Steward Health Care, the nation’s largest physician-owned hospital operator, announced a critical move on Monday: filing for Chapter 11 bankruptcy protection. This decision, according to the company, is essential to ensure uninterrupted patient care amidst its ongoing financial struggles.
A press release from Steward confirmed the filing in the Southern District of Texas court. The health system is also finalizing a debtor-in-possession financing agreement with Medical Properties Trust, securing an initial $75 million with the potential for an additional $225 million contingent upon meeting specific conditions.
Steward emphasizes that day-to-day operations will not be impacted by the bankruptcy proceedings. All hospitals, medical centers, and doctor’s offices remain fully operational.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment,” stated Dr. Ralph de la Torre, CEO of Steward, in the press release. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees, and communities at this time.”
Dr. de la Torre elaborated, “In the past several months we have secured bridge financing and progressed the sale of our Stewardship Health business in order to help stabilize operations at all of our hospitals. With the delay in closing of the Stewardship Health transaction, Steward was forced to seek alternative methods of bridging its operations. With the additional financing in this process, we are confident that we will keep hospitals open, supplied, and operating so that our care of our patients and our employees is maintained.”
Steward cites sustained challenges in receiving adequate reimbursement from government payers as a major factor in their financial difficulties. These challenges, coupled with rising labor costs, inflationary pressures, and ongoing COVID-19 expenses, make it increasingly difficult for the health system to maintain financial stability.
The company expresses commitment to a swift resolution through the bankruptcy proceedings, prioritizing the long-term financial health of the entire system.
Steward operates a network of 33 hospitals across eight states, making them the largest physician-owned hospital operator in the country. Their financial troubles surfaced earlier this year with a reported $50 million delinquency in rent owed to Medical Properties Trust.
Facing scrutiny from regulators, particularly in Massachusetts where concerns regarding potential hospital closures were raised, Steward unveiled a comprehensive recovery plan that included restructuring, a process now intended to be expedited by Monday’s bankruptcy filing.
Massachusetts Secretary of Health and Human Services, Kate Walsh, released a statement on Monday, indicating that the governor’s office was prepared for this development.
“The Healy-Driscoll administration 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 healthcare system,” said Secretary Walsh.
The Massachusetts Health Policy Commission also issued a statement, confirming ongoing communication with the governor’s office in response to the bankruptcy filing.
