TALKS ARE UNDERWAY within state government about establishing a third long-term care home for veterans, Veterans Services Secretary Jon Santiago said Tuesday.

At a Joint Ways and Means Committee hearing in Worcester, the secretary described the next budget cycle as being about the “organizational maturation” of the Executive Office of Veterans Services.

The office became a Cabinet-level office two years ago after governance and operational shortcomings that proved fatal during the pandemic, particularly at the state-run veterans’ homes in Holyoke and Chelsea. He described how things are going at the new Chelsea facility that opened in 2023 and the work underway to prepare for the under-construction new Holyoke home.

Santiago also raised the subject of a $200 million bond authorization that the Legislature, where he served at the time, included in a 2021 law to address long-term care for veterans in other parts of the state.

“There was a $200 million bond bill put forward to look into a third home, right, to increase that geographic equity. That’s something that we’re in a conversation with [the Division of Capital Asset Management and Maintenance], to look where across the Commonwealth we could potentially put a third home and what that would entail,” the secretary said.

The authorization to borrow up to $200 million in the 2021 law is specifically for “increasing geographic equity and accessibility related to the continuum of long-term care services for the Commonwealth’s veterans not primarily served by the Soldiers’ Home in Massachusetts located in the city of Chelsea or the Soldiers’ Home in Holyoke, including the establishment of regional or satellite veterans’ homes.”

The potential for a third state-run veterans’ home came up during a back-and-forth between Santiago and Rep. Russell Holmes of Boston, who asked the secretary about the diversity of the resident veterans served at the state-run facilities.

“It always feels like the Chelsea and the Holyoke homes feel like they’re local, they’re for local people. That’s just historically how they’ve felt; people in the west thought it was for them in the west, people in the east thought Chelsea was for the east. And as you grow from 117 beds, it sounds like, to 234 in Holyoke. And then as you now opened up Chelsea, do you have an answer on diversity of the residents who’s living there?” Holmes asked.

The representative said he was particularly interested in knowing how the state plans to make the additional beds that will come online in Holyoke available and what outreach will be done to make sure all veterans know their options.

“My understanding is, historically, it’s kind of been, you know, who you knew helped you get in. I hope we’re eliminating all of that as a part of this new process,” Holmes said.

Santiago said he “completely agree[s]” with Holmes about the way the Chelsea and Holyoke homes have been viewed. He said the “vast majority of residents there are white male” and told Holmes that while the “current mechanism is a ‘first come, first served’ ” method of accepting new veterans to the homes, it’s something he wants to look at it as part of a 2030 strategic plan.

“Part of that is looking into how we make sure veterans who are underserved, irrespective of their race, maybe, or their gender, are cared to. We have 25,000 women veterans across the commonwealth. Traditionally, they have not gotten the services, respect, that they have fought for and that they have earned,” he said. “And so we’ve changed our management, we’ve changed our programs and policies to better address that, and we look forward to doing it with the veterans of color as well.”

If the state is going to establish a third home, Rep. Kip Diggs of Barnstable said it should be on or near Cape Cod.

“We have 19,000 veterans on the Cape … and what’s important to me is if that third spot, maybe we can get it closer to the Cape. Because, honestly, it’s all about taking care of my area and making sure — you know, our veterans have done so much and asked for so little,” he said. “So I think it’s something that’s just so poignant and so necessary that we bring something down towards the southern part of Mass.”

The secretary responded briefly to point out the “significant cost” that would be associated with any potential third facility. Others, including Sen. John Velis of Westfield, have previously mentioned that conversations about additional veterans facilities were taking place.

Lawmakers dug into a variety of topics with Santiago during their time for questions. Sen. Kelly Dooner of Taunton put a pitch in for finding a way to partner with a nonprofit to repurpose parts of Taunton State Hospital for veteran housing, Sen. Michael Brady of Brockton wanted to know about the impact so far and outlook for additional federal cuts at the VA, Rep. Judith Garcia asked about veteran needs that are not met through the state budget appropriation, and Sen. Ryan Fattman pressed officials on the need for better tracking of suicides among veterans here and especially among Mass. National Guard members.

Santiago said Healey’s budget proposes $206 million for his secretariat, $7.6 million more than the current state budget. He said the budget proposal includes an increase of $13.6 million to veterans benefits and annuities, as well as $80 million to support the state-run veterans homes in Chelsea and Holyoke.

“This overall allotment helps us maintain critical staffing, supports infrastructure improvements, allows us to operate and maintain our two veteran cemeteries in Winchendon and Agawam, and provides health care and supportive services to veterans at the long-term care and independent living facilities in Chelsea and Holyoke,” Santiago said. “We are particularly proud of the transformation happening at both veteran homes over the past two years. They both continue to show progress when it comes to modernization and quality of care, ensuring that Massachusetts veterans receive the highest standard of care.”

Chelsea Veterans Home Superintendent Christine Baldini told lawmakers that the implementation of electronic medical records was a “significant milestone” for her facility.

“This is transforming our health care operation. By replacing traditional paper records with a secure, integrated, digital platform, we have enhanced accuracy, reduced administrative burden and improved overall efficiency. Real-time access to resident information empowers the care team to make informed decisions more quickly, and fosters streamlined communication across all disciplines,” she said.

Holyoke Superintendent Michael Lazo said his team is preparing to expand into the new 234-bed facility the state broke ground on in August 2023. He told the Ways and Means Committee that the larger and modern facility “will require approximately 40% increase in workforce spending, both clinical and non-clinical roles.”

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A REDACTED COPY of Treasurer Deborah Goldberg’s decision to fire Shannon O’Brien as chair of the Cannabis Control Commission was filed in court this week, but the treasurer is asking a skeptical judge to keep troves of other information related to the long-running saga out of public view.

Goldberg fired O’Brien in September 2024 after considering about 19 hours of meetings held last summer as well as two outside investigations, various documents, case law and policies. The treasurer had not released any document outlining her decision, but said she fired O’Brien because she “committed gross misconduct and demonstrated she is unable to discharge the powers and duties of a CCC commissioner.” O’Brien is contesting her firing and has appealed it through Suffolk Superior Court.

