Steward Health Care files for Chapter 11 bankruptcy

boston – Steward Healthcarea struggling health care company that relied on support from private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas and Florida, Announced on Monday They file for bankruptcy.

Steward, he Millions of dollars in debtIt said it had “begun an in-court restructuring process by filing voluntary petitions for relief” under Chapter 11 of the US Bankruptcy