The company that controls Steward Health Care’s hospital properties in Massachusetts has rejected Governor Maura Healey’s proposal to save St. Elizabeth’s Medical Center by seizing the building and grounds for $4.5 million.
The company, a subsidiary of Apollo Global Management, said the offer was a fraction of the property’s estimated value of more than $200 million, and less than St. Elizabeth’s annual tax bill of $5.1 million.
In a letter to the Healey administration, Apollo attorney Joel Faller threatened to “vigorously challenge” the plan to take over St. Elizabeth’s through expropriation and transfer ownership to Boston Medical Center. He said the plan – and the state’s conduct – raises “numerous procedural and constitutional questions.”
If the state proceeds, the company wrote, “(Apollo) will have no choice but to exercise its constitutional and legal rights and take all necessary actions to protect the interests of investors to whom it has fiduciary obligations.”
Apollo officials are willing to negotiate a fair sales price for the St. Elizabeth property to avoid the time and expense of a legal dispute, the company said.
But Apollo’s rebuff opens the possibility of litigation that could further delay a resolution for one of Steward Health Care’s largest hospitals. The company’s opposition to Healey is the latest twist in the complicated and still-ongoing process that will decide the future of most of Steward Health Care’s hospitals after the company filed for Chapter 11 bankruptcy in May.
Nevertheless, Healey’s plan remains unchanged, her spokeswoman Jillian Fennimore said on Wednesday.
“Steward and Apollo must stop playing games with people’s health care,” she said by email. “We are moving forward with our plans to take over St. Elizabeth’s through expropriation.”
Apollo is the mortgage holder for Medical Properties Trust and Macquarie Asset Management, two companies that jointly acted as landlords for Steward’s properties in Massachusetts. MPT and Macquarie recently agreed to transfer the properties to Apollo to facilitate the sale of the hospitals.
All three companies have come under fire from the governor, who accused them of trying to maximize their profits while the health care of so many Massachusetts residents is at stake. Healey also accused Steward employees of greed and profiteering.
Last Friday, before leaving for the Democratic National Convention in Chicago, Healey announced tentative contracts for five Steward hospitals. She said Boston Medical Center would take over Good Samaritan Medical Center in Brockton and eventually St. Elizabeth’s. Rhode Island-based Lifespan would operate Morton Hospital in Taunton and St. Anne’s Hospital in Fall River. And Lawrence General Hospital, she said, would take over Holy Family Hospital in Haverhill and Methuen.
But the deals are still not finalized. And despite Healey’s announcement, a quick solution does not seem certain.
In court filings, Steward representatives accused their master landlord, MPT, of undermining the hospital’s sale process. And a group of Steward’s largest lenders argued they should be able to approve any hospital sale.
Meanwhile, two Steward facilities, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, are scheduled to close by the end of next week after Steward officials said they had not received any qualified offers to purchase the sites.
Steward officials declined to comment on Wednesday.
