Finance
Steward Health goes bankrupt after increasing financial problems
(Bloomberg) — Steward Health Care System LLC filed for bankruptcy early Monday after a period of mounting financial troubles and government scrutiny over the impact of hospital closures on patients.
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The Dallas-based company is finalizing a rescue loan with landlord Medical Properties Trust Inc., the filing said. It sought Chapter 11 protection in the Southern District Court of Texas, listing both assets and liabilities ranging from $1 billion to $10 billion.
The bankruptcy filing allows Steward Health to continue operating while it seeks approval for a restructuring plan. Steward operates more than 30 hospitals in eight states and employs about 30,000 people, according to its bankruptcy website. It is the largest private, for-profit hospital chain in the country.
Steward’s liquidity crisis worsened this year as the company struggled to pay suppliers and manage operations at its sites. The system moved to close hospitals, including several in Massachusetts, to cut costs. That led to significant opposition and scrutiny from the state’s politicians, including U.S. Senator Elizabeth Warren.
The company also decided to sell its managed services organization and hired consulting firm AlixPartners for operational help, Bloomberg reported.
Medical properties
As part of the restructuring deal, Medical Properties – a US real estate trust focused on healthcare facilities – will provide an initial financing of $75 million to accounts receivable and an additional loan of as much as $225 million if certain conditions are met. , it said in a statement. In January, Medical Properties provided Steward Health with a $60 million bridge loan and deferred some rent arrears.
Medical Properties fell as much as 11.5% in Monday trading as of 11:20 a.m. New York time. MPT has been the subject of a brief attack over its finances and exposure to Steward.
Democratic lawmakers, including Warren, have also written to Cerberus Capital Management about their concerns about the private equity firm’s role in Steward’s finances. Private equity firm Cerberus founded Steward after purchasing St. Elizabeth’s and five other Catholic hospitals in Massachusetts in 2010.
Cerberus made a profit of about $800 million on its investment before transferring its remaining stake to doctors in the company, including Steward’s now Chief Executive Officer Ralph de la Torre, Bloomberg reported in 2021.
The company blamed higher costs and inadequate reimbursement from government programs for factors that led to the Chapter 11 filing. The delay in the sale of the Stewardship Health physician division forced the company to look for an alternative source of financing.
Through the bankruptcy process, “Steward will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure continued care and service to our patients and our communities ,” said de la Torre. said in a statement.
The case is Steward Health Care System LLC, 24-90213, US Bankruptcy Court for the Southern District Court of Texas.
–With help from Bre Bradham.
(Updates throughout with additional context. An earlier version corrected the company’s base of operations and number of hospitals.)
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