Steward Health Care’s Texas and nationwide sites share challenges

Steward disputes that local officials were blindsided. But the closure represents an increasingly familiar story for the hospital chain. The for-profit health system has shuttered a number of hospitals in recent years, and its financial woes have now put at risk services for thousands of patients in Massachusetts.

The Globe first reported in January that Steward — which operates nine hospitals in Massachusetts, serving thousands of patients from the Merrimack Valley to the South Coast — is in such grave financial straits that it may be forced to discontinue some services or close facilities. The company said Friday it has secured financing to keep its Massachusetts hospitals open for now, but concerns remain about the long-term viability of its sprawling operation here.

In other states, elected officials, health care workers, and local business leaders detailed poor communication from company executives, legal entanglements, and even supply shortages at some hospitals.

A Globe review found challenges across the company’s national footprint. Steward, which owns more than 30 hospitals in nine states and employs more than 40,000 people, has faced escalating financial difficulties for at least the past three years, public records show. Steward’s landlord revealed last month that the health system had failed to pay its full rent for months and would consider selling off some hospitals.

Citing poor finances and in some cases under-utilization by patients, Steward has already shuttered hospitals in recent years in Texas, Ohio, and Arizona. Another closure is scheduled in Beaumont, Texas, this month. Lawsuits filed by business partners have dogged the company in states including Florida, Ohio, and Texas, as well as Massachusetts. The company declined to comment on specific litigation but dismissed legal disputes with vendors as the “normal course for any large health system.”

Steward plans to close its rehabilitation hospital in Stoughton in April, and some in the health care industry fear more Massachusetts closures could follow — taking away much-needed services for at-risk populations.

Locals in San Antonio know that sort of sudden, devastating shock to the care system well.

“They waited until the last minute, when they knew that this population was so vulnerable already,” said San Antonio City Councilor Adriana Rocha Garcia. “The sad reality is that this was just another business that didn’t really care for people. They were more interested in profiting.”

A spokesperson for Steward defended the company’s dealings in San Antonio, arguing that “the issues and subsequent closing … were well known.”

But when asked about its overall financial well-being, Steward 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.”

“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 Steward spokesperson added.

After selling the real estate for its hospitals to Medical Properties Trust for $1.2 billion in 2016, Steward undertook a national expansion. Steward operated only in Massachusetts until 2017, when it purchased eight hospitals in Ohio, Pennsylvania, and Florida from Community Health Systems.

Later that year, it broadened its portfolio further when it acquired Tennessee-based IASIS Healthcare, which brought 18 hospitals in six states — Arizona, Arkansas, Colorado, Louisiana, Texas, and Utah — under Steward’s control. The company at the time celebrated becoming the largest private hospital operator in the country.

But more than six years later, Steward appears to be facing challenges across much of that empire.

In West Monroe, La., Steward’s 278-bed Glenwood Regional Medical Center was “almost shut down” late last year after the state health department found it was lacking basic medical supplies, said Louisiana state Representative Michael Echols, whose constituents rely on the hospital. Many patients were diverted to other hospitals, including nearby St. Francis Medical Center and Ochsner LSU Health, he said.

The hospital has been able to scrounge up enough supplies to pass muster with the state for now, Echols said. But the state Health Department remains on high alert, and is continuing to monitor the situation at Glenwood, he said.

“They’re compromising the health outcomes of the citizens of Northeast Louisiana based on the level of both supplies and adequate medical needs that are needed to meet that service delivery,” Echols said. “I am beyond extremely concerned.”

The Steward spokesperson said the company has been working with Louisiana state officials “on some areas of oversight they have identified to help us better serve our community.”

In Florida, Steward owns eight hospitals, including five purchased from Tenet Health Care for $1.1 billion in 2021. But a year after the sale, Tenet sued Steward, claiming Steward is insolvent and owes Tenet $18.2 million for providing data and IT services to those five hospitals. Steward disputed the accusations in court and claimed that Tenet actually owed it money.

The company’s financial troubles are affecting day-to-day operations, some health care workers told the Globe. Andrea Oliveros, a registered nurse at the Steward-owned Palmetto General Hospital in Hialeah, Fla., said that in the last few months, the hospital has frequently run out of critical supplies, including towels, blankets, syringes, and tape.

The supply problem “puts you behind,” Oliveros said. “You can’t perform your job.”

Asked about the Hialeah hospital, the Steward spokesperson said “we are confident we have the supplies needed to provide care to our patients.”

In 2020, Steward threatened to shutter its hospital in Easton, Pa., if it did not receive a $40 million bailout, the Wall Street Journal reported. The nonprofit St. Luke’s University Health Network ultimately purchased the hospital, saving it from closing during the early months of the COVID-19 pandemic.

In November 2019, Steward shuttered St. Luke’s Medical Center, a facility that had operated in Phoenix for a century. Former hospital CEO James Flinn said in a public letter announcing the closure that the closure was necessary because two out of three beds in the hospital were routinely empty; patients were choosing to go elsewhere for their health care needs.

Steward has not cited underutilization as a pressing challenge in Massachusetts. By contrast, hospitals here have been facing a capacity crisis, with crowded emergency rooms and full hospitals, largely because there aren’t enough staff at nursing homes and rehab facilities where patients would be discharged.

But elsewhere, Steward has cited the lack of patients as a major obstacle. Steward pointed to under-utilization as its reason for closing a campus of the Medical Center of Southeast Texas in Beaumont, Texas, this week. A spokesperson said the facility was “severely underutilized” and said all the care offered at the Beaumont facility will be accommodated at the company’s nearby and larger Port Arthur campus.

Kenneth Coleman, public health director for the city of Beaumont, said he could not speak to how widely used the facility was, but said he himself took his son there after he hurt his knee playing basketball. He predicted the closure “would definitely have an impact on the community.”

“That’s one less facility that citizens have access to,” he said.

Like their neighbors in San Antonio, some local officials in Beaumont said there was something to be desired in the way Steward made the announcement about the closure.

“This news just came out of nowhere,” Coleman said.

The Beaumont hospital was set to close on Friday. Coleman learned about the closure when the Globe asked to interview him Tuesday.

With a dry laugh, Coleman added, “it would’ve been nice for them to let us know.”

Jessica Bartlett, Catherine Carlock, and Thomas Lee of the Globe staff contributed to this report.

Emma Platoff can be reached at [email protected]. Follow her @emmaplatoff. Dana Gerber can be reached at [email protected]. Follow her @danagerber6.