Lawrence General Hospital will absorb the Methuen and Haverhill campuses of Holy Family Hospital in the Merrimack Valley north of Boston. And to the south, Providence-based Lifespan Health System, soon to be rechristened Brown University Health, will gain a foothold in Massachusetts by taking over operations at St. Anne’s Hospital in Fall River and Morton Hospital in Taunton.
The preliminary sales come as two other Steward hospitals — Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer — are slated to close by Aug. 31 after Steward said they had failed to attract qualified bids.
Financial terms of the sales deals weren’t disclosed but are expected to be included in bankruptcy court documents in the coming week. After struggling to pay vendors and maintain operations at its hospitals in Massachusetts, Steward filed for bankruptcy on May 6 and has been working to sell off its holdings here and in five other states to pay creditors.
Healey announced the deals at a news conference Friday where she was flanked by Walsh and public health commissioner Robbie Goldstein. She excoriated Steward, saying the for-profit company, which had acquired the former Caritas Christi chain of Catholic hospitals in 2010, left a legacy of greed, mismanagement, and chronic underinvestment.
“Today, I’m pleased to say we’re closing the book on Steward once and for all in Massachusetts,” Healey said. “Good riddance and goodbye.”
As part of the deals, all of the hospital buyers will receive financial aid from the state to transition operations and upgrade facilities, especially BMC and Lawrence General, which treat large numbers of low-income patients insured by MassHealth, the state Medicaid program.
The Healey administration is providing $30 million in bridge financing to cover payroll and operating costs during the transition and helping to arrange more than $80 million a year in state and federal funding for advances or additional MassHealth payments over the next three years. Other funding sources are also being contemplated.
BMC, in a statement, said it was stepping up “to help mitigate a looming public health crisis in the region.” It noted that the sales still need to be finalized and approved by a federal bankruptcy judge.
Lawrence General chief executive Abha Agrawal said in a statement that she looked forward to “signing an agreement that will allow Holy Family Hospital[s] … to join Lawrence General Hospital to build a true regional healthcare care system in the Merrimack Valley.”
Jessica Wharton, a spokesperson for Lifespan, also underscored that the deals aren’t complete, saying the Rhode Island system “continues to work on finalizing terms” with Steward and its landlord.
The state will move to seize St. Elizabeth’s, Healey said, because despite “endless go-rounds,” it was unable to reach a lease deal with the owners of the hospital’s land and buildings, which Steward had sold in 2016. The company later paid a $111 million dividend to shareholders — most going to chief executive Ralph de la Torre, according to a lawsuit filed by a Steward creditor.
Earlier this month, the companies that own the real estate, Medical Properties Trust and Macquarie Infrastructure Partners, turned the properties over to their mortgage lender, New York-based private equity firm Apollo Global Management. But the hospital sales negotiations have remained deadlocked over leases that buyers would need for the property, with its owners demanding more than bidders could pay.
In a statement, Healey said the trio of firms — MPT, Macquarie, and Apollo — “have repeatedly chosen to put their own interests above the health and well being of the people of Massachusetts.”
“Enough is enough,” the governor said. “Our administration is going to seize control of St. Elizabeth’s through eminent domain so that we can facilitate a transition to a new owner and keep this hospital open.”
A spokesperson for Apollo declined to comment on the eminent domain plan. Property owners can fight an eminent domain taking in court.
The hospital sits on nearly 14 acres of valuable land in Brighton Center, and has an assessed value of just over $200 million, according to property records.
On Friday, the governor said she gave Apollo a take-it-or-leave-it last offer of $4.5 million for the property, which Healey said reflects its fair market value. She did not specify how the state was funding the seizure, saying that was still being worked out.
If the owner refuses, the state plans to file an order in Suffolk County to seize the property. The administration does not need the Legislature’s approval to use eminent domain. State staffers said they were not aware of another instance of Massachusetts using the tool to take over a hospital.
The potential transfer of St. Elizabeth’s to BMC was welcome news in its neighborhood. Anna Leslie, executive director of the Allston Brighton Health Collaborative, said she hoped the takeover would reinvigorate the hospital’s engagement with the surrounding community.
”We could be so much stronger in terms of public health preparedness and prevention, if we had a stronger relationship with such a large health care provider in our neighborhood…” she said. “I think they’ve just been functioning with one hand tied behind their backs, because of Stewart’s philosophy and financial focus.”
Eminent domain wasn’t feasible at Carney or Nashoba, Healey said, because those hospitals, unlike St. Elizabeth’s, didn’t have an operator willing to take them over. “That’s why those hospitals are set to close,” she said, “what Stuart did in running them to the ground.”
But many in the communities served by those two hospitals, as well as workers and patients, have blamed the Healey administration for not acting more aggressively to save Carney and Nashoba. In a statement Friday, state Senator Nick Collins, whose district includes Dorchester, said the governor’s “bold action” to save St. Elizabeth’s demonstrates the state has “the authority and resources to save our community hospitals.”
Healey acknowledged the losses that communities in Dorchester and Central Massachusetts face. “The news today is good, but not for everyone,” she said. “And as governor, I understand that.”
One major health care union on Friday praised Healey’s move to steer most of the Steward hospitals into better hands, but said it still hoped she could do the same to keep Carney and Nashoba Valley open.
“This is the exact kind of aggressive action that the health care workers of 1199SEIU have been demanding from our state leaders,” said Tim Foley, executive vice president of 1199, which represents 80,000 health care workers in Massachusetts. He called for “the same level of uncompromising commitment” to save Carney and Nashoba Valley .”
Steve Walsh, president of the Massachusetts Hospital Association, applauded the deals and said he hoped they would help to stabilize a state hospital system that had been bracing for the worst.
“We are highly encouraged to see that trusted health systems are on track to take over Steward’s Massachusetts hospitals and have every confidence in their ability to restore normalcy,” he said in a statement. ”In turn, we are hopeful that this process will help alleviate the pressures being felt by other healthcare facilities” across the state.
Shortly before Healey’s announcement, at a hearing in Houston, federal bankruptcy Judge Christopher Lopez approved a separate deal to sell Steward’s physicians network, Stewardship Health, to Rural HealthCare Group, an arm of buyout firm Kinderhook Industries, for $245 million. Roughly half of Stewardship’s 5,000 doctors work in Massachusetts.
At that same hearing, Steward attorney Ray Schrock said the parties had made “very significant progress” in negotiating the Massachusetts hospital sales but had yet to finalize deal. Schrock said he hoped asset purchase agreements could be signed as soon as Monday. After Healey announced her plan, a Steward spokesperson said the company had no immediate comment.
Lopez has scheduled a hearing next Thursday at which he’ll be asked to approve the sales.
Globe correspondent Camilo Fonseca and Alexa Gagosz of the Globe staff contributed to this report.
Robert Weisman can be reached at robert.weisman@globe.com. Jason Laughlin can be reached at jason.laughlin@globe.com. Follow him @jasmlaughlin.
