Finance
US healthcare landlord Medical Properties Trust’s largest tenant Steward Health is going bankrupt, raising regulatory concerns
Medical Properties Trust Inc (NYSE:MPW) tenant Steward healthcare plunged into Chapter 11 bankruptcy, posing significant financial risks to hospitals in eight states.
State regulators, alarmed by the precarious situation, have intensified oversight of the Steward Health Care System. With a network of 30 hospitals caring for 2.2 million patients annually, the chain’s recent struggles have highlighted alarming incidents including the evacuation of an intensive care unit due to bats, unpaid travel nurses and equipment shortages.
Unlike typical bankruptcies, Steward’s predicament stands out because there is no secured financing. The company’s dependence on its landlord, Medical Properties Trust, for liquidity has raised eyebrows.
Despite owing billions, the Wall Street Journal reports noted that Steward is negotiating a $300 million loan from Medical Properties Trust to continue operations during the bankruptcy proceedings.
Steward Health Care’s assurance of uninterrupted business operations has done little to allay concerns. Dr. Ralph de la Torre, the CEO, said the company has strived for operational success despite the challenging healthcare landscape.
In Massachusetts, where Steward represents a significant portion of hospital capacity, regulators and competitors are mobilizing contingency plans. The state is actively seeking new owners for Steward Hospitals to ensure medical access, jobs and health care stability.
The complexity of Steward’s bankruptcy is compounded by its complicated ties to Medical Properties Trust, potentially creating conflicts between creditors’ interests and regulatory requirements. Hospital bankruptcy expert Laura Coordes highlights the inherent conflict between regulatory and bankruptcy objectives.
Regulatory interventions could translate into lower returns for creditors such as Medical Properties Trust. Medical Properties Trust, which already bears significant risks as Steward’s largest tenant and lender, faces potential losses from restructuring efforts.
Regulators exercise significant influence in bankruptcy proceedings, with the goal of protecting the public health and welfare of the community. Their interventions could determine the outcome of Steward’s restructuring, with implications for stakeholders and the healthcare system.
On Monday, Medical Properties Trust approved the financing of $75 million in debtor-in-possession financing and said it has not committed to providing additional financing above this amount.
In March, Steward healthcare made a deal to sell its national physician network UnitedHealth Group Inc (NYSE:UNH) Optum Care Unit.
Price promotion: Shares of MPW closed Monday at $4.5.
Photo via Shutterstock
“SECRET WEAPON OF ACTIVE INVESTORS” Boost Your Stock Game With The #1 Trading Tool For “News & Everything Else”: Benzinga Pro – Click here to start your 14-day trial now!
Want the latest stock analysis from Benzinga?
This article US healthcare landlord Medical Properties Trust’s largest tenant Steward Health is going bankrupt, raising regulatory concerns originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
