Federal Court Approves 2 Massachusetts Hospitals Shutdown Amid Steward Health Care Bankruptcy

Bankruptcy Judge Christopher Lopez approved the shutdown of Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, both of which will cease operations by August 31.

A Federal Judge has authorized the closing of two Massachusetts hospitals operated by Steward Health Care.

US Bankruptcy Judge Christopher Lopez approved the shutdown of Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, both of which will cease operations by August 31.

Judge Lopez described the decision as “painful” but noted that Steward met the legal criteria for closing the facilities. “

To keep those hospitals open, based upon the evidence before me, threatens the entire hospital system in Massachusetts,” Lopez stated during a hearing on Wednesday, according to WBUR.

Financial Struggles & Closure Justification

Steward Health Care, based in Dallas, filed for Chapter 11 bankruptcy in May, sought to sell its 31 hospitals and associated physician group, Stewardship Health.

The health system announced last week that it would close Carney and Nashoba Valley due to insufficient funds and a lack of viable hospital bids.

Carney Hospital has faced significant financial losses, reporting a $14.7 million deficit in earnings before interest, taxes, depreciation, and amortization (EBITDA) from January to May.

Nashoba Valley Medical Center has also struggled, with a year-to-date EBITDA loss of $2.3 million. Both facilities operate at a loss and cater to a limited patient base.

According to court filings, Steward’s other Massachusetts hospitals have accrued over $63 million in EBITDA losses from January through May.

The remaining facilities include Morton Hospital in Taunton, Good Samaritan Medical Center in Brockton, Holy Family in Methuen and Haverhill, St. Elizabeth’s Medical Center in Brighton, and St. Anne’s Hospital in Fall River.

State Response & Future Prospects

Massachusetts officials have expressed disappointment over the closures but are working to manage the transition. Hugh McDonald, a state lawyer, emphasized that preparations have been made to relocate patients from Carney and Nashoba Valley.

“We have seen this coming. We have prepared for this. We are trying our very best to make sure, through cooperation, we will get these patients into safe facilities,” McDonald said.

Moreover, Governor Maura Healey has criticized the decision, attributing the closures to “greed and mismanagement” by Steward Health Care’s leadership.

Healey called on Steward to finalize sales for its remaining five Massachusetts hospitals to secure the $30 million in advance Medicaid payments offered by the state.

“These hospitals have long served their communities—their closures are about more than the loss of beds, doctors, and nurses. We want to assure the people of Massachusetts that we have prepared diligently for this moment and will take all available steps to help facilitate a smooth transition for impacted patients and employees,” Healey said.

Steward has indicated that it will assist patients and staff with the transition. The health system stated, “We have notified and are closely coordinating with the appropriate state and federal agencies on the closure process.”

Bankruptcy Proceedings & Sale Efforts

Steward's financial difficulties extend beyond Massachusetts. The health system recently canceled auctions for its hospitals in Ohio and Pennsylvania due to a lack of qualified bids.

Further, the system is exploring alternatives for these facilities and anticipates making announcements soon.

Additionally, potential buyers have emerged for hospitals in Arkansas and Louisiana, with bid deadlines extended as high-profile sales have faltered.

The closures are part of broader bankruptcy proceedings and efforts to sell assets amid significant losses. The state of Massachusetts is working to mitigate the impact on patients and staff as the health system navigates its financial restructuring.