Analysis reveals “red flags” for Steward’s finances
Steward Health Care System may own 10 hospitals in Massachusetts, but it’s on shaky financial footing. That’s according to
an audit an analysis of the finances for the hospital chain that wants to purchase Landmark Medical Center in Woonsocket.
The Department of Health has confirmed that Enterprise Management Corporation conducted
the audit the analysis for the state’s health systems planning. DOH is currently reviewing Steward’s application to buy Landmark.
the audit the analysis, Enterprise Management’s president Michael Kraten says he was unable to access Steward’s financial business plans, but according to the company’s “Consolidated Financial Statements” there are a number of “red flags” concerning Steward’s financial health. Among Kraten’s concerns-
- Steward’s estimates for its liabilities for the next year outweighed its assets by $43.6 million dollars.
- As of September of 2011, Steward’s pension plan was underfunded by $263.9 million dollars, less than 56% funded.
- Steward had a net loss of $56.9 million dollars during fiscal year 2011.
Kraten advises the Department of Health to get “detailed information” about Steward’s plans to address these financial problems before it concludes its review of Steward’s proposal to buy Landmark.
You can read the entire
audit document yourself here. Steward hasn’t yet responded to a request for comment.
UPDATE: Rhode Island’s Health Services Council discussed this
audit analysis at a meeting today but Steward representatives said they didn’t want to talk on the record with me about the report. The Department of Health didn’t allow Michael Kraten to talk with me either. I missed the beginning of the meeting where the audit the analysis was discussed, but there might be an audio recording. When I get a copy I’ll transcribe some of the relevant responses.
In Steward’s defense, this
audit analysis was based on financial information from September of 2011 when the hospital chain was in its infancy and leaning heavily on Cerberus, its parent company. That’s not the best time to judge an organization’s stability. It’s possible Steward is more stable now. The Services Council pressed Steward to respond to the audit’s report’s questions in writing if possible within the next 48 hours. Those responses are public record, so I’ll throw those up when they’re available.
UPDATE TWO: Apologies for characterizing this as an “audit”. Please see the comments below from Michael Kraten clarifying the nature of the financial analysis.