Steward Hospital Saga, Part III (with apologies to those who've been forced to read more about 9 little hospitals in Massachusetts than they ever needed to):
Steward announced over the weekend that they'd received funding that will bridge their current financial woes long enough to complete an agreement with a "significant equity partner to our physician organization." They assured employees that this would mean all of the Steward hospitals threatened with closure would remain open.
Simultaneously, the Boston Globe dug deeper on Steward's other hospital holdings and found a pattern of similar financial brinksmanship when facilities in Pennsylvania, Louisiana and Texas threatened to close (the latter actually did, leaving a low-income swath of San Antonio without its primary birthing center and emergency room).
While denying that they had delayed alerting the appropriate officials of the financial straits these hospitals faced, Steward was unusually candid in their statement to the Globe about their Massachusetts holdings.
They acknowledged, "the need for the company to review its operations,” citing, “factors from chronically low reimbursement against the important, underserved marginalized patient populations Steward over indexes towards in Massachusetts and other markets, and the challenges presented by COVID-19,” adding that, “Steward is advancing an action plan to strengthen its liquidity, restore its balance sheet, and put the necessary tools in place to continue forward as a key provider of healthcare services to our patients, communities, physicians, and employees.”
The Globe also reported on an internal memo that was even more blunt. "2023 was a tough year," it read. According to the article, Steward said, "its financial problems are due to rising interest rates and labor costs, an increasing Medicaid population, and difficulty collecting bills." Hence the influx of M&A money they are promising will arrive shortly.
Should we be encouraged that there is a market among investors for systems that face the litany of woes cited above? What is it the upside that the next round of funders is chasing? And can the infusion of this much-needed cash be done in a way that buys anything as long as the 14-year reprieve that these community hospitals have "enjoyed" since Steward 's initial founding on the remains of the struggling Caritas Christi system?
Perhaps a model for sustainability is being hatched in America's medical mecca. Or maybe it's just another exercise in plugging the leaking dam? The answers will certainly be worth watching for Bostonians and health policy wonks alike.
Office Manager at Elizabethtown Periodontics
6moWhat an amazing boon this will be for the community! Congrats on the award!