Steward closing two hospitals, laying off over 1,200 employees

Photo: Michael Duva/Getty Images

Steward Health Care plans to close two hospitals in Massachusetts by the end of the month, resulting in over 1,200 layoffs.

Sales of its other 29 hospitals have been delayed and Steward's CEO Ralph de la Torre has been subpoenaed to appear before a Senate subcommittee.

WHY THIS MATTERS

On July 29, Steward reported through a Massachusetts Worker Adjustment and Retraining Act (WARN) notice that it would be laying off 753 employees at the Steward Health Care System Carney Hospital in Dorchester, Massachusetts, as of August 31. It also reported 490 layoffs at its Nashoba Valley Medical Center in Ayer, Mass., that will also occur by August 31.

Steward is moving to close these hospitals, according to WBUR, even though Michigan company Insight Health System wanted to buy all of Steward's 31 hospitals out of bankruptcy. The bid was rejected as not viable, according to the report.

Critics, such as the Massachusetts Nurses Association, said Steward should have given greater consideration to the bid to keep hospital doors open, according to the WBUR report.

THE LARGER TREND

Other setbacks for keeping Steward facility doors open include a decision by Optum to no longer pursue a deal to buy the Steward Health Care physician group in Massachusetts.

Optum's purchase of the physician group was one step in a bankruptcy restructuring process to sell all of its 31 hospitals in the financially troubled health system.

However, at the end of May, the Department of Justice filed an objection to the debtor-in-possession financing terms for Steward Health Care.

The company found buyers for its other Massachusetts hospitals, but the sales were delayed due to a dispute between Steward Health and landlords Medical Properties Trust and Macquarie Asset Management, Reuters reported.

A Senate subcommittee has issued a subpoena to Steward Chairman and CEO Ralph de la Torre, since he reportedly opted to appear voluntarily. 

This is the first subpoena issued by the Senate Committee on Health, Education, Labor, and Pensions (HELP) since 1981.

The Senate HELP subpoena compels the CEO to testify at a hearing on September 12 titled, "Examining the Bankruptcy of Steward Health Care: How Management Decisions Have Impacted Patient Care."

HELP Committee Chairman Senator Bernie Sanders (I-Vt.) led the committee in a bipartisan vote to authorize an investigation into the bankruptcy of Steward Health Care and private equity's role in the healthcare system.

Email the writer: SMorse@himss.org