PROVIDENCE – Steward Health Care may not operate hospitals in Massachusetts anymore, but its demands are still putting the facilities in jeopardy, according to new owners of the hospitals including Brown University Health.
Steward has threatened to stop providing several services key to operating the hospitals unless the new owners pay higher fees for those services than originally agreed upon, court documents show. These services include scheduling health and operating room services, insurance authorizations, Medicare billing and maintenance of hospital medical records for radiology, laboratory, pathology and pharmacy.
“If the debtors [Steward] cut off services … patient lives will be at risk,” Brown Health said in a joint court filing with Boston Medical Center, Lawrence General Hospital, which all purchased Massachusetts facilities from Steward. “Prematurely cutting off the … services would cause irreparable harm to the buyers and the communities they serve, as the hospitals would likely be forced to close in such a scenario.”
Steward, a Dallas-based private for-profit health system that filed for Chapter 11 bankruptcy in May 2024, sold its Massachusetts hospitals in October to several health systems, including Brown Health, which purchased St. Anne’s Hospital in Fall River and Morton Hospital in Taunton.
The buyers are seeking an emergency court order enforcing the sale agreements to prevent Steward from shutting off the services. A hearing on the matter was scheduled for Friday and was delayed to “no later than” Feb. 14.
Similar hospital transactions would take six to 12 months to close because of the complexity of transitioning regulatory, information technology, payor relationships and other issues from the seller to the buyer. But Steward’s financial struggles meant the hospitals had to be sold much quicker – or risk closing.
Because the transaction closed so quickly the buyers agreed to transition service agreements with Steward. Under these agreements, Steward would provide the buyers with several IT and revenue cycle services for an agreed-upon price that’s paid in advance each month. Also, the fees for the services should not exceed the “actual cost” Steward incurs for providing them, according to court records.
Invoices show Brown Health paid Steward $3.25 million on Dec. 20 for January’s services. Also, Lawrence General originally owed $1.44 million and Boston Medical Center owed $4.19 million for January.
On Dec. 21, Steward sent another invoice to Brown Health, Boston Medical Center and Lawrence General for January services that marked a more than 30% increase over what the buyers agreed upon. Steward requested an additional approximate $1.07 million from Brown Health, $469, 259 from Lawrence General and about $1.4 million from Boston Medical Center due Dec. 27. Steward sent another invoice with the same prices for February.
Along with the invoices sent on Dec. 21, Steward also sent the buyers a draft of amendments to the agreements increasing the monthly payments by the same amounts to be effective Jan.1 through March 31.
The invoices that Steward sent did not include any details as to why it was requesting higher payments.
"We are working collectively to ensure that safe and quality patient care continues without the added financial burden caused by Steward's unilateral decision to increase costs for maintaining infrastructure. We are committed to finding a solution that works,” Brown Health, Boston Medical Center and Lawrence General said in a joint statement.
A spokesperson for Steward did not immediately respond to PBN’s request for comment Friday.
(Updated at 1:15 p.m. to include a joint statement from Brown University Health, Boston Medical Center and Lawrence General said in a joint statement.
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.