A Michigan company wanted to buy all of Steward's Mass. hospitals. Steward said no

A Michigan-based health care company that specializes in distressed hospitals made a bid to buy all of Steward’s Massachusetts hospitals out of bankruptcy, but the bid was rejected as not viable, WBUR has learned. 

While Steward’s hefty rent payments are an obstacle for some bidders, Insight Health System was willing to take on payments to Steward’s landlord. Despite this, a deal never materialized, according to Insight officials.

“Insight made a bid for all of Steward's Massachusetts hospitals and we indicated a willingness to negotiate terms and lease payments,” Atif Bawahab, Insight’s chief strategy officer, said in a statement. “A mutual agreement was not reached, but we remain interested in being part of the solution to keep the hospitals' doors open.”

Steward's critics, including the Massachusetts Nurses Association, have argued the company should give greater consideration to all bidders to avoid the planned closures of Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer.

Steward officials are moving to close the facilities by the end of this month, saying they didn’t receive any “qualified” bids for those hospitals. The company is working to finalize deals with other bidders for its five remaining Massachusetts hospitals, but it has yet to name the potential buyers.

Steward officials declined to comment on why they rejected Insight's bid.

In bankruptcy court last week, one of Steward's lawyers, David Cohen, said “There were certain parties that indicated an interest in assuming the operations” of Carney and Nashoba Valley. But there were “no actionable bids from parties with financial wherewithal or financial support ... to actually operate the hospitals in a manner that would be acceptable to state regulators.”

Insight, based in Flint, Michigan, is mostly unknown in Massachusetts and has no other business in the state. Insight officials did not explain how they would have financed a deal to rescue the Steward hospitals.

Bawahab said Insight has “extensive experience assuming leadership of distressed, underperforming healthcare organizations across the country and turning them into sustainable operations that meet the needs of the communities we serve.” The company operates or manages hospitals in Michigan, Illinois, New Jersey and other states.

Healey administration officials declined to comment on Insight or its bid for Steward's facilities.

“Carney and Nashoba Valley did not receive qualified bids. Our focus is on supporting patients, clinicians and staff through this transition, and doing everything in our power to get Steward to finalize deals to save the remaining hospitals,” Olivia James, a spokesperson for the Executive Office of Health and Human Services, said in an email.

Health care workers from Carney and Nashoba Valley are protesting the planned closures of their hospitals, calling on state officials to intervene. About 1,250 people at Carney and Nashoba Valley are expected to lose their jobs.

“These hospitals must remain open, both in Dorchester and the Nashoba Valley,” said Katie Murphy, president of the nurses association. “Neither of these communities is expendable.”

But the administration has not taken steps to prevent the closures. Instead, administration officials are working with Steward to relocate the patients at Carney and Nashoba Valley, the state’s lawyer, Hugh McDonald, said in bankruptcy court last week.

Administration officials said they are focused on making sure the other Steward hospitals in Massachusetts stay open. These hospitals are St. Elizabeth’s Medical Center in Brighton, Good Samaritan Medical Center in Brockton, St. Anne’s Hospital in Fall River, Morton Hospital in Taunton and Holy Family Hospital in Methuen and Haverhill.

Norwood Hospital, which closed after flooding damage in 2020, remains closed and was not part of the bankruptcy sale process.

The Healey administration is developing a plan to prop up the new operators of the Steward hospitals with streams of public funding. Administration officials said the recently approved state budget provides $35 million a year for three years to help the new hospital operators. Combined with matching federal funds, the new operators will receive $80 million a year for the next three years.

In addition, the administration is prepared to advance an undisclosed amount of Medicaid payments to the health care providers that take over the Steward hospitals. Administration officials said this funding will help support the cost of operations, including salaries and supplies, and will cover financial losses. The payments are also intended to help the new operators pay for improvements to the hospital buildings.

But Steward has yet to finalize deals for these hospitals, largely because of disputes between Steward and the companies that own its Massachusetts real estate — Medical Properties Trust and Macquarie Asset Management. Also involved in the negotiations is Apollo Global Management, which holds the mortgage on the properties.

The firms are working to finalize deals by Tuesday, when Steward is scheduled to ask the bankruptcy court to approve an agreement that would provide $30 million in advance Medicaid payments from Massachusetts officials to keep its hospitals afloat for the next several weeks. Administration officials said that money is contingent on Steward signing agreements with buyers.

Without deals, McDonald, the state’s attorney, warned last week, Massachusetts could find itself in “a public health crisis.”