Rhode Island’s largest hospital system, Lifespan, on Thursday said that it reached a deal to buy two Massachusetts hospitals from the distressed Steward Health Care for $175 million.
The price for Saint Anne’s Hospital in Fall River, Mass. and Morton Hospital in Taunton, Mass., includes the land, building and improvements to the property as well as the hospitals’ operations, Kathleen Hart, a Lifespan spokeswoman, said in an email.
The purchase is expected to be financed with debt. The nonprofit Lifespan said it is also finalizing an agreement to receive “modest support” from Massachusetts for a limited time to support the hospitals’ operations.
If the sale is approved, Lifespan said, the collaboration and efficiencies such as a shared electronic medical records would benefit Saint Anne’s and Morton Hospitals.
“I am confident our team has the experience and know-how to rebuild the infrastructure of these two hospitals and operate them as successful and thriving not-for-profit organizations,” Lifespan President and CEO John Fernandez, said in a statement. Adding the two Massachusetts hospitals, he said, “creates a unique opportunity to build our regional healthcare organization that will benefit the health of the communities in both states.’’
Despite Steward’s financial distress, the two Massachusetts hospitals that Lifespan plans to buy are making money, Peter Markell, Lifespan’s chief financial officer, said in an interview Thursday. “They were generating enough cash to cover the rent and have additional cash after that,’’ Markell said. “So for us, [the purchase] made sense.”
Lifespan’s takeover of the two community hospitals is not expected to dilute the value of its Rhode Island operations, Markell said. “If anything, they might help.”
The purchase of Saint Anne and Morton Hospitals, he said, would add about $500 million – or roughly 17% – to Lifespan’s annual revenues.
The deal is expected to increase Lifespan’s market share in southeastern Massachusetts, where Markell said the company already serves about 29,000 people. The overall market share in the Bay State, he said, will still be “relatively small’’ but it will give the company a “beachhead to grow more.”
Saint Anne’s and Morton Hospitals’ administrative operations are largely run out of Dallas, where Steward is based, Markell said, so no layoffs are expected at the two hospitals. “Doesn’t mean we won’t look at certain things and things could happen down the road,” he said, “but we are not going in and thinking there will be significant headcount reductions.”
The sale is pending approval by state and federal regulators, as well as a federal bankruptcy court in Texas where Steward filed for Chapter 11 bankruptcy on May 6. Steward, a privately-held for-profit company based in Dallas, Texas, has been trying to sell off its assets in Massachusetts and other states to pay creditors.
The company confirmed its plans to purchase the two hospitals earlier this month.
Massachusetts Gov. Maura Healey announced the Lifespan deal on Thursday along with Lawrence General Hospital’s planned purchase of two other Steward hospitals: Holy Family Hospital in Haverhill and Methuen, Mass.
Another deal that has not yet been finalized is Boston Medical Center’s takeover of Good Samaritan Medical Center, the Healey administration said in a statement. The administration said it is also in the process of taking control of Saint Elizabeth’s through eminent domain, with the goal of turning it over to Boston Medical Center to keep the hospital open.
Meanwhile, WBUR has reported that Steward is closing Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, despite pleas from workers and residents.
Health reporter Lynn Arditi can be reached at larditi@thepublicsradio.org
