Sale of St. Elizabeth's Medical Center Gets Green Light in Bankruptcy Court

A federal judge in Texas approved the sale of St. Elizabeth’s Medical Center in Brighton and five other hospitals on Wednesday after the hospital’s owner, Steward Health Care, went bankrupt earlier this year.

The approval of the sale to the nonprofit hospital Boston Medical Center will provide a lifeline to St. Elizabeth’s and end months of uncertainty after Steward, a Texas-based for-profit health care company, spiraled into a financial crisis over unpaid debts and chronic mismanagement.

It also assuages fears from hospital affiliates and local politicians that the hospital might be permanently shuttered. Another Steward-owned hospital in Boston, Carney Hospital, closed its doors last week.

According to the terms of the deal, St. Elizabeth's will sell its operating license to BMC for several million dollars. Massachusetts will then seize the hospital building and the underlying land via eminent domain before transferring it to BMC.

Boston City Councilor Elizabeth A. “Liz” Breadon called the judge’s Wednesday approval “the end of a very distressing chapter for the staff, patients and the wider community.”

“The acquisition by BMC is a new beginning,” she said.

The state will also provide another round of tens of millions in funding to ensure the hospitals can pay their bills and employees through the rest of the month. The Boston Globe reported last month that state officials also expect to pay up to $700 million to address staffing and infrastructure issues under Steward’s ownership.

Ellen MacInnis, a longtime nurse at St. Elizabeth’s, said that an influx of cash was necessary to improve the hospital’s poor physical condition.

“Things haven’t been upkept, we have broken stretchers and broken beds,” she said.

With “cracked floors and cracked tiles and breaking pipes,” she added, “there is a lot to be done.”

Since the financial crisis at Steward first came to light, state officials have adamantly said they would not consider a bailout of the flailing health care company. Still, the immediate stop-gap funding going to Steward — and the larger sums expected to flow to the hospitals’ new owners — show that the state will still end up paying a high price to cover the private company’s failures.

The deal’s parties remain at odds over how much, or even whether, Steward’s lenders and Apollo Global Management — which owns the St. Elizabeth’s property — should be compensated as part of the bankruptcy sales and state seizure. Under eminent domain, the state is required to provide “just compensation” to the owner of the property.

—Staff writer Jack R. Trapanick can be reached at jack.trapanick@thecrimson.com. Follow him on Twitter @jackrtrapanick.