State slaps Steward with $1,000/week fines

Chain refuses to turn over financial statements

State officials are starting to assess $1,000-a-week fines on Steward Health Care for failing to turn over to regulators the company’s audited financial statements, with the current tab standing at $12,000.

Steward, which is owned by the New York private equity firm Cerberus Capital Management, provides to the state fairly detailed information on the individual hospitals it owns but it has refused to hand over the company’s consolidated financial statement for 2013. Steward says it shouldn’t have to turn over the consolidated financial statement because the document includes information on non-hospital businesses that are not covered by state regulation.

State officials disagree and, after months of negotiations went nowhere, sent Steward an invoice for $5,000 in late November. Andrew Jackmauh, a spokesman for the Center for Health Information & Analysis, said the $1,000-a-week fines currently total $12,000.

Steward has provided its consolidated financial statements to the state twice in the past. The statements, which CommonWealth obtained through public records requests, are one of the few reliable sources of information on the company’s overall performance and its financial relationship with Cerberus.

The fiscal 2011 statement indicated Steward overall had a net loss of $56.9 million. In fiscal 2012, the loss narrowed to $33 million; at the time, a company spokesman said the loss was in line with the company’s business plan, but a year earlier a Steward attorney had forecasted “positive net income” in 2012.

Brooke Thurston, a spokeswoman for Steward, issued a statement Wednesday night saying the company’s consolidated financial statement contains “confidential information that as a private, investor-owned, tax-paying entity is not relevant.” She said confidential material includes investor information and data on non-hospital businesses and potential out-of-state acquisitions.

Thurston also said the state’s pursuit of Steward’s financial statements exceeds its oversight authority. “Steward has offered to provide CHIA the audited financials with confidential information redacted,” Thurston said. “When this was not enough, Steward offered to provide the redacted version for the record but to sit with CHIA privately and provide the full audit confidentially.”

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

The state’s fines come at a time when Steward is trying to shut down money-losing Quincy Medical Center despite promises to keep it open until 2017.