From groundbreaking to grave digging?

It was only two years ago, in November 2021, that then-Gov. Charlie Baker gathered with Steward Health Care officials to grin and grip shovels in a celebration of the start of construction of a new Norwood Hospital, after flooding damaged the old one. Now those same shovels could be put to a very different use for Steward in the coming weeks and months, metaphorically speaking, as some wonder if the system could be going under.

The new Norwood Hospital remains unfinished, and on January 19, the Boston Globe broke the story of the troubles at Steward, which is behind on rent payments and may have to sell off hospitals, after it had already announced the closure of a rehab hospital in Stoughton. That has set off alarm bells among health care regulators and elected officials, with Sen. Elizabeth Warren voicing concern about Steward’s “grave financial situation,” which has put patients and workers’ jobs at risk.

Boston Mayor Michelle Wu’s administration has been in contact with state officials and unions, as two of the system’s hospitals, St. Elizabeth’s in Brighton and Carney in Dorchester, are within the city’s borders. Congressman Stephen Lynch told WCVB last week that Steward is eyeing quick sales of sales of four of its nine Massachusetts hospitals, including Norwood, which is in his district. On WBUR, Gov. Maura Healey said no when asked whether a bailout of the for-profit system and its high-flying executives was being considered.

Those same executives, while running the state’s third-largest hospital system, repeatedly resisted allowing regulators to take a look at their financials. The information was needed, regulators say, in order to keep an eye on the stability of the entire Massachusetts health care market. A statement yesterday from the Health Policy Commission, a state watchdog office, said Steward corporate leaders’ refusal to provide legally mandated reports is “ongoing.”

Stuart Altman, who chaired the Health Policy Commission board for 10 years, from 2012 and 2022, said the agency never had a good sense of Steward’s operations during his tenure. “They stonewalled and then they moved,” he said, referring to the company switching its headquarters in 2018 from Boston to Dallas, where there was even less scrutiny.

With the help of a private equity firm, Steward had taken over Caritas Christi, a nonprofit hospital system affiliated with the Archdiocese of Boston, in 2010. They later created a complicated sales-leaseback arrangement in which Steward sold the land their hospitals were on to a real estate trust, and then paid the trust rent for operating the hospitals on the land. Part of the proceeds from the land sales went back to the original investors.

They also bought hospitals like Quincy Medical Center in 2011, before closing and selling off the property in 2016. “Their only concern was the bottom line,” Quincy Mayor Tom Koch said of the executives.

Altman said it was unclear to him how much of Steward’s financial struggles are a problem across its hospitals around the country, and how much is unique to its Massachusetts operation. Then there are the high salaries CEO Ralph de la Torre and other executives are pulling in, enough in de la Torre’s case to buy a multimillion-dollar yacht and donate large sums to federal and state lawmakers. Altman said he’d want a look at Steward’s cost structure, and where the money’s gone, before figuring out how to deal with de la Torre’s mess.

“With that said, the state rightly is concerned about the patients that are being treated by the hospitals,” he said. “That is a legitimate concern with the state. But how they deal with it is tricky.”

Altman said while Steward was based in Boston, he met de la Torre several times, and recalls him as smart, confident, and not inclined to pay attention to what others might tell him about health care. “Once they moved to Texas, I never saw him again,” he said.

Added Koch, who years later still feels misled by de la Torre about the company’s regulatory obligations to keep providing care as Steward moved to shut down Quincy’s hospital: “I don’t wish him ill but I was not impressed with his commitment to health care. He was hired to create an entity that would make people a lot of money.”

Spokespeople for Steward were unavailable for comment.

In Altman’s telling, the state wasn’t asleep at the switch; it was flying blind. “Once they left the state and moved into this new world where they sold their hospitals to a real estate trust and then invested it back, and bought other hospitals all over the country, I can honestly say we lost track of them,” he said.

As for what happens next, Altman said he won’t second-guess steps that state officials will take. “What’s most important is the patients need to be protected, not the investors who created that company,” he said.