Hearing for Steward hospital sales delayed for fifth time as negotiations continue - The Boston Globe (2024)

Steward Health Care has again moved back a court hearing to ask a bankruptcy judge to approve the sale of its Massachusetts hospitals, the fifth delay in the past three months, as sales talks continue.

The hearing, which had been set for Friday in US Bankruptcy Court in Houston, was postponed by six days until next Thursday. Steward revealed the delay in an overnight court filing. As in the previous times it pushed back the date, the company gave no reason for the move.

But the parties involved in the hospital sales negotiations — Steward, bidders for the six hospitals, Massachusetts representatives, and Apollo Global Partners, a private equity firm that owns the hospitals’ real estate — have yet to overcome some long-running obstacles in the talks.

Steward, which filed for bankruptcy May 6, last month said it received no qualified bids for two other hospitals in the state, Carney Hospital in Dorchester and Nashoba Valley Medical Center in the north-central Massachusetts town of Ayer, and would close them by Aug. 31.

State officials on Wednesday evening were set to hold a public meeting in Devens about the closure of Nashoba Valley. A similar hearing in Dorchester Tuesday drew a raucous crowd, as communities are increasingly putting pressure on Governor Maura Healey’s administration to prevent the closures.

Preserving the six remaining hospitals has presented its own challenges. Among the issues holding up a resolution have been what to do about long-term leases on the property and the size of state transition funding packages for the buyers, according to parties briefed on the talks.

Two previous owners of the leases on the hospitals’ land and property, Medical Properties Trust and Macquarie Infrastructure Partners, stepped aside in early August, turning over the property to Apollo, their mortgage lender. While that streamlined the number of players at the negotiating table, the parties briefed on the talks say Apollo — a Wall Street giant that manages nearly $700 billion in assets — has taken a hard line.

Apollo has yet to come to terms with hospital bidders who want to either purchase the real estate, agree on a path to eventually buy it, or pay substantially lower rent. On July 31, federal bankruptcy Judge Christopher Lopez nullified a “master lease” requiring Steward hospitals in the state to pay annual rents topping $100 million a year through 2040.

Healey administration officials have been privately working with prospective buyers on transition funding packages that are expected to top $80 million a year for the next three years. But the buyers wouldn’t be able to meet Apollo’s demands on lease terms without even more money from the state, the parties briefed on the talks said.

The latest delay threatens the second phase of a nearly $30 million infusion of bridge capital state officials agreed to provide the Steward hospitals in Massachusetts, which are running out of money, to keep them operating until they can be transferred to new owners. The first tranche of $13.6 million was released to the hospitals last week.

State officials were set to release the second and larger tranche of $18.7 million Friday, but only if buyers of the hospitals had signed asset purchase agreements by then, a scenario that now appears unlikely.

The negotiations have focused on the sale of Steward-owned St. Elizabeth’s Hospital in Brighton, Holy Family Hospital with campuses in Methuen and Haverhill, Good Samaritan Medical Center in Brockton, Morton Hospital in Taunton, and St. Anne’s Hospital in Fall River.

In a filing with the bankruptcy court earlier this week, submitted by Principal Deputy Assistant Attorney General Brian Boynton, the US Justice Department objected to moving forward with the sales until Steward discloses the qualified bidders for the hospitals.

Those bidders have yet to be identified. Insiders have said at least four hospital systems in Massachusetts or neighboring Rhode Island have engaged in talks to acquire one or more Steward hospitals: Boston Medical Center, Lawrence General Hospital, Southcoast Health in New Bedford and Fall River, and Lifespan Health System in Providence.

Southcoast confirmed its interest in St. Anne’s Hospital in March. None of the other systems have publicly commented on their participation in negotiations, citing nondisclosure agreements required by Steward.

The company, which moved its headquarters from Boston to Dallas in 2018, also delayed its sales hearings for hospitals it owns in Arkansas and Louisiana until Aug. 22. A hearing on the sale of its 10-state doctors group, Stewardship Health, to Rural Healthcare Group, an arm of private equity firm Kinderhook Industries, is still scheduled for Friday.

Robert Weisman can be reached at robert.weisman@globe.com.