The treasurer laid out four instances of “conduct in which you engaged that may warrant your removal” in a letter to O’Brien last spring. That included claims that O’Brien “made rude and disrespectful comments, remarks, statements, and presumptions to Commission staff and colleagues that were or were perceived to be race-based or, at minimum, to be racially, ethnically, and culturally insensitive;” made comments about the parental leave of former CCC Executive Director Shawn Collins, a one-time Goldberg deputy, “that deprived him of assurances that he could exercise his rights to take additional job-protected parental leave, and those statements, combined with other conduct … created a hostile work environment;” and “communicated with and about the Commission’s Executive Director in a threatening, abusive, and humiliating manner that, in combination with the totality of behavior described … constituted bullying.”

The redacted version of her removal decision shows that Goldberg found nearly all of the claims to be creditable and concerning.

“I am removing Chair O’Brien as a commissioner because the sum and totality of her conduct described below amounts to gross misconduct, and because many of the instances described below individually constitute gross misconduct,” Goldberg wrote early in the decision. “Chair O’Brien also has demonstrated through her actions that she is unable to discharge the powers and duties of a commissioner.”

It also details a pattern of O’Brien making indelicate comments, including some that some people present viewed as being based in ethnicity or demographic background. Goldberg’s decision says those comments were made to members of the CCC, to one of the investigators interviewing O’Brien about a separate allegation of racial insensitivity, and during one of the hearings on her dismissal last year.

O’Brien is herself a former state treasurer and was the Democratic Party nominee for governor in 2002.

On Wednesday, the treasury filed a five-volume administrative record of the case with the court. The first volume consists of the redacted version of the 83-page explanation Goldberg wrote of her decision to fire O’Brien, a public document that the attorney general’s office provided at the News Service’s request Thursday morning. The treasurer asked the judge to impound the four remaining volumes, which are thought to contain transcripts of testimony given in closed-door hearings, investigative reports, emails detailing employee complaints at the CCC, written testimony submitted in connection with the hearings, and more.

A spokesman for O’Brien said Goldberg’s attempt to keep thousands of pages of information related to O’Brien’s firing private “is making a mockery of the public’s right to know.”

“When the Treasurer insisted on a secret hearing, Shannon O’Brien objected because she predicted that Treasurer Goldberg would make totally biased findings and conceal the evidence that proved the opposite. This is exactly what Treasurer Goldberg has done. She has released her partisan and unproven findings and concealed the evidence,” Joe Baerlein said on O’Brien’s behalf. He added, “While transparency is spoken of as a needed remedy for state government, the Treasurer continues to hide the facts, creating mischief and hoping no one will notice her behavior. The public should take notice of the State Treasurer’s proclivity to operate in the shadows of darkness.”

Goldberg’s office referred questions about the filing to Attorney General Andrea Campbell’s office, which is representing Goldberg in the suit. Campbell’s office said volumes two through five of the administrative record are subject to a provisional motion to impound and as such are not available to the public.

Assistant Attorney General John Hitt, who has argued on Goldberg’s behalf in court, wrote in a filing late last year that Goldberg “acknowledges that this case … is of great interest to the public, and the public has a right to know as many of the facts and circumstances regarding the Treasurer’s decision as possible.”

“The Treasurer supports public disclosure of as much as the underlying record of proceedings before her as is possible,” Hitt wrote.

Judge Robert Gordon last month struck from the record the entirety of a 1,733-page appendix O’Brien filed alongside her appeal in an attempt to put information about her firing into the public realm. But the judge made clear in his ruling that he was skeptical the administrative record Goldberg was to file would contain large amounts of personal information that is protected under the “narrow definition” being used.

“Here, to the extent the Treasurer seeks to impound any portion of the administrative record, she must do so by accompanying motion in accordance with Standing Order 1-96. In such motion, the Treasurer must identify the specific information she seeks to withhold, and, as to each piece of information so referenced, she must cite the specific statutory or common law basis of the claim that the material is protected from public disclosure,” the judge declared.

But the motion Goldberg filed to impound most of the administrative record instead seeks more of a blanket impoundment without specifying any specific information to be withheld.

“Significant portions of the administrative record here reference such protected information concerning Plaintiff and third parties. The confidential information cannot feasibly be segregated or redacted from the voluminous record without extraordinary effort. Doing so would render the administrative record confusing and unusable,” the filing from Goldberg says. It adds, “Additionally, the effort and time that would be required to provide the notice to third-party data subjects identified in the administrative record and the opportunity for those third-party data subjects to potentially seek judicial relief … would likely slow down prompt judicial review of the final decision at issue here.”

An affidavit filed by Hitt this week said the administrative record is more than 2,940 pages long, plus audio and visual files.

“Attempting to do pinpoint redactions of the protected information is hampered by the fact that many of the references are not easily captured by PDF redaction software and would require hand review and re-review to ensure that all protected personal data had been removed from the record,” Hitt wrote.

Baerlein said O’Brien “looks forward to her day in court and the opportunity to finally and publicly clear her good name.” No future hearing had been scheduled as of Thursday afternoon.

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SEPTEMBER WAS THE BEST month yet for legal sports wagering operators since Massachusetts legalized betting in early 2023, with about $73.5 million in taxable revenue collected by sportsbooks and mobile betting apps last month, the Gaming Commission said Tuesday.

The $73.49 million haul for operators topped the $71.13 million in revenue generated in January 2024, according to data from the Gaming Commission. Bettors set their own record last month by putting about $678.75 million on the line as wagers on September sporting events. That unseats the previous record monthly handle of $658.7 million wagered on events in December 2023.

About 97 percent of the money wagered last month was bet via one of the seven mobile or online betting platforms operating here, with DraftKings taking more than half the bets. And more than 98 percent of the sports wagering revenue generated last month was produced by online operators.

The commission said sports wagering activity generated about $14.63 million for the state last month. Revenue from online wagers is taxed at a rate of 20 percent while revenue generated from wagers places at the physical sportsbooks at Plainridge Park Casino in Plainville, MGM Springfield, and Encore Boston Harbor in Everett is taxed at 15 percent.

