In Steward hospital fight, a former Mass. lieutenant governor has an awkward seat

The New York private equity giant playing a key role in the fate of bankrupt Steward Health Care’s Massachusetts hospitals has a prominent local figure on its board: former Lt. Gov. Kerry Murphy Healey.

Healey — no relation to the current governor — joined the board of Apollo Global Management in January 2022, according to public company filings. She served in the Romney administration from 2003 to 2007, then went on to hold other non-elected government roles and was president of Babson College.

Healey chairs Apollo's Sustainability and Corporate Responsibility Committee, according to a filing with the Securities and Exchange Commission, overseeing issues that could affect the company’s “business, strategy, operations, performance or reputation.”

Healey said she has had no hand in the Steward negotiations, which threaten to shutter at least two Massachusetts community hospitals. But her $246,000-a-year role on the board, plus her Apollo stock holdings, mean she has a financial interest in the company’s dealings with the third-largest hospital system in her home state.

Reached by phone, Healey told WBUR that while she serves on Apollo’s board, she has had “nothing to do” with the Steward talks. She declined further comment.

Steward declared bankruptcy in May and is negotiating the sale of dozens of its hospitals around the country, including five in Massachusetts. A bankruptcy judge has approved the closure of two Massachusetts medical centers: Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer. They are scheduled to shut down next week, over the protests of employees, patients and local politicians.

Apollo emerged as a central player in the sale negotiations earlier this month, when it took over the Massachusetts hospital properties from Steward’s landlords — Medical Properties Trust (MPT) and affiliates of Macquarie Asset Management. In a 2022 deal, Apollo loaned $920 million to those two entities, secured by the hospital real estate. (Steward originally sold the hospital properties to MPT in 2016 in exchange for cash, and agreed to costly long-term lease payments.)

Financial and political observers of the state’s battle with Apollo said this is an awkward spot for a former high-level state official like Healey to find herself in, but it’s not entirely unusual.

“Lots of these folks end up on corporate boards,” said John McDonough, a professor at Harvard University’s T.H. Chan School of Public Health. “It would be surprising if she were, in fact, in any way intimately involved in this.” He added, “I bet there's plenty of Massachusetts people who have some relationship with Apollo — maybe they don't have the profile of a former lieutenant governor.”

Mary Bugbee, a research director at the Private Equity Stakeholder Project, a watchdog group, said it's "peculiar" for a former elected official from Massachusetts to be on Apollo's board, "but I think these sorts of relationships are more common than we want them to be.”

Several people in political circles said if they were in the former lieutenant governor's shoes, they would feel compelled to reach out to Gov. Healey, or to help Apollo navigate the fraught Steward situation in a way that’s positive for Massachusetts. The governor’s office was not immediately able to say whether anyone in the administration had reached out to Kerry Healey on the matter.

Mary Ellen Carter, a professor at Boston College’s Carroll School of Management, said it’s likely Kerry Healey would recuse herself from the Steward matter, “because I think it would be hard for people to believe that she could act independently, in the best interest of Apollo, if she's got deep roots in Massachusetts.”

The Steward hospital talks have turned contentious. This week, Apollo rejected the state’s offer to pay $4.5 million for Steward’s flagship facility, St. Elizabeth’s Medical Center in Brighton. In announcing the offer, Gov. Healey expressed frustration with the lengthy negotiations, and said she plans to take the Brighton hospital property by eminent domain. Those proceedings are ongoing.

A letter from an Apollo lawyer to the state, obtained by WBUR, said under Massachusetts law, Apollo is entitled to “fair market value” for the 14-acre parcel, which it said has an assessed value of over $200 million. The company said there is “no realistic scenario” in which the fair market value of the property is $4.5 million. The letter also said Apollo would “exercise its constitutional and statutory rights to vigorously challenge” the commonwealth’s offer.

A spokesperson for Gov. Healey said Apollo should “stop playing games with people’s health care,” and said the state intends to continue the process of taking control of St. Elizabeth’s.

Massachusetts Sens. Elizabeth Warren and Ed Markey, both Democrats, wrote to Apollo this month asking the company to work in good faith to facilitate sales of the Massachusetts hospitals.

Apollo’s record of owning hospitals has come under scrutiny before, including last year from Iowa Sen. Chuck Grassley and Rhode Island Sen. Sheldon Whitehouse. Apollo owns 220 hospitals in 36 states, with about 75,000 employees, according to a report by the Private Equity Stakeholder Project.