Massachusetts taxpayers may have to fork out hundreds of millions of dollars over the next few years to help new owners take over the hospitals that were operated by Steward Health Care, a state-owned for-profit company that is selling the hospitals to restructure itself through bankruptcy.
The state may need to spend as much as $700 million over the next three years to stabilize the facilities, according to people familiar with negotiations over five Steward hospitals in Massachusetts.
State officials did not respond Friday to requests for comment on the estimate or the status of negotiations to transfer ownership of the hospitals.
“From what I understand, there is a lot of unmet capital need and the facilities and equipment are in a difficult state,” said John McDonough, a professor at Harvard’s TH Chan School of Public Health who is not involved in the talks.
Steward declined to comment Friday.
Gov. Maura Healey outlined a plan last week for three hospital systems to take over the Steward hospitals. Healey said there are agreements in principle under which Boston Medical Center will operate St. Elizabeth’s Medical Center in Brighton and Good Samaritan Hospital in Brockton; Lifespan in Rhode Island will take over St. Anne’s Hospital in Fall River and Morton Hospital in Taunton; and Lawrence General Hospital will take control of Holy Family Hospital, with locations in Haverhill and Methuen.
The deals were complicated, in part because the hospital properties are held separately from hospital operations. Steward’s landlords recently agreed to transfer the properties to their mortgage holder, a subsidiary of Apollo Global Management, to facilitate the sale.
The cost to the state of Healey’s plan includes paying $4.5 million for St. Elizabeth’s Medical Center and expropriating the land. She said the move was necessary because a purchase agreement could not be reached for the land beneath Steward’s flagship hospital.
A lawyer for Apollo has said the company will “vigorously contest” the expropriation of the hospital.
Despite Healey’s announcement, a lawyer for Steward told a bankruptcy judge yesterday that the sales agreements for the Massachusetts hospitals had not been finalized. A bankruptcy court hearing on the sales was postponed until Tuesday.
Two other Steward facilities, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, are scheduled to close next week because there are no qualified buyers for them, according to Steward.
McDonough said it was no surprise that the collapse of Massachusetts’ third-largest hospital system would be costly for the state.
“The state has a responsibility in every case because these are licensed acute care facilities that are part of the system and have to continue to operate in some form,” McDonough said. “The state is involved in this whether you like it or not. And the state has been involved in this since it first became clear late last year that there were significant financial dangers and risks.”
In January, Steward said financial losses were jeopardizing operations. In May, the company filed for bankruptcy.