On the casino side, the state’s three traditional gambling centers generated a touch more than $92 million in gross gaming revenue last month, which works out to about $26.24 million in taxes for the state. Combined, commission licensees generated more than $165.55 million in revenue for themselves in September, with a bit more than $40.87 million due to the state.

Since legal gambling began here in 2015, the state has collected $1.878 billion in taxes and fees from casino-style gaming. It has also taken in $187.88 million in taxes and assessments from sports wagering operations that became legal in 2023, the commission said.

Starting next month, the Gaming Commission will report monthly casino and sports betting revenues on the 20th of each month (or the next business day) rather than the 15th of each month. Officials said the change is to give the commission’s finance department more time to turn around the reports that operators must file with the commission by the 15th of every month.

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IT’S BEEN BEACON HILL’S favorite buzzword for the last few years and “has been kind of discussed to death,” as one policy expert put it, but a discussion among business leaders last week put a fine point on the complexity of the competitiveness conversation.

“There’s implications across the entire spectrum and I think that it’s not one thing … it’s this tsunami of little things that are having the biggest impact,” Sara Fraim, CEO of the Massachusetts Technology Leadership Council, said Wednesday during an event co-hosted by the Greater Boston Chamber of Commerce and the Massachusetts Taxpayers Foundation.

In the post-pandemic environment of weaker links between employment and residency and amid economy-wide cost pressures, Massachusetts and other states have put a particular emphasis on marketing themselves to both businesses and workers. Complaints about the high cost of living, traffic, unreliable transportation, and the business and tax environment carry even greater weight with policymakers at a time when it’s easier than ever for people to relocate.

But asking what it means to be competitive as a state and what Massachusetts should do to improve its standing will produce a wide variety of answers. Fraim said the “lens is so different” among the different tiers of the tech industry she speaks with, from startups to large enterprise companies. The people behind startups, for instance, generally want to stay in Massachusetts.

“But they have a hard time. They can’t afford rent — to live in or to work in — and they can’t afford to hire because they can’t afford the salaries to attract people so they can come and live here. … And then you talk about sort of that middle — those are people that are grounded here — they have their kids here, education, the social aspects of what makes Massachusetts amazing — they stay, [but] they can’t hire here,” she said.

“At the enterprise level,” Fraim added. “I had a dinner with several CFOs last night and what surprised me is that the surtax, the millionaire tax, came up in conversation — again — but with real implications. Somebody was saying that more than half of their leadership team, out of 11 people, VPs and up, six of them have left.”

Jane Steinmetz, the managing principal of EY’s Boston office, said it’s the “complexity” of the state’s competitiveness picture and the breadth of potential policy prescriptions that stands out to her.

“It’s not one factor that’s going to be the silver bullet that makes Massachusetts competitive vis a vis other states. It’s really going to be multifaceted,” she said. “So I believe that if we’re going to be competitive, we’re going to have to come up with solutions that really span the spectrum of the issues that help to retain our low-wage, middle-income and high-net worth individuals, that helps to retain and attract entrepreneurs, small businesses, and our large employers. And there’s just different factors that are going to come into play.”

The Mass. Taxpayers Foundation had that complexity in mind when it produced its new Massachusetts Competitiveness Index, a report released last month that aims to take a data-driven look under the state’s hood to help inform actionable public policy changes, said president Doug Howgate.

Howgate said the topic of competitiveness “has been kind of discussed to death,” but that much of the analysis isn’t all that constructive for “doing something about making sure Massachusetts continues to be competitive, continues to be strong in the areas that we’re historically strong at, and gets better in new areas.”

He said he hopes the index, which MTF plans to update annually, will help policymakers “find things here that start to connect to policy levers Massachusetts may have in the years going forward.”

When moderator and Greater Boston Chamber head James Rooney asked the panelists to give one, two, or three issue areas the state should tackle soonest, Fraim was quick with an answer.

“It’s got to be housing, like one, two and three,” she said. “It really does have to be housing, because if people can’t afford to live here and they do have the option to go someplace else, they will.”

Steinmetz said she has four kids going off to college “and all I hear is southern schools.” She said a recent Wall Street Journal article pointed out that a lower cost of living and “fun on social media” are helping fuel interest in schools in the south.

“But what really struck me is it says a lot of students are looking to southern schools. Two-thirds stay, so not only do we have this phenomenon going on with southern schools, two-thirds stay because of jobs and lower-cost housing,” Steinmetz said. “So we have to fix the housing problem so that they want to come back here and they can afford to come back here.”

Transportation also got significant attention during Wednesday’s event. Howgate noted that while financial issues like the cost of housing and paying taxes in Massachusetts are important, things like commute time have become costs that businesses and workers take into account more and more in the post-pandemic world.

“When you no longer have to be in the office every day, the fact that in Massachusetts you’re likely to be stuck in traffic for longer than you are in other places, that’s going to be a competitive disadvantage for Massachusetts,” he said.

Rooney, who has been involved in transportation policy for decades and also has been one of the state’s leading marketers as the head of the chamber and in his last job running the Mass. Convention Center Authority, told the audience that the Bay State’s traffic is a weakness that other states try to take advantage of.

“When I was in North Carolina, I asked the person who’s in charge of economic development for the state, ‘you know, what do they say about Boston and Massachusetts when they’re competing against us for something?’ And the guy didn’t hesitate, and he said, ‘I tell them about your commute time and traffic and congestion,'” Rooney said. “So having been in the business of competing with others, it’s not just telling your story. You weave in a little bit about your competitors too, and that’s what they say about us.”

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STATE TAX COLLECTIONS in September rose slightly compared to last year but lagged projections, coming in about half a percentage point below the administration’s expectations for a significant revenue month.

The Department of Revenue said Thursday that it collected $4.518 billion in September — $331 million, or 7.9 percent more, than what was collected during September 2023, but $29 million, or 0.6 percent, below the monthly benchmark. And the department said a “temporary, one-time event in sales and use tax” accounted for $54 million of the year-over-year increase last month, without which last month’s revenues would have been $83 million below the benchmark.

September “is a significant month for revenues because many individuals and corporations are required to make estimated payments,” DOR said, adding that it generally produces about 10 percent of the state’s annual tax revenue.

