Steward Health Care files for Chapter 11 bankruptcy protection
Steward Health Care ultimately could be one of the largest hospital bankruptcies in U.S. history.
Steward Health Care, which has struggled financially during a period of rapid expansion, on Monday, May 6th, filed for Chapter 11 bankruptcy protection. The company owns 30 hospitals in eight states, including Massachusetts, Florida and Texas, where it is based.
The bankruptcy filing lists 30 creditors that are owed a total of more than $500 million, including the U.S. government, and Steward owes more than $32 million in reimbursements for insurance overpayments. Steward’s debts likely are much higher, experts told CBS News, and this ultimately could be one of the largest hospital bankruptcies in U.S. history.
The company said it is relying on its landlord to provide sufficient funding to allow its hospitals to continue to operate through bankruptcy. “The company is finalizing the terms of debtor-in-possession financing from Medical Properties Trust for initial funding of $75 million and up to an additional $225 million upon the satisfaction of certain conditions acceptable to Medical Properties Trust,” Steward said in a statement.
In the meantime, the company and state officials said patients and employees can expect business as usual.
“Steward hospitals remain open, and patients should not hesitate to seek care,” said Katie Walsh, the Massachusetts Health and Human Services secretary. The state “is working with Steward and any potential partners to support an orderly transfer of ownership that protects access to care, preserves jobs and stabilizes our health care system.”
Nevertheless, anxiety over the future viability of the company’s hospitals runs deep, particularly in Massachusetts. For months, health care workers have voiced concern over the impact of any potential closure.
“The potential loss of any of these facilities will have devastating consequences for hundreds of thousands of residents from the South Shore to southern New Hampshire,” the Massachusetts Nurses Association said. “However, Steward going through the process of reorganization provides an opportunity for other stakeholders to take long-awaited action and center the voices of caregivers and patients.”
Related: UnitedHealth pays out $2B in advances to struggling providers hit by cyberattack
Steward recently has become synonymous with the risks of private equity investment in health care. The company started buying Massachusetts hospitals in 2010, with hundreds of millions of dollars in backing from private equity giant Cerberus. A filing with the Securities and Exchange Commission from 2021 shows Steward’s owners paid themselves millions in dividends.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment,” CEO Ralph de la Torre said. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.”