Steward Health Care is threatening to cut off medical record and billing services it continues to provide to its six former Massachusetts hospitals, demanding millions of dollars more each month. This alarming move has prompted the hospitals to warn of wide-scale disruptions, which could potentially force some facilities to close.
The new owners of these hospitals have been scrambling to address Steward's demands over the last month. This week, they filed motions in Steward’s bankruptcy case demanding adherence to their contract, which encompasses various software and technology services, including digital patient records for radiology, laboratory, pathology, microbiology, and pharmacy.
“If [Steward were to] cut off services... patient lives will be at risk,” stated a filing jointly submitted by Boston Medical Center, Lawrence General, and Brown University Health, each of which took control of Massachusetts hospitals from Steward amid its bankruptcy proceedings last year. They argued, “[We] cannot safely and effectively operate the hospitals without appropriate transition of electronic medical records and IT services, or without receiving revenues from payers, all of which would be significantly impacted if the [contracted] services cease.”
No justification was provided in court documents for the proposed higher charges, but the hospitals contend the increases are for the same services they were already receiving.
A hearing on the dispute, originally scheduled for Friday, has now been delayed to no later than February 14, 2025. Meanwhile, local hospital operators have been communicating with state officials about the situation. Kate Walsh, the Massachusetts Secretary of Health and Human Services, expressed her frustration, stating, “Steward has been a bad actor for a very long time and this is the latest move by them to try to get more money from their failed operations in Massachusetts.” She expressed gratitude to the new operators who have stepped up to continue delivering care to patients during this tumultuous time.
Despite this grim outlook, hospital operators remain hopeful. John Fernandez, chief executive of Brown University Health, described the request for additional payments as “unbelievable, unconscionable, and ridiculous.” Despite the challenges, hospital leadership is focusing their efforts on ensuring patients continue to receive care. “We hope... with the judge, we’ll be able to figure out some solution,” Fernandez added.
Alongside these statements, the new operators of the hospitals released a joint statement underscoring their dedication to maintaining quality patient care without the financial strain caused by Steward’s unilateral price hikes. They expressed their commitment to finding an amicable solution.
Steward Health Care, which no longer operates any hospitals in Massachusetts, has recently undergone significant leadership changes. Just last week, chief executive Mark Rich stepped down and was replaced by John Castellano, managing director of Steward’s consulting firm AlixPartners. Castellano has been serving as the chief restructuring officer since Steward entered bankruptcy.
Since the sale of its Massachusetts hospitals on October 30, 2024, the dispute highlights the complexity of the healthcare system as these medical institutions still remain tied to Steward's financially troubled for-profit health system.
Following the sale, immediate ownership was transferred to hospital operators to prevent shutdowns, with the operators unsure of how they would manage the switch to new systems. To simplify this transition, new operators had agreed to pay Steward for certain interim services. Earlier invoices showed Boston Medical Center incurring charges of $4.2 million, with Lawrence General paying $1.5 million, and Brown University Health billed $3.3 million just for January 2025.
Steward then began to demand additional payments. Court filings reveal the proposed monthly fee increases started at $1.5 million to Boston Medical Center, $1.1 million to Brown, and nearly $500,000 to Lawrence—marking over 30 percent hikes. The same increases were reflected in February invoices.
The situation extends beyond just the Massachusetts facilities. Healthcare Systems of America, which recently acquired eight Steward hospitals across Texas, Louisiana, and Florida, initially agreed on $10 million monthly payments for IT, staffing, and revenue management services. Yet, Steward has reportedly charged HSA additional fees, sparking disputes over financial agreements and threatening to terminate services entirely.
“Such drastic action would jeopardize patient safety and cause patients at any of HSA’s hospitals harm or death,” HSA’s initial filing claimed, though it was later withdrawn after Steward challenged its confidentiality. Amid increasing tensions, Steward’s attorneys, consultants, and creditors are engaged in fierce battles over dwindling funds to address the billions owed to them.
Meanwhile, the hospitals face enormous bills for services from Steward as they explore immediate alternatives. They find themselves trapped, reliant on Steward for many of the services supplied nationwide. The hospitals maintain they are working diligently to transition these services, but no companies are positioned to take over everything Steward currently manages without incurring significant time and costs. The filing warns, “Prematurely cutting off the [contracted] services would cause irreparable harm,” emphasizing the risk of possible hospital closures.
Jessica Bartlett can be reached at [email protected]. Follow her for updates on this developing situation.