At the quarter pole of fiscal year 2025, state government has collected approximately $9.826 billion in tax revenue. That’s $541 million, or 5.8 percent, more than actual collections over the same period of fiscal 2024, but still $44 million, or 0.4 percent, below the year-to-date benchmark. Without September’s one-time payment, DOR said, year-to-date collections would be $98 million below benchmark.

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TREASURER DEBORAH Goldberg fired Cannabis Control Commission Chair Shannon O’Brien on Monday, her office confirmed, a removal that seems likely to kick the yearlong drama back into the courts.

In a statement, Goldberg said she decided to fire O’Brien after carefully considering more than 20 hours of meetings held earlier this year as well as various documents, case law and policies. Goldberg said she fired O’Brien because she “committed gross misconduct and demonstrated she is unable to discharge the powers and duties of a CCC commissioner.”

“I do so with deep regret because she has a long history of public service, and when appointed I anticipated she would lead the Commission capably and in an appropriate manner,” the treasurer said. “I expect my appointee’s actions to be reflective of the important mission of the CCC and performed in a manner that incorporates the standards of professionalism required in today’s work environment.”

Goldberg plans to name a new acting chairperson for the CCC soon, her office said.

Max Stern, a lawyer from Todd & Weld who represents O’Brien, said the firing of O’Brien “whitewashes the unequivocal evidence that would lead any reasonable and fair fact-finder to conclude that there are no grounds for removal and would immediately reinstate her to steer the rudderless the [sic] CCC shipwreck.”

After appointing her to the top job in 2022, Goldberg suspended O’Brien, a former state treasurer and the Democratic Party’s 2002 nominee for governor, with pay ($196,551 annually) last September.

Goldberg’s statement did not provide specific examples of O’Brien’s alleged misconduct or inability to discharge her duties as chair of the CCC. Her office declined to provide a copy of any letter or notice outlining the rationale for the firing.

The treasurer had previously given two justifications for O’Brien’s suspension and possible firing: that the chairwoman is alleged to have made racially insensitive remarks and that she mistreated former CCC Executive Director Shawn Collins, a former Goldberg deputy. O’Brien denied the allegations against her and in the fall sued Goldberg.

“All of this came about as a result Obrien’s [sic] effort to rectify the dysfunction the agency, for the very reason she was appointed by Goldberg.  This precipitated a furious backlash, by the persons who felt threatened by her new broom including, in particular, Shawn Collins, the close friend of Goldberg and her Deputy Treasurer, who they had installed as the Executive Director and their man in the CCC,” Stern said. “The kiss of death for O’Brien was when she told Goldberg that her mentee, who had proved incapable of managing the agency, might have to be let go.”

Stern said that Goldberg “credited every complainant – including those who never testified, even if anonymous” during closed-door hearings held earlier this year and found no facts in O’Brien’s favor. He said the treasurer “altogether discredited” two people who testified live on O’Brien’s behalf: former CCC Chair Steven Hoffman and current CCC Commissioner Kimberly Roy.

O’Brien’s lawyer also said that Goldberg and her general counsel “refused to testify themselves and to produce relevant documents, despite acknowledging they possessed relevant information only known to them.”

“But the Treasurer should understand that the sunlight is the best disinfectant, and Chair O’Brien’s pursuit of truth and justice for the Commonwealth and CCC will prevail,” Stern said. O’Brien’s team did not directly answer when asked if the former chairwoman plans to contest the firing in the courts.

The rationale behind Goldberg’s decision to fire O’Brien could be the basis for a legal challenge.

When Superior Court Judge Debra Squires-Lee late last year ruled that Goldberg could proceed with the meetings that were required before she could fire O’Brien, she specifically pointed out that she made no determination as to O’Brien’s claims that the reasons Goldberg has given for her suspension and potential firing “do not rise to the cause standard contained in the statute but reflect mere policy disagreements or disputes over personnel management or other operational matters.” Appeals Court Judge Rachel Hershfang echoed that sentiment in February.

“[T]he arguments must be pressed and resolved first by the Treasurer and then, if O’Brien is unsuccessful, in an action for certiorari review,” Squires-Lee wrote. “Put elsewise, it is premature and inappropriate for this Court to resolve on this record whether the bases for removal … satisfy the statute as the Treasurer has yet to take final action.”

The CCC has been without a dedicated chairperson since O’Brien was suspended last September and has been without an executive director for nearly as long. Collins, the only administrative head in the CCC’s history, went out on parental leave last September and resigned in December before returning. The remaining four commissioner have repeatedly butted heads over who should perform the chair’s duties in the meantime and also stripped Acting Executive Director Debra Hilton-Creek of much of her expanded role months after selecting her for it.

Inspector General Jeffrey Shapiro pleaded with lawmakers to appoint a receiver to run the “rudderless” agency. The Legislature declined to go that far, but a key lawmaker said in July that the House “recognizes the need for clarity in structure and accountability at the Cannabis Control Commission” and “foresees a legislative path forward addressing the sources of concerns about the CCC’s administrative function.”

Rep. Daniel Donahue, the Worcester Democrat who chairs the Cannabis Policy Committee, said his committee will hold public hearings throughout the fall “in an effort to engage all interested parties in identifying the best path forward.”

“Further, the Committee has identified broader opportunities for reconsideration, including appointment and removal powers, as well as the structural model of the agency itself,” Donahue said.

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A US BANKRUPTCY COURT judge on Wednesday approved the sale of six Steward Health Care hospitals in Massachusetts, the most significant milestone yet in a saga that has commanded state government’s time, attention, and money, and will reshape the health care landscape in the eastern part of the state.

Judge Christopher Lopez made the decision after hearing arguments Wednesday morning, including around an objection that key lenders to the bankrupt company filed to the proposed sales. The judge said he would approve the sales, though he still wants Steward and the lenders to iron out differences around how a certain $17 million in proceeds is divvied up among creditors.

“This sale needs to happen, and it will happen,” Lopez said from the bench in Houston, Texas. He added, “What I am saying is you’re going to be authorized to sell it, but I’m going to withhold $17 million bucks, which is the funding shortfall. I’m going to withhold it from the other entity. They can get paid all the other money, but we’re going to take $17 million bucks, and I’m going to figure out who gets it.”

