Steward Health Care, the country’s largest private for-profit hospital chain, filed for Chapter 11 bankruptcy to secure a loan from Medical Properties Trust.
The official statement
The Steward Health Care press release confirmed that the hospital chain filed for bankruptcy. The news comes after the hospital chain, with over 30 facilities nationwide, began shutting down its doors due to financial instability. Dallas-based Steward Health Care statement said filing for Chapter 11 bankruptcy restructuring is the best way to help patients, staffers, and communities.
Closings and other issues
The company recently closed one Massachusetts hospital and, in February, the Beaumont campus of the Medical Center of Southeast Texas. The Wall Street Journal reported that one facility in Florida was infested with bats and that garbage was accumulating there.
The Department of Public Health got involved
The Department of Public Health founded teams for every Steward Health Care facility to help the staff and monitor safety and quality standards. However, other concerns were raised, and they revolved around allegations of the private equity firm Cerberus’s financial gains and its role in Steward’s finances.
Senator Warren criticized Cerberus
Democratic Senator Elizabeth Warren slammed Cerberus Capital Management, stating that Steward Health Care’s bankruptcy is directly connected to their decision to force Steward to pay rent at its hospitals. Cerberus denied the allegations, saying the real estate sale helped the hospital chain invest in equipment. Cerberus added that Steward was financially healthy when sold to a physician group led by Steward’s CEO in 2020.
Warren and Senator Markey against Medical Properties Trust
Warren was joined by another prominent Massachusetts Senator, Edward Markey. Markey and Warren criticized Medical Properties Trust, as Markey on X ensured he would do his part to keep hospitals open. The Senator, who has been serving since 2013, added he will do everything he can to ensure that hospitals have what they need.
Allegations aimed at Steward
Furthermore, WSJ reported allegations against Steward regarding the relationship with Medical Properties Trust. The outlet explained that these allegations involve Medical Properties Trust buying hospital buildings from Steward only to lease them back, which reportedly added a financial burden to the hospital chain.
Massachusetts was preparing for bankruptcy
Massachusetts Health and Human Services Secretary Kate Walsh said the state was preparing for Steward’s bankruptcy, ensuring hospitals would stay open. Governor of Massachusetts Maura Healey pointed out that the situation comes from mismanagement, greed, and a lack of leadership transparency in Dallas.
Bankruptcy in numbers
Texas bankruptcy court filings confirmed that Steward filed for bankruptcy with between $1 billion and $10 billion in liabilities. The filling allows hospitals to stay open while seeking restructuring plans. The largest private physician-owned hospital has over 30,000 employees. Medical Properties already gave a response.
Medical Properties issued a statement
In response to Steward Health Care’s Chapter 11 bankruptcy filing, Medical Properties Trust, Inc. said in a statement that it approved $75 million in debtor-in-possession financing. It did not commit to further funding and expects Steward to ensure continuity of patient care.
Debts before 2020
Steward reportedly had debts exceeding $800 million between 2017 and 2020. Officials vary on whether things worsened during the pandemic. According to its official website, the hospital chain serves more than 2.2 million patients annually.
Things were looking up in January
WSJ reported in January that Medical Properties Trust assured it was working on developing ways to strengthen Steward’s liquidity. In 2023, MPT reportedly wrote off Steward’s $714 million debt due to the hospital’s financial struggles.
The next step
Steward’s bankruptcy alarmed some lawmakers, and Ron Mariano said it was up to legislators to ensure this scenario does not repeat for any other similar facility. Massachusetts has the state’s emergency operations plan, while Alabama announced it will open a Healthcare High School that will help fill the State’s need for healthcare workers.
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