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What’s going on with Steward?

March 8, 2012

Yesterday was a pretty busy day and I only had time to write a short news brief about Steward’s proposed amendments to its purchase agreement with Landmark Medical Center.

So, let’s really get into what these amendments are all about. By the way, Felice Freyer offers a good explanation in the Providence Journal this morning .

So, Steward Health Care System signed a purchase agreement with Landmark last year after a long, involved process in court. In the original document, Steward agreed to a two year moratorium on cuts in services at the hospital. Since then, a few things have changed.

Steward says it wants to investigate whether these changes will dramatically decrease demand for mental health and OBGYN services at Landmark. If they do, Steward wants the freedom to lift the two year moratorium on service cuts and get rid of those programs. Cutting services means cutting jobs too.

Steward’s spokesman says the for-profit company is looking at these services in particular, but the amendments to the purchase agreement don’t specifically mention OBGYN and Psych services. If the moratorium is lifted, Steward could technically cut anything. Same goes with an amendment related to lay-offs. Steward says it’s in there because of the potential elimination of the maternity and mental health services, but the language reads-

Buyer shall not be restricted or otherwise limited in any way from (i) implementing any further reductions in force of the Transferred Employees at either the Hospital or the Rehab Facility after the Closing Date or (ii) making employment decisions with respect to the Transferred Employees after the Closing Date as determined in Buyer’s sole discretion.

Translation- we would have the power to lay-off an unlimited number of employees. But Steward says not to worry. If it works out its issues with OBGYN and Psych services, it will eliminate those amendments. Still, there’s nothing in the actual document that makes that guarantee.

Steward also describes new reasons why it could potentially back out of the deal to buy Landmark.

  1.  The loss of any provider number
  2. The Buyer is prohibited by law from acquiring not for profit hospitals within the same calendar year of the Closing
  3. That changes in law or regulations impose additional burdens or obligations or requirements applicable to operations of for profit hospitals in the state…

Notice condition #2. Turns out THERE IS a law prohibiting for profits from buying more than one hospital in the span of not one, but THREE years. Steward is behind legislation that would get rid of that law. This amendment spells out what folks have already been whispering about- that Steward won’t buy Landmark unless that bill passes. Pretty high stakes for lawmakers.

And lastly, Steward says it won’t buy Landmark unless it’s reached a “mutually acceptable Memorandum of Understanding” with Thundermist Health Center on how Thundermist works with Landmark on everything from OBGYN to referrals for primary care, lab services, and specialist visits.  It also wants a “definitive agreement” with Radiation Therapy Services, the company that partners with Landmark on its Cancer Center.

For now, all of these amendments to the purchase agreement are just proposals. Superior Court Judge Michael Silverstein has the final say on whether they can be added to the original document. He’ll review the amendments in a hearing tomorrow at 9:30am.

In the meantime, what do you think? Are these amendments realistic expectations or do they give the for-profit company too much power? You can read the proposal here.

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