Will Steward’s Massachusetts hospitals stay open?

The fate of Steward’s eight Massachusetts hospitals has been the subject of debate for months. After confronting financial challenges that included a failure to pay full rent to its landlord, Steward has been trying to sell off some of those hospitals. Simultaneously, the system announced that it would sell its physician network to a subsidiary of UnitedHealth Group.

Those efforts became more muddled on Monday, when the national for-profit health system filed for Chapter 11 bankruptcy in an attempt to restructure the debt for its 31 hospitals. Ethan Jeffery, a bankruptcy attorney with Murphy & King who has extensive experience with health care insolvency, said early filings appear to indicate that Steward intends to sell its assets. Those it cannot sell it may have to close.

“Massachusetts is not unique, where they have hospitals in distressed communities that are the only hospitals providing services. No one wants to see them close,” Jeffery said. “At the same time, if the numbers don’t work, there has to be some solution.”

Patients won’t be abandoned through the process, Jeffery cautioned. While Steward will initially make decisions about its facilities, such plans will require court approval. Attorneys general in each state will be heard through bankruptcy to advocate for preservation of critical health care assets. Health care bankruptcies typically also have a patient ombudsman whose sole role is to look out for the interests of patients.

But hospitals will be assessed to see if they are financially viable, or if services needed to be scaled down to cut costs. One such complicating consideration is the fact that each hospital must make lease payments for the property it sits on, due to Steward’s sale of the real estate in 2016, Jeffery said.

Boston City Councilor Liz Breadon, whose district includes Steward’s St. Elizabeth Medical Center, noted that the state has set up a command center to help oversee care during this transition. Many emphasized too that for now, Steward’s operations remain intact and open. Local officials urged patients to continue to seek care at those facilities.

But the future of the hospitals remains a question mark.

“It’s going to be a long process,” Breadon said. “We may lose some hospitals in the process. I really hope that the state has a firm hand on the situation.”

The development is a massive departure from the early days of Steward, established in 2010 in part to rescue the struggling Caritas Christi system. Created in partnership with private equity firm Cerberus Capital Management, the system was seen as an experiment in low-cost health care.

In a news release, Steward blamed bankruptcy filing on a number of factors, from the delay in selling its physician group to insufficient reimbursement rates from government insurers.

For their part, state and federal officials blamed one factor: Steward management. The 2016 sale of the hospital’s real estate netted Steward $1.2 billion, but it subjected the facilities to multimillion-dollar rent obligations. In 2021, Steward paid out a $111 million dividend to equity owners, including chief executive Ralph de la Torre, a former heart surgeon, according to a lawsuit filed against the company by a California medical staffing firm.

“I don’t want to lose sight of the fact that this situation is rooted in greed, mismanagement, and lack of transparency on the part of Steward leadership in Dallas, Texas,” said Governor Maura Healey, at a press conference on Monday.

Senator Ed Markey said he wouldn’t let the founders of the health system escape blame and accountability.

“Dr. de la Torre, Steward Health Care, and Cerberus Capital Management will be remembered not for improving access to care or saving the non-profit hospitals they purchased, but for their unforgivable abdication of responsibility to the people they promised to serve,” Markey said in a statement.

Attorney General Andrea Joy Campbell said at Monday’s press conference that she takes seriously any effort Steward made to strip-mine the hospitals for profit, saying if such efforts violated the law, “I along with my team will do everything in our power to hold anyone accountable for any kind of wrongdoing.”

Even as local officials voiced concern about what might happen through the bankruptcy process, they welcomed the transparency and closure that would come from it.

“Ultimately, this is a step toward our goal of getting Steward out of Massachusetts. And it allows us to do that to protect access to care, preserve jobs, and stabilize our health care system,” Healey said. “Of course we can not guarantee that there won’t be disruptions or inconveniences.”

Robbie Goldstein, commissioner for the Department of Public Health, said as difficult as it is to hear about the bankruptcy, the state was prepared for this important next step.

“We understand that the idea of a hospital in bankruptcy may be unsettling,” he said at the press conference. “Yet this declaration of bankruptcy marks an important transition, resolving some of the uncertainties about how Steward will operate and moving us beyond speculation to begin the purposeful journey down the pathway toward resolution.”

While bankruptcy might result in closure or sale of some hospitals, it is perhaps less chaotic than the alternative, said David E. Williams, president of Boston consulting firm Health Business Group. The structured environment of a bankruptcy proceedings allows for longer transitions between operators, with the state likely to have more visibility into the finances of individual hospitals.

“There are often layoffs and could be service disruptions,” Williams said. “But compared with the existing trajectory, it’s not worse. It gives the opportunity to do things in an orderly fashion, and avoid making short term decisions.”

Even as the facilities themselves remain open, some employees have already begun to leave. Good Samaritan temporarily closed its Brockton cancer infusion center last month.

Some felt the state was still on uneven footing. Lora Pellegrini, president of the Massachusetts Association of Health Plans, criticized the state’s failure to assess its health care assets and determine which are critical.

“The state will have to look carefully at where some facilities could close and the availability of other facilities to take on that volume, and where [facilities are] critical,” she said.

Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett. Robert Weisman can be reached at robert.weisman@globe.com.