The judge said his decision to hold aside some of the sale proceeds to still be allocated “should not hold up these sales” and that he would have a ruling well before the targeted transaction close date of September 30.

Approved was Steward’s plan to sell St. Anne’s Hospital in Fall River and Morton Hospital in Taunton to Lifespan for $175 million; the Holy Family Hospital facilities in Methuen and Haverhill to Lawrence General Hospital for $28 million; and Good Samaritan Medical Center and St. Elizabeth’s Medical Center to Boston Medical Center for as much as $140 million. Steward closed its other two hospitals here, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, on Saturday.

The lawyer representing Massachusetts state government in Steward’s bankruptcy case urged Lopez on Wednesday morning to approve the sale of the six hospital sites and hinted at “the support that will be required in the future for these hospitals” from state government.

“The Commonwealth has watched and participated in this process for months and months — days and days of mediation, days and days of effort to bring together bidders and the estate in order to consummate transactions that will preserve jobs, will preserve hospitals, and first and foremost, will preserve health care in communities that require them,” Andrew Troop, the state’s lawyer from the New York office of Pillsbury Winthrop Shaw Pittman, said. “This is not to say that there weren’t tough decisions made in this case with respect to other transactions. But here, there are willing buyers for assets that are, however described, challenged.”

Troop said Massachusetts “has tried to do its fair share” to get the deals to the point of seeking court approval, including advancing Steward $30 million to fund operations in August and, with Lopez’s approval granted Wednesday, providing the company another $42 million this week to keep the hospitals afloat until the end of September, when the sales are supposed to close.

“The Commonwealth has also thought very hard about the delivery of health care in Massachusetts, and the support that will be required in the future for these hospitals to hopefully turn themselves around and become the pillars of the community that they once were,” he said.

The Healey administration has said the state will provide additional financial support for Steward, but has so far declined to say how much more the state will contribute. The financial aid package to help ease the transitions to new owners could reportedly swell to $700 million over three years.

The Executive Office of Health and Human Services did not respond to questions Wednesday about the details of the financing plan, which Secretary Kate Walsh previously said would be made available when the deals were finalized.

Candace Arthur, one of Steward’s lawyers from the firm Weil, Gotshal & Manges, laid out for the court just how complicated of a process it was to reach the deals to sell Steward’s hospitals in Massachusetts. She described “challenging issues” around value allocation, alternative source financing, navigating regulatory regimes, and negotiating with multiple parties at the table.

“None of the sales are just two-party binary discussions. Each sale involved the debtors, the buyer, the debtor’s secured lenders, the debtor’s landlord under the master lease governing the real property that the hospitals are situated, the mortgagee of the underlying real property, the creditors committee, and the Commonwealth of Massachusetts. And this is in connection with negotiating the transaction terms, and doesn’t include the concurrent negotiations that the debtors engaged in with unions and contract counterparties,” she said.

Arthur added, “So truly, your honor, each transaction before you today is the highest or best that the debtors are able to achieve.”

But the deals for the Massachusetts hospitals, she said, are also Steward’s “only option available after a thorough search.”

Court documents filed ahead of the sale hearing revealed just how limited the bidding for the Massachusetts hospitals was this summer. No hospital got more than three bids total, and one of the bids was a proposal to buy all of Steward’s hospitals in Massachusetts for a total of $1.

The Official Committee of Unsecured Creditors, appointed to represent some of the people and companies with the largest unsecured claims during the bankruptcy proceedings, supported the deals. Brad Kahn, from the firm Akin Gump Strauss Hauer & Feld, said the creditors’ goal all along has been “to keep the hospitals operating and transition them to new operators, safely and effectively.”

“By hook or by crook, we are now on the precipice of achieving that goal for six of the debtors’ eight Massachusetts hospitals,” he said. “Did the sales go exactly as we had all hoped they would when we started this case? No. But these hospitals need to be transitioned to their new operators as quickly and safely as possible.”

Kahn added, “The committee also believes that the estates must be fairly compensated in these sales, and it sounds like the court is going to help the parties figure out what that means in the context of the FILO lenders’ objection today.”

Wednesday’s hearing got into the meat of an objection filed by the “first in, last out,” or FILO, lenders that have pumped hundreds of millions of dollars into Steward as the company headed for bankruptcy. Those lenders said they “cannot possibly consent to the proposed sales of the Massachusetts Hospitals in their current form, and they do not.” That objection is the basis for Lopez’s decision to withhold $17 million for potential reallocation.

“The Debtors’ sale process has resulted in bids for the Massachusetts Hospitals for an aggregate purchase price of $343 million, subject to certain adjustments … However, this figure is misleading as the entirety of the Purchase Price will be allocated towards the real property and therefore flow to benefit the purported landlord (MPT and Macquarie) and more specifically will flow to the purported landlord’s secured lender,” the FILO lenders wrote in the objection.

Of the $175 million purchase price Lifespan has agreed to pay for Morton and St. Anne’s, $166.8 million would go towards the transfer of the underlying real estate from an affiliate of Apollo Global Management while roughly $8.2 million would be allocated to Steward’s hospital operation, according to court papers.

Approximately $9.4 million of the $140 million that BMC agreed to pay for Good Samaritan and St. Elizabeth’s is for the hospital operations, while all of the $28 million that Lawrence General agreed to pay for the Holy Family hospitals would be “paid for the acquisition of the underlying real property from an affiliate of Apollo Global Management.”

1199SEIU United Healthcare Workers East, which said earlier this year that 5,000 of its members provide care through the Steward systems, said the sale approval marked “a bright new day for healthcare workers and our patients.”

“With Steward finally on its way out of Massachusetts, the critical work of transitioning the hospitals to their new owners can begin. Throughout this complicated process, patient safety and workers’ rights need to be protected, and new investments will be needed to help stabilize our fragile hospitals and their vital workforces,” union Executive Vice President Tim Foley said. “Healthcare workers are the heart and soul of our hospitals, and Steward workers stuck around through months of uncertainty because of our strong commitment to our patients.”

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THE FIRMS THAT CONTROL the real estate of St. Elizabeth’s Medical Center in Brighton rejected what they say is the state’s low-ball offer for the property and told Gov. Maura Healey that they will “vigorously challenge” her plan to take the land beneath bankrupt Steward Health Care’s hospital by eminent domain.

