Mass. officials have limited authority over sale of Steward physician group

State officials are promising strict oversight of any deal involving the sale of Steward Health Care's physician network. But the state's authority over the proposed deal with a UnitedHealth Group subsidiary appears to be limited.

The state Attorney General's Office and the state Department of Health told WBUR they lack the ability to approve or veto any deal, adding to questions about whether funds from a sale would be directed to help the financially troubled Steward's Massachusetts hospitals.

In a filing with the Massachusetts Health Policy Commission this week, Steward said it had reached an agreement to sell its physician group, Stewardship Health, to OptumCare, a sister company of the national insurer United Healthcare. The deal involves primary care doctors and other providers in nine states, including Massachusetts.

The deal is part of Dallas-based Steward's plan to stabilize its finances. The national chain of 33 hospitals has fallen behind on rent, according to its landlord, Medical Properties Trust, and court records show numerous vendors seeking payments from the company.

Steward executives have said they plan to leave Massachusetts, and Gov. Maura Healey has repeatedly called for the company's exit. She also said she would not provide a bailout for its facilities. Steward operates nine hospitals in Massachusetts, although one is in the process of closing, and another has been closed for years because of flooding.

A Steward spokesperson declined to comment on the proposed sale to Optum, and neither company has disclosed terms of deal.

Officials at the state Department of Public Health said they have no oversight role in the deal because the physician group is not a department-licensed facility.

Massachusetts Attorney General Andrea Campbell said her office can neither approve nor reject the deal, but her staff will be scrutinizing it.

"My office will be reviewing this proposed transaction to ensure that it adequately protects public access to competitive affordable healthcare options," Campbell said in an emailed statement. "We hope that its proceeds are directed toward supporting the operations of Steward's in-state hospitals until they can be transitioned to new operators."

The attorney general can review merger and acquisition deals to make sure they comply with antitrust laws. However, unlike non-profit health care transactions, this sale would not fall under the authority of the attorney general's charities oversight because neither party is a charity. This limits Campbell's ability to impose conditions or influence the terms of the deal.

When Optum purchased the nonprofit Atrius Health in Massachusetts in 2022, Healey, then Attorney General, required the creation of a charitable foundation, and Optum agreed to invest $200 million in Atrius over five years. The Atrius network includes hundreds of Massachusetts doctors.

The sale of Steward's physician group will be reviewed by the state's Health Policy Commission, which will look into how the transaction might affect health care costs and access. The commission has 30 days from the time it receives all supporting materials to review the deal. As of Thursday, the commission said it had not yet received all the supporting materials. The commission can opt to do an in-depth analysis of the proposed sale, which could take several months.

Some state officials and health care experts have expressed concerns that the growth of for-profit companies in health care is not in the best interest of patients. House Speaker Ron Mariano urged the commission to carefully examine the deal and said other state and federal agencies should scrutinize it as well. He noted Optum's parent company, UnitedHealth Group, is already the subject of a federal Department of Justice antitrust investigation related to its physician network.

“The proposed sale of Steward’s physician group to Optum has the potential to significantly impact the competitiveness of the health care market in Massachusetts, and cause further disruption during a period of acute instability in the health care system," Mariano said.

John McDonough, professor at the Harvard T.H. Chan School of Public Health, said the state should be clear about its objectives and develop a legal strategy to protect the health care market.

"We've had no indication from the state on what they believe their legal authority includes," McDonough said. "One would hope that they would have some ability to intervene on behalf of the commonwealth and the citizens and the hospitals at risk."

In Boston Wednesday, U.S. Sen. Ed Markey, a Democrat, met with health care leaders and state officials to discuss private investments in health care. He is chairing a congressional field hearing next week about for-profit involvement in the health care industry.

"Steward is emblematic of a national problem that requires a national solution," Markey said in a statement after Wednesday's meeting. "We need greater transparency and accountability to guarantee that our country has a health care system, not a wealth care system."

Markey has invited Steward's chief executive Ralph de la Torre to testify at next week's hearing, but it remains unclear whether he will appear.