Steward Health Care System said Thursday that it would close Quincy Medical Center and displace nearly 700 workers after the long-struggling hospital finally succumbed to the intense competition for patients south of Boston.
The shutdown, scheduled to be completed by the end the year, marks the biggest hospital closing in the state in at least a decade and the first failure for Steward, the for-profit company that promised to reinvent community health care when it entered the Massachusetts market four years ago.
Steward bought the 124-year-old Quincy Medical Center out of bankruptcy in 2011 and said it poured $100 million into equipment, maintenance, and other upgrades to try to make it profitable. But patients still chose to seek care elsewhere, and the losses at Quincy Medical Center mounted. The hospital is on track to lose $20 million this year.
The problem, Steward executives and health care specialists said, is that there are too many hospital beds in the area. More than a dozen hospitals sit within a 10-mile radius of Quincy Medical Center. In recent years, the hospital has faced increased competition from South Shore Hospital in Weymouth, which is planning a merger with Partners HealthCare, and Beth Israel Deaconess Medical Center's hospital in Milton.
Many patients also prefer the big teaching hospitals in Boston.
"This is not a pleasant process," said David Cutler, a health care economist at Harvard University. "It is an economic reality about health care. There's no fighting economic realities."
The shutdown of Quincy Medical Center follows two other sizable hospital closings this year. Radius Specialty Hospital, a rehab facility in Quincy and Roxbury, shut down last month, and North Adams Regional Hospital closed in March.
Steward's plans to close Quincy Medical Center on Dec. 31 appear to violate an agreement the company signed with Attorney General Martha Coakley when it acquired the hospital in 2011. The agreement required Steward to keep the hospital open for at least 6½ years and give 18 months' notice before shutting down.
Dr. Mark Girard, president of Steward's hospitals, said the company was in touch with state officials about the hospital's problems before the closure was announced.
Coakley, who lost her bid for the governorship Tuesday, was formally notified of the closure decision Thursday. Her office is "reviewing it in the context of Steward's legal obligations," Coakley's spokesman, Brad Puffer, said.
State law requires hospitals to give 90 days' notice and a public hearing before closing. The Department of Public Health said it has yet to receive notice from Quincy Medical Center.
"DPH will work closely with Steward and other area providers to ensure that any closure plan includes the appropriate continuity of care for patients," spokeswoman Anne Roach said.
Steward did not respond to questions about the Coakley agreement. The company said it will pay its Quincy workers for 60 days and try to find jobs for them at other Steward facilities. "We've got about 980 open job slots," Girard said.
Quincy Medical Center has struggled for years, forcing Steward to use revenues from its other hospitals to keep it afloat. These days, just 40 of Quincy Medical Center's 196 beds are generally filled. About 70 percent of its patients are on Medicaid, government insurance for the poor, or Medicare, government insurance for seniors, which both pay less than commercial insurers.
The situation is so dire that even local officials and labor unions, while disappointed, are not fighting the hospital's closing.
"It's met with great sadness, but I can't say that I'm extremely shocked," said Mayor Thomas P. Koch of Quincy. "This institution has been on a roller-coaster ride for many years."
Quincy, with a population of about 93,000, will become the largest city in Massachusetts without its own hospital.
"I was born there in 1934," said Quincy resident Robin Solletti. "I think it's a terrible loss, a city without a hospital."
Steward Health Care, owned by the New York private equity firm Cerberus Capital Management, entered the Massachusetts market in 2010, when it bought the Caritas hospital system from the Archdiocese of Boston. Steward, which today operates 10 hospitals in the state, promised to create a new model for health care by delivering it more efficiently and at lower costs in community settings.
Though Quincy Medical Center is closing, Steward executives say they plan to maintain a 24-hour emergency room and open a new urgent care clinic in other Quincy locations. They did not say where or when those services would open.
"This is about aligning the delivery system with the needs of the Quincy community," Girard said.
Girard said the company does not plan to close any other hospitals.
Quincy Medical Center's employees are affiliated with two unions, the Massachusetts Nurses Association and Local 1199 of the Service Employees International Union.
"Our goal in all of this is to make sure that our employees are protected and made whole, and just as important, to make sure the community needs are met," said David Schildmeier, a spokesman for the nurses' union.
Gale Martell, an SEIU leader and 38-year employee at the hospital, said she believed Steward did all it could to try to keep the hospital running. But the news of the shutdown still hit workers hard, she said.
"They're worried about their jobs," said Martell, a medical technologist.
Quincy Medical Center's problems worsened in recent years as a referral partner, Granite Medical Group, part of the Atrius Health doctors' network, sent more patients to other hospitals.
"Granite Medical Group's admission patterns have shifted over the last five years to include more of Beth Israel Deaconess Hospital-Milton, and South Shore Hospital," Bob Calway, Granite's interim chief executive, said in a statement. "These changes are a result of changing patient preferences and Granite's ongoing efforts to develop effective and collaborative working relationships with all of the hospitals in the communities in which our patients live and work."
Nina Godlewski contributed to this report. Priyanka Dayal McCluskey can be reached at firstname.lastname@example.org. Follow her on Twitter @priyanka_dayal. Robert Weisman can be reached at email@example.com. Follow him on Twitter @GlobeRobW.