The governor announced Friday that the state plans to seize the land to facilitate a transfer of the hospital to Boston Medical Center, which she said was lined up to buy St. Elizabeth’s as part of a suite of deals struck — but not yet finalized — to keep five Steward hospitals here from closing. A hearing related to those deals previously postponed to Thursday was pushed off again late Wednesday afternoon, this time until August 27.

The state offered the companies that control Steward’s hospital real estate $4.5 million on Friday “to purchase the fee and any other necessary property interests in St. Elizabeth’s Medical Center” as the first step towards an eminent domain taking of the land.

The companies — owner Medical Properties Trust along with lenders Apollo Global Management and ACREFI CS U, which took the lead — rejected that offer in a letter late Tuesday, saying the state’s proposal “significantly undervalues the real property underlying St. Elizabeth’s” and represents an amount less than the property’s annual tax bill.

“Accordingly, should the Commonwealth move forward with its proposed plan to exercise eminent domain and compensate ACREFI only $4.5 million for the property, ACREFI will have no choice but to exercise its constitutional and statutory rights and take any and all actions necessary to protect the interests of the investors to which it has fiduciary obligations,” the letter from the lender says. “ACREFI believes there are numerous procedural and constitutional issues raised by the Commonwealth’s proposed plan and conduct to date that it will vigorously challenge.”

Healey’s office said that it is completing the legal work necessary to move ahead with an official order of taking, which is required for the state to exercise its eminent domain powers.

“Steward and Apollo need to stop playing games with people’s health care. We are moving forward with plans to take St. Elizabeth’s by eminent domain,” a Healey spokesperson said Wednesday afternoon in response to the offer rejection.

The $4.5 million that Healey’s administration offered Apollo for the St. Elizabeth’s land was the “appropriate and fair market value of that property,” the governor told reporters Friday. The state’s offer letter said that the amount was “based on the current third-party offer for St. Elizabeth’s Medical Center.”

The Boston assessor’s office lists the assessed value of the land at 736 Cambridge St., where St. Elizabeth’s is located, at just under $51 million, with the building value listed at more than $140 million.

The Fifth Amendment to the Constitution gives governments the power to take private property “by eminent domain” – regardless of the owner’s wishes – so long as the government proves the property is needed for a public use and the owner is paid fair market value for the property.

“Multiple appraisers agree with ACREFI that there is no realistic scenario in which the ‘fair market value’ of the property is $4.5 million,” the firm wrote in its letter.

The governor said last week that the state must pursue an eminent domain taking for St. Elizabeth’s after negotiations with Apollo proved unsuccessful and the company “refused to move.” Apollo declined to comment on the governor’s announcement and again declined to comment Wednesday on the rejection. But the offer rejection letter from ACREFI suggests the property owners and lenders disagree with the governor’s take on the situation.

“Over the past several weeks, ACREFI has attempted to work with the Commonwealth to explore a number of different structures that would both (a) respond to the Commonwealth’s concerns, including about the long-term viability of St. Elizabeth’s as a hospital and (b) provide ACREFI with a fair result. Specifically, ACREFI has proposed structures featuring short-term leases, long-term leases, purchase options and other upside protections – in many cases, in direct response to the Commonwealth’s request for ACREFI to consider those options,” the firm said.

ACREFI said it has made at least five proposals to the state regarding St. Elizabeth’s in recent weeks and “remains open to discussing terms for a consensual transfer of the St. Elizabeth’s property,” something it says it communicated to the state as recently as Saturday.

“The Commonwealth has, however, rejected all such proposals and indicated this past weekend that it is no longer interested in negotiating any consensual solution in respect of St. Elizabeth’s, at least in the near term,” ACREFI wrote.

The lenders also call the state’s plan to arrange for St. Elizabeth’s to be handed over to BMC “effectively little more than a transfer of the significant value in the real estate that rightfully belongs to its owner (and ACREFI as mortgage lender) to BMC.” They also suggest that an eminent domain taking was part of the state’s plan even before negotiations reached loggerheads.

“It appears that BMC fully appreciated that the Commonwealth would ensure the hospital ended up in its hands one way or another, as BMC informed ACREFI during the bidding process that it had no reason to improve its bid because the Commonwealth would simply exercise eminent domain to deliver the hospital property to BMC in the event a consensual agreement was not reached,” the letter says.

Healey said Friday that deals were in place to sell St. Elizabeth’s to BMC as well as to transfer four other Steward hospitals on five campuses to new owners: Lawrence General Hospital will buy the Holy Family Hospital facilities in Methuen and Haverhill, Lifespan will take over Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River, and BMC will also buy Good Samaritan Medical Center in Brockton, as long as the deals are finalized and approved.

A Steward lawyer said Friday the company hoped to be signing asset purchase agreements for those hospitals by Monday and would present them to a US Bankruptcy Court judge for approval at a hearing Thursday. That hearing was moved to Tuesday, August 27 as there was still no sign late Wednesday of movement around the deals that Healey announced last week.

The governor’s office did not respond to a question Wednesday about the status of the deals Healey announced Friday before taking off for the Democratic National Convention in Chicago for the week.

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“ENOUGH IS ENOUGH,” Gov. Maura Healey declared Friday as she announced that all the bankrupt Steward Health Care hospitals in Massachusetts still up for sale have new owners lined up and that the state is going to assist in the transitions with financing and, in one case, the use of its property-taking powers.

The governor said deals in principle have been struck to transition four Steward hospitals on five campuses to new owners: Lawrence General Hospital will buy the Holy Family Hospital facilities in Methuen and Haverhill, Lifespan will take over Morton Hospital in Taunton and Saint Anne’s Hospital in Fall River, and Boston Medical Center will buy Good Samaritan Medical Center in Brockton, as long as the deals are finalized and approved.

Massachusetts state government will take the fifth for-sale hospital, St. Elizabeth’s Medical Center in Brighton, by eminent domain in order to keep it open before it is also transitioned under BMC’s control, Healey said.

