The audit concerns the Center for Health Information and Analysis, or CHIA. The independent state agency, in its own words, “provides objective analysis of the quality, affordability, utilization, and access to the Massachusetts health care system.”
“It's CHIA’s responsibility to raise the red flag and to provide oversight regarding the monitoring of these financial conditions. That is the responsibility of CHIA, and those services were inadequately provided, as CHIA did not appropriately monitor the financial conditions of acute care hospitals and health systems in Massachusetts," said State Auditor Diana DiZoglio. “During the audit period, they were made aware that six acute care hospitals were either going to be closing or discontinuing essential services during the audit period, which was from 2021 to 2023- But we found out that CHIA had not actually made any mention of these six acute care hospitals being at risk for closure or discontinuing essential services. A miss for CHIA. They did not complete any health system profiles for any of the eight hospitals owned by Steward Health Care during the audit period, and they did not assess potential fines of $1,613,000 for acute care hospitals and health systems that did not file financial reports by required deadlines.”
Texas-based Steward Health Care declared bankruptcy in May 2024, threatening the end of jobs and access to healthcare through the hospitals it owned in Massachusetts for thousands. The company’s abrupt, scandal-plagued collapse led to a scramble to find new operators for the facilities, which are largely in the eastern portion of the state. Some, like the Nashoba Valley Medical Center in Ayer, closed permanently.
“We did find that CHIA never collected audited financial statements from 10 acute care hospitals," the auditor continued. "Namely, Athol Memorial Hospital, Heywood Hospital, Morton Hospital, Nashoba Valley Medical Center, and Steward’s Carney, Good Samaritan, Holy Family, Norwood, St. Anne's, and St. Elizabeth’s. So, by not ensuring that acute care hospitals and health systems meet the financial reporting requirements, CHIA risks overlooking hospitals and health systems that are at risk of closing. And obviously, we saw some of the challenges that our hospital systems faced.”
For its part, CHIA tells WAMC that it “respectfully disputes” DiZoglio’s audit. In a statement, the agency founded in 2012 says the report “misleadingly references audited financial statements from ten hospitals under two healthcare systems (Heywood Healthcare and Steward Health Care) that were not collected during the audit period and corresponding penalties that were not imposed.”
CHIA says that Heywood could not issue an audited financial statement from a registered certified public accountant in fiscal years 2021 and 2022, and that it fined Steward multiple times for noncompliance in the face of its claim that the company did not have to provide financial data. It also took the company to court over the issue, with the Massachusetts Superior Court siding with CHIA in a 2023 ruling.
CHIA also disputes the figure of $1,613,000 of unassessed fines mentioned in DiZoglio’s audit, “as it does not account for CHIA’s discretion for reasonable extensions, Heywood’s inability to complete audited financials, nor the agency’s prior fines and active litigation with Steward.”
The agency maintains that it “used other data sources where possible, including standardized financial data collected by the agency, to fulfill its obligation to report on the financial performance of these systems, their hospitals, and physician organizations,” and that it has “been resolute in its position that hospitals must comply with all financial reporting requirements under General Laws and regulations, including providing audited financial statements.”
The Democratic auditor told WAMC that she attributes CHIA’s criticism of the report as “a lack of understanding regarding the specificity in [her office’s] findings.”
“CHIA deserves credit for those times where it did actually assess fines and call Steward Health Care forward to do the right thing, but that did not always occur, and that is what audits exist to identify,” Dizoglio said.
On the federal level, Democratic U.S. Massachusetts Senators Liz Warren and Ed Markey responded to the Steward collapse by excoriating company leadership and pushing for greater regulation of similar for-profit health care companies owned and operated by private equity firms.
