Rhode Island-based health system Lifespan said Thursday it has signed a deal to buy two Massachusetts hospitals from Steward Health Care for $175 million, a price that includes both the hospital operations and the land and buildings of St. Ann’s Hospital in Fall River and Morton Hospital in Taunton.
Lawrence General Hospital has signed a deal to acquire Holy Family Hospital, which has campuses in Methuen and Haverhill, for $28 million for the hospital operations and real estate, according to court documents.
“The real work is just beginning,” Dr. Abba Agrawal, CEO of Lawrence General Hospital, told WBUR in an interview. “There has been a very, very significant underinvestment in these hospitals, and frankly, that’s the root of the problem.”
The signed agreement is the first concrete sign that months of negotiations to determine the future of Steward’s Massachusetts hospitals are coming to fruition.
“This agreement achieves our goal of preserving and protecting access to health care and jobs in southeastern Massachusetts and the Merrimack Valley, while also completely removing Steward Healthcare from Massachusetts,” Gov. Maura Healey said in a statement.
Steward, a Dallas-based for-profit hospital system and Massachusetts’ third-largest, filed for bankruptcy in May, raising questions about what would become of its hospitals as the company moves forward with plans to auction off dozens of hospitals in several states, including two other Massachusetts facilities, St. Elizabeth Medical Center in Brighton and Good Samaritan Medical Center in Brockton.
Steward said in a court filing Thursday that he is finalizing terms of a deal for Boston Medical Center to buy St. Elizabeth Hospital and Good Samaritan Hospital.
The Healey government has threatened to expropriate St Elizabeth Hospital, but the hospital’s owners are fighting back.
Massachusetts officials will provide $42 million to help Steward Hospital meet its payroll obligations and operations until the sale closes at the end of next month, according to court documents. The state has already provided a $30 million Medicaid advance this month to keep Steward Hospital open.
Meanwhile, Steward will close two Massachusetts hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, on Saturday over worker and resident opposition.
Steward’s chief restructuring officer, John Castellano, said Steward officials are “thrilled” to have found qualified buyers for most of its Massachusetts hospitals. “Through these transactions, Massachusetts residents will be able to continue to receive vital health care while Steward focuses on its ongoing Chapter 11 bankruptcy proceedings,” he said in a statement.
The sale requires approval from a bankruptcy court judge and state and federal regulators. A hearing on the Massachusetts hospital sale is scheduled for Sept. 4 in federal bankruptcy court in Houston.
In an interview with WBUR, Lifespan officials said most of the purchase price for Morton and St. Ann’s hospitals will go toward the hospital land and buildings, which have been a bone of contention in the negotiations. The properties are owned by outside investors who are battling with Steward over who should receive the bulk of the proceeds from the sale of the hospitals.
Lifespan is Rhode Island’s largest not-for-profit health system and operates the state’s flagship teaching hospital and children’s hospital. It is affiliated with Brown University and is in the process of rebranding as Brown University Health.
Lifespan Chief Financial Officer Peter Markel said his team has been in discussions with Steward since the beginning of the year. He said the acquisition fits with Lifespan’s expansion strategy.
“We care about these communities,” he said, “and we see them as important to the areas we want to serve.”
Some patients chose to avoid Steward Hospital this year after it struggled to make payments and filed for bankruptcy. Lifespan said it would work to lure them back.
“We have to convince the patients in these communities that we’re going to bring the hospital back and make it even better, which is what they knew before the hospital went under,” he said, “but it’s up to us to convince the people in the community.”
Lifespan plans to set up an affiliate called Lifespan of Massachusetts to operate Morton and St. Ann’s hospitals and will borrow to fund the deal. Lifespan officials said they are finalizing a separate agreement to receive “modest” assistance from the Healey administration to cover the costs of operating the hospitals for a “limited period of time.”
“We are confident that our team has the experience and know-how to rebuild the infrastructure of these two hospitals and operate them as successful, thriving nonprofit organizations,” Lifespan President and CEO John Fernandez said in a statement.
Lawrence General Hospital is a nonprofit community hospital serving the diverse, working-class city of Lawrence and surrounding cities and towns. Agrawal said her team is counting on upcoming funding from the state to help with the acquisition and improvements to Steward’s Holy Family campus.
Steve Walsh, president of the Massachusetts Health and Hospital Association, said the sale deal marks “the beginning of a new and hopefully brighter chapter for health care in Massachusetts.”