The sweeping transition and health care market restructuring plan that Healey announced Friday is expected to require significant involvement from the Legislature. The governor’s office said it has been working with lawmakers on “a fiscally responsible financing plan that includes cash advances, capital support, and maximizing federal matches” to support the transition to new operators.

“Today, we are taking steps to save and keep operating the five remaining Steward Hospitals, protecting access to care in those communities and preserving the jobs of the hard-working women and men who work at those hospitals,” Healey said. “Our team under Secretary Kate Walsh worked day in and day out to secure new, responsible, qualified operators who will protect and improve care for their communities. We’re grateful for the close collaboration of the Legislature to develop a fiscally responsible financing plan to support these transitions.”

Healey said that the sticking point around St. Elizabeth’s was that the hospital’s landlord and its mortgage lender “have repeatedly chosen to put their own interests above the health and wellbeing of the people of Massachusetts.”

“Enough is enough. Our administration is going to seize control of Saint Elizabeth’s through eminent domain so that we can facilitate a transition to a new owner and keep this hospital open,” the governor said, without providing additional details.

Walsh, who has been at the center of the state’s Steward negotiations, is the former president and chief executive of BMC, a job she held for 13 years until Healey tapped her last year to join her cabinet. She is now a central player in the state’s actions to ensure that another Boston-area hospital is added to the company’s portfolio.

St. Elizabeth’s is a mid-size teaching hospital with 234 staffed beds and more than 1,700 full-time equivalent employees, according to state data from fiscal 2022. With about $446 million in operating revenue, St. Elizabeth’s had more than 25,500 emergency department visits in fiscal 2022, nearly 12,700 inpatient discharges, and more than 115,600 outpatient visits that fiscal year. 

The Fifth Amendment to the Constitution gives governments the power to take private property “by eminent domain” – regardless of the owner’s wishes – so long as the government proves the property is needed for a public use and the owner is paid fairly for the property. The taking of private property, though, is likely to require legislative approval.

The state Constitution says the Legislature “shall have the power to provide for the taking, upon payment of just compensation therefor, or for the acquisition by purchase or otherwise, of lands and easements or such other interests therein as may be deemed necessary…” and that the land taken or acquired “shall not be used for other purposes or otherwise disposed of except by laws enacted by a two thirds vote, taken by yeas and nays, of each branch of the general court.”

About 20 minutes before Healey’s office announced the deals in principle, a lawyer representing Steward said in US Bankruptcy Court on Friday morning that the company is “close” to signing purchase agreements for at least five of its six for-sale hospital campuses in Massachusetts.

“I’m pleased to report we’ve made very significant progress with the parties, in no small part to the efforts of the mediator,” Ray Schrock, Steward’s lawyer from the firm Weil, Gotshal & Manges, said Friday. “We’re not quite there yet but we are hopeful that we could close out the remaining issues between, on the one hand the buyers, on the second between the Commonwealth of Massachusetts and our stakeholders, as we move forward toward what we hope is a signing of asset purchase agreements on hopefully all of the six hospitals that we’re trying to sell. But certainly at least on five, I know we’re very, very close.”

Steward hopes to be “reporting a favorable result on signing the asset purchase agreements for Massachusetts on Monday,” Schrock said. Healey’s announcement said only that deals in principle had been reached, not that agreements laying out the terms of the sales had been signed.

Schrock said that the outstanding issue related to the sixth hospital was under discussion between the mortgage lender for Steward’s landlord and Massachusetts state government. On Thursday, Healey had called out the lender, Apollo Global Management, and said she has been “very aggressive” about pushing Apollo to sign off on a deal.

“So my hope is that they come to their senses and finalize this so that we can proceed with saving these six campuses,” Healey said.

In the announcement Friday of the “actions to save” the five for-sale Steward hospitals, Healey’s office emphasized that the news does not impact Carney Hospital in Dorchester or Nashoba Valley Medical Center in Ayer, “which will close after not receiving qualified bids.” Steward has already received court approval to close those hospitals by the end of the month.

Nashoba Valley and Carney supporters have been pleading with the state to use its powers and resources to save those hospitals. 

The post New owners lined up for Steward hospitals in Mass., Healey says appeared first on CommonWealth Beacon.

GOV. MAURA HEALEY gave her OK to sweeping statewide policy changes Monday afternoon as part of the overdue fiscal year 2025 budget, signing free community college, online Mass. Lottery products, free rides on regional transit authorities, and more into law while making only minor adjustments to the spending plan crafted by House and Senate Democrats.

The governor signed nearly all of the budget the Legislature sent her 10 days ago, approving all but three of the 261 policy proposals lawmakers padded it with. But she also potentially created more work for the Legislature by trimming $317 million from 60 separate line items in the spending plan with her veto pen just more than 48 hours before formal sessions are set to conclude, leaving the House and Senate little time to take the votes necessary if they choose to overrule the governor.

The budget, which the governor’s office said carries a $57.78 billion bottom line after Healey’s actions, increases state spending by about $1.7 billion, or about 3.1 percent, over last year’s budget. It uses about $1.2 billion in one-time revenues to support the outlays during a time of volatile state tax collections and an expected increase in revenues from the state’s new tax on household income above $1 million is also helping the state to boost spending.

“The budget today represents a whole lot of things. One thing it represents is investments on things that we’re already leading on, and making them even better. This includes our number-one ranked schools and our nation-leading child care policy. We’re also tackling our biggest challenges by lowering household costs and improving transportation,” the governor said during a signing ceremony in her ceremonial office Monday afternoon. “We’re doing this all responsibly, fiscally responsibly, staying within our means, and in line with the rate of inflation. We’ve worked hard to make sure that every taxpayer dollar is focused on making life better for all who live and work in our state.”

Legislators packed the budget with policy provisions, authorizing free community college, free rides on regional transit services, and legal online Lottery sales to fund a permanent Commonwealth Cares for Children (C3) grant program that launched during the pandemic with federal dollars — all of which Healey signed off on Monday.

The governor also touted the budget’s investment in her “Literacy Launch” program, which aims to connect all children from three years old to third grade with high-quality and evidence-based reading instruction, as well as its dedication of 1 percent of total spending to environment and energy initiatives.

