested audited financial statements at the system and hospital level from 2015-2023,” a spokesperson for the Executive Office of Health and Human Services said Wednesday. “The limited amount of information EOHHS has received has been incomplete and unacceptable.”