According to the report, the agency also failed to impose what would have been $1.6 million in fines against hospitals and health systems that failed to submit their financial reports under statutory deadlines, the auditor’s report found.
Auditor Diana DiZoglio said in a statement that the audit revealed a “startling lack of oversight” over the financial conditions of the state’s hospitals.
“By not receiving, analyzing, and reporting on data related to hospitals and health systems in Massachusetts, CHIA limited its own ability to identify and address concerns regarding hospitals at risk of closing. This may have prevented policymakers from becoming aware of these issues and taking actions to prevent or soften the impacts of these issues,” the report said.
In a statement, the center disputed the findings of the auditor’s report, saying it has consistently collected and analyzed hospital financial data in a timely manner. The agency said it has offered limited extensions to state reporting requirements “on a case-by-case basis” to ensure the accuracy of the data, but those extensions have never impeded its ability to publish reports on the financial performance of Massachusetts hospitals.
The agency also asserts that the auditor’s report is misleading because of its focus on two health systems — Steward Health and Heywood Healthcare — under unusual circumstances. In the case of Heywood, which is based in Central Massachusetts, the system did not have an audited financial statement to produce in fiscal years 2021 and 2022. A spokeswoman for Heywood Healthcare said the system did not submit audited financial statements for 2021 to 2023 because of a failed transition to a new electronic medical record system, which compromised its financial performance and records.
And in Steward’s case, the center fined the company multiple times over several years for noncompliance — which has been the subject of ongoing litigation.
For the past decade, Steward has been the only hospital system in Massachusetts to refuse to comply with a law requiring that audited financial statements be filed annually with the state. The company stopped filing its full financial statements in 2014.
From 2015 to 2017, the agency fined Steward a total of $400,000 for not reporting audited financial statements — of which $115,000 was collected from Steward. In October 2017, Steward sued the agency. As a result of the litigation, the center ceased issuing and collecting fines.
In 2023, the Suffolk Superior Court ruled in the center’s favor affirming Steward’s obligation to submit its financial data to the agency. Steward appealed this decision, and the matter is still in court, but has been stayed until the company’s bankruptcy is resolved.
In both cases, the agency said it used other data sources where possible to fulfill its obligation to report on the financial performance of the systems and their hospitals. “CHIA 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 agency said in its statement.
According to the report, the center did not examine or identify six acute care hospitals that had notified state health officials about a possible closure or elimination of essential services. Those hospitals include Tufts Medical Center and Beth Israel Lahey Health’s Beverly Hospital, among others.
Alan Sager, a Boston University professor of health law, policy, and management, said the auditor’s report “performs an invaluable public service,” by underscoring the state’s statutory obligation to identify and examine hospitals in financial distress. “This is the kind of information that the public and the Legislature should value to get a grip on the health care services we need and risk losing,” he said.
Chris Serres can be reached at chris.serres@globe.com. Follow him @ChrisSerres.
