The Attorney General's Office is investigating whether Steward Health Care System violated the terms of a 2011 agreement when it announced yesterday that Quincy Medical Center will shut down operations by the end of the year, a spokesman said.
"We have just been notified about this decision and are currently reviewing it in the context of Steward's legal obligations," said Brad Puffer, a spokesman for Attorney General Martha Coakley.
When Steward bought the 196-bed Quincy hospital in a bankruptcy auction in 2011, it signed an agreement with Coakley that included a 10-year "No Close Period" requiring that it "maintain an acute care hospital in Quincy providing at least the same scope of services as Quincy Medical Center currently provides."
Steward could close Quincy Medical in the last three-and-a-half years of that 10-year period if it could show the hospital "experienced two consecutive fiscal years of negative operating margins" and provide the state's Department of Public Health with "at least 18 months prior written notice of its intent to close," according to the agreement.
A Steward spokeswoman declined to comment when asked about the no-close clause last night.
The Quincy hospital, which has 680 employees, reported a $19.7 million loss last year and has projected a $20 million loss for 2014.
"This positions us to be stronger," said Dr. Mark Girard, president of Steward Hospitals. "Quincy Medical Center has been losing about $20 million (annually) and ... that $20 million comes from the other hospitals in diversion of resources. So, to the extent that we're not diverting those resources, we're allowed to reinvest in our other locations."
Quincy Medical Center's financial losses, Girard said, forced Steward Hospitals to delay the development of an emergency room at Morton Hospital in Taunton and stalled construction projects at Carney Hospital in Dorchester and Holy Family Hospital at Merrimack Valley in Haverhill.
"Health care has evolved ... technology allows you to do a lot of things that historically required inpatient care or extended inpatient care that now you can do either in one day or out of the hospital altogether," Girard said. "That's one big trend that we're all facing and certainly one that has been part of the issue for Quincy Medical Center."
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