A federal bankruptcy judge in Texas has ruled that Lifespan Corporation can pursue the acquisition of St. Anne’s Hospital in Fall River, Mass., along with Morton Hospital in Taunton, Mass., from Dallas-based Steward Health Care, which declared bankruptcy in May. The purchase is still subject to federal and state regulatory reviews. (Ken Castro/Rhode Island Current)
A Lifespan Corporation subsidiary has until the end of the month to close the deal to buy two Bristol County, Massachusetts, hospitals from their bankrupt owner, a federal bankruptcy judge in Houston ruled on Wednesday.
The Sept. 4 court order by U.S. Bankruptcy Judge Christopher Lopez came a week after Rhode Island’s largest hospital provider announced the deal to buy St. Anne’s and Morton hospitals for $175 million. The pair of hospitals in Fall River and Taunton, respectively, are among the casualties of Dallas-based Steward Health Care, which declared bankruptcy in May. In order to secure gap financing, the national hospital chain operator was under court order to sell off 31 hospitals nationwide, including eight in Massachusetts.
Lopez in his 371-page order approved the sale agreements for five Bay State hospitals to new owners, including the two poised to be taken over by Lifespan of Massachusetts.
The deals are still subject to federal and state regulatory reviews, including, for Lifespan, a potential review by the Rhode Island Office of the Attorney General . Massachusetts Department of Public Health and the Massachusetts Health Policy Commission must also sign off, according to Jessica Wharton, a Lifespan spokesperson.
“ We look forward to incorporating these two hospitals into the Lifespan system and are committed to providing exceptional patient care to the residents of both Massachusetts and Rhode Island,” Wharton said in an email Thursday.
Lifespan intends to pay for the pair of Massachusetts hospitals through debt financing. Partially redacted purchase agreements included in court filings show the bulk of the proceeds from the sale will be given to Apollo Global Management, the lender for the mortgages on the Massachusetts land and buildings. Of the combined $343 million sale value of all five Massachusetts hospitals, Lopez ordered $17 million of the proceeds must also be set aside, potentially to pay off Steward’s creditors, many of which objected to the sale in court filings.
Lopez on Wednesday also authorized another $42 million in gap financing from Massachusetts to keep the five hospitals afloat, $5.7 million of which is set aside for Morton and $3 million for St. Anne’s. This is in addition to the $30 million bridge loan already promised by Massachusetts Gov. Maura Healey for short-term transition costs, along with an expected $80 million annually for three years.
Lifespan, which employs 17,000 workers in Rhode Island, previously touted the deal as a way to expand its regional network, adding the 211-bed St. Anne’s Hospital or 144-bed Morton Hospital to its existing, 1,110 beds across five Rhode Island hospitals.
Another selling point: Massachusetts pays higher provider reimbursement rates than Rhode Island.
Lifespan is also poised to boost its balance sheet within the Ocean State through an expanded partnership with Brown University Health. The agreement, announced in June, includes a $150 million investment from Brown to Lifespan over the next seven years, alongside a pending name change to Brown University Health.
The court order also approves the sale of Holy Family Hospital to Lawrence Memorial Hospital, while Boston Medical Center can take over St. Elizabeth’s Medical Center and Good Samaritan Medical Center.
Two other Steward-owned hospitals in Massachusetts, Carney Hospital and Nashoba Valley Medical Center, closed on Aug. 31 because there were no “qualified bids” from prospective buyers. The Healey administration has planned a series of programs and interim measures aimed at helping hospital workers find new jobs and alternative healthcare options for residents.
Steward acknowledged receipt of an inquiry for comment, but did not actually answer questions on Thursday.
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