The Senate initiative to make community college permanently free for all will cost $117.5 million, covering tuition and fees for students. And the House-backed idea of authorizing online Lottery sales is projected to pull in $100 million for the popular C3 early education grant program. Another section of the budget aims to prevent so-called home equity theft, which refers to a municipality taking more of a property owner’s earned equity than is owed in unpaid taxes and other expenses.

“All of these investments are focused on making life better, making life easier for people in Massachusetts, making it more affordable to live here, to work here, to raise children here. This also makes us more competitive — more competitive for our employers, for economic growth, particularly as we compare ourselves to other states,” Healey said. “So it’s a really important investment, this budget.”

The fiscal 2025 budget is supported by $1.3 billion in revenue generated from the state’s 4 percent surtax on household income above $1 million, on top of the general state revenue foundation of $40.2 billion that lawmakers and the administration agreed to months ago.

The surtax revenue — which is restricted by law to education and transportation uses — is being deployed in the budget to cover tuition-free community college, free RTA rides, the costs of providing universal free school meals in K-12 schools, enhanced minimum aid funding to local schools, additional financial aid for Massachusetts public college and university students, local road and bridge funding, and more.

“Those are just a few of the transformative investments made possible by the ultra-rich paying more of their fair share in state taxes. We’re starting to rebuild the transportation and education infrastructure that everyone in our state, from families and seniors to workers and businesses, needs to succeed,” Andrew Farnitano, spokesman for the Raise Up Massachusetts group that successfully pushed for the surtax, said.

The fiscal 2025 budget includes a $447 million direct appropriation to the MBTA, which is just one portion of the funding the T receives but represents a significant increase over the current spending plan at a time when the state is considering new ways to finance transportation across the state. There is also $110 million for the state’s 15 regional transit authorities, $40 million of which is projected to be used to allow those agencies to eliminate fares for riders.

House Ways and Means Chairman Aaron Michlewitz said the “record number funding” for the T was a House priority and suggested that the chamber could dive into a more thorough transportation financing conversation when the new legislative term starts in January.

He said funding for the MBTA is “something that we know we still have to continue to work through and something that we’re not walking away from, but actually leaning in on and something that we’re going to be working on going forward.”

Lawmakers and budget managers in the Healey administration are also likely to have to work on funding for the state’s overburdened emergency family shelter system in fiscal year 2025. The budget Healey signed Monday includes $326 million to contribute to the state’s ongoing shelter response, but the actual costs of providing shelter to homeless families swelled to roughly $1 billion last budget year, though Healey has since changed the program’s terms in an attempt to control costs.

A host of legislators joined Healey in her ceremonial office for the budget signing — Senate President Karen Spilka, House Speaker Ronald Mariano, Michewlitz, Senate Ways and Means Chairman Michael Rodrigues, Democratic Reps. Tommy Vitolo of Brookline and Adam Scanlon of North Attleborough, and Weymouth Republican Sen. Patrick O’Connor.

“What we have here is a document that we can all sort of take a bow on,” Mariano said.

Healey apparently felt the same way, judging by the light touch she took with her veto and amendment pen. Of the 261 outside policy sections, Healey approved 258 in full and sent three back in proposed amendments. And of the budget’s nearly $58 billion in spending, Healey reduced or vetoed 60 line items for a total reduction of $317 million, or about 0.5 percent. The Mass. Taxpayers Foundation said Healey’s vetoes are “the highest level of proposed budget cuts in at least five years.”

“Look, our economy is strong, our bond rating is excellent, we’ve got money in our rainy day fund. But it’s also our responsibility to make sure that we’re being fiscally responsible in a time where there’s still some uncertainty as to economic conditions. And we would rather be in a position of budgeting accordingly now, rather than facing the specter of having to make cuts later, better to plan than to have to make cuts later,” Healey said when asked about the thinking behind her vetoes. “We think these vetoes were vetoes that were well-managed. $317 million, it’s more than last year. But again, we think we’ve done so in a way that is responsible and also doesn’t do harm to the delivery of service.”

The single largest veto was in the MassHealth managed care account, where Healey cut $192.3 million and said the remaining $5.9 billion in the account was the “amount projected to be necessary due to anticipated utilization, timing of rate updates, and new revenues.”

The Massachusetts Taxpayers Foundation said Monday that Healey’s vetoes total $316.8 million in gross spending with a net impact of $248 million. Health care spending, including the MassHealth managed care line item, took the brunt of reductions at $233.3 million. The governor also vetoed $24 million from education accounts, $19.7 million from support services, $11.6 million from energy and environment line items, $8.2 million from economic development initiatives, $1.5 million from housing accounts, $600,000 from public safety funds, and $9.9 million categorized as “other,” the foundation said.

“Notably, if the Legislature maintains the proposed cuts, the final FY 2025 budget would spend less than the administration’s original recommendation by $352 million. This speaks to the significant spending and revenue fluctuations that the state experienced throughout FY 2024, and how they may impact FY 2025,” the foundation wrote in its analysis of Healey’s budget actions Monday. “The decision to veto this amount of spending provides the Healey administration with some of the flexibility it requires to respond to unexpected cost increases or revenue downturns throughout the fiscal year.”

The Legislature has just two days left for formal sessions to consider Healey’s vetoes. The governor can’t stop the House and Senate from overriding her vetoes with two-thirds support in each branch, but she could still veto any of the policy sections that the Legislature returns after July 31, and the Legislature would be effectively powerless to react. Lawmakers last year overrode about $83 million or roughly 30 percent of the $276 million that Healey vetoed from the fiscal 2024 budget.

The three policy sections that Healey returned with proposed amendments deal with a new MassHealth “notice of eligibility” requirement and with $63 million in annual supplemental MassHealth payments to Cambridge Health Alliance (technically two sections).

Healey’s amendment would make the Cambridge Health Alliance payments contingent upon the availability of federal funds and federal approvals for the payments, and her MassHealth amendment would change when MassHealth is required to notify eligible members ages 55 or older of the options for enrolling in voluntary senior care programs.

Among 46 states whose fiscal year began July 1, Massachusetts was the last one to put an annual spending plan in place, according to data tracked by the National Conference of State Legislatures. Lawmakers and Healey previously agreed to an interim budget covering state expenses for about a month.

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