Steward Health Care has kept financial information secret for years. Now, it faces a demand

Update: As of 5 p.m. Friday, Healey administration officials said Steward Health Care had not provided all of the financial documents they requested, and they called for Steward to complete an orderly transition out of Massachusetts.

Steward executives said Friday evening that they are cooperating with state officials. They said they have secured a financing agreement for $150 million and are working to sell assets as part of a larger strategy to stabilize the company.

A long-running dispute between Massachusetts officials and Steward Health Care is coming to a head.

Massachusetts requires all hospital systems to disclose detailed financial statements every year. But almost a decade ago, Steward stopped complying with this rule, according to state officials.

Steward executives argued the state was overstepping by demanding confidential and proprietary details about a private company — and by releasing that information as public records to journalists.

Officials at the state Center for Health Information and Analysis, or CHIA, fined Steward, and the matter eventually went to court. Last year, Superior Court judge Catherine Ham ordered Steward to submit its complete, unredacted financial statements.

Steward appealed that decision.

Now, as Steward appears to be in grave financial distress, Gov. Maura Healey is ordering the company produce its documents by the close of business Friday. She has not specified how she will respond if Steward fails to meet the deadline.

Administration officials are demanding financial statements that have been reviewed by an independent auditor. Without an auditor’s notes, “the information Steward supplies is simply not reliable,” officials said.

“We need to understand all the dimensions and facets of this challenge,” Kate Walsh, state secretary of health and human services, said at a press conference at Steward’s Good Samaritan Medical Center in Brockton this week.

“We haven't received complete information, and we are particularly stymied in our efforts to understand the relationship of the hospitals in our state to the corporate structure,” she said.

Steward was founded in Massachusetts in 2010 with private equity backing and later expanded to include more than 30 hospitals across the country. It has seven acute-care hospitals in Massachusetts, largely serving older adults and people with low incomes who rely on the government insurance programs Medicare and Medicaid. Steward is in the process of closing a rehabilitation hospital in Stoughton, and is also the operator of Norwood Hospital, which closed after flooding in 2020 and has never reopened.

The company is behind on rent payments, according to its landlord, Medical Properties Trust, or MPT, and has failed to make payments to numerous vendors, according to court documents. Steward officials have been in talks with state and federal officials about the future of their local hospitals, as they look to exit the Massachusetts hospital market.

This week, Steward officials insisted they are cooperating with public officials and said they have shared tens of thousands of pages of data.

“We have played with our cards face up on these data requests, using teams of professionals to interact with multiple state officials and to gather and produce data into the night and over weekends,” Dr. Michael Callum, interim president of Steward’s New England region, wrote in a letter to the governor.

Callum said Steward executives hope to meet with Healey to discuss “the orderly departure of Steward from Massachusetts.”

State officials said Steward’s public disclosures so far have been insufficient. They noted that Steward is the only hospital company in Massachusetts that has failed to regularly submit financial details.

A company's audited financial statements include key figures about revenues, expenses and debt. Footnotes often contain important details about how executives count their money, said Nancy Kane, a hospital finance expert and professor emerita at Harvard T.H. Chan School of Public Health who has studied Steward’s numbers.

Kane said policymakers need this information to develop plans for allocating public dollars and protecting patients’ access to care.

“The state really does have a public health responsibility to protect communities,” she said. “We don't want to see Brockton and Haverhill and Dorchester and these markets where certain Steward hospitals are struggling lose access to services. You need to know how real the financial situation is and have as much lead time as you can get to be able to figure out what to do.”

Over the years, Steward submitted some financial information to the state but redacted key details, according to state officials. Some of Steward’s numbers also became public in filings from MPT, the real estate company that owns Steward’s hospital properties.

What is known about Steward’s finances isn’t good, Kane said: The company lost close to $1 billion in the years leading up to 2020, and had a negative net worth of $1.5 billion.

“It means they have way more debt than they have assets to pay it off,” she said. “And they're not generating enough cash from their business to pay back that debt.”

Members of Congress also are demanding answers from Steward about the company's financial situation and business plans.

“We have not had cooperation from Steward Health Care — despite their statements to the contrary,” said U.S. Rep. Stephen Lynch. “They have not been collaborative in terms of giving us the information that we need.”

Lynch spoke to reporters after visiting Steward hospitals in Norwood and Brockton this week. He said if the company fails to respond to requests for information, Congress could take action.

“We could probably issue subpoenas to get that information, or to pull officials from Steward Health Care before Congress,” he said.

Congresswoman Ayanna Pressley told WBUR’s Radio Boston on Friday that financial transparency from Steward is essential.

“I think every option has to be on the table,” she said, “though I think it is shameful that it could come to potentially a situation where we would have to subpoena this information.”