BY Fraser Tennant
In what has been described as the biggest hospital bankruptcy in decades, healthcare provider Steward Health Care has filed for Chapter 11 bankruptcy protection.
Among the factors driving the filing are insufficient reimbursement by government payors as a result of decreasing reimbursement rates, skyrocketing labour costs, increased material and operational costs due to inflation, and the continued impacts of the coronavirus (COVID-19) pandemic.
The company intends to resolve the Chapter 11 process as quickly as possible, with the help of the court, with a view toward the long term, sustainable financial health of the system.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment,” said Ralph de la Torre, chief executive of Steward. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.”
In addition, Steward is finalising the terms of debtor-in-possession financing from Medical Properties Trust for initial funding of $75m and up to an additional $225m upon the satisfaction of certain conditions acceptable to Medical Properties Trust.
“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,” continued Mr de la Torre. “By working collaboratively with stakeholders in this court-supervised controlled environment, and having the benefit of our earlier strategic efforts.”
Based in Dallas, Steward currently operates more than 30 hospitals across Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas. It is the US’ largest physician-led, minority-owned, integrated healthcare system.
The company does not expect any interruptions in its day to day operations, which will continue in the ordinary course throughout the Chapter 11 process. Steward’s hospitals, medical centres and physician’s offices are open and continuing to serve patients and the broader community.
Mr de la Torre added: “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 the continued care and service of our patients and our communities.”
News: US hospital network Steward files for bankruptcy, aims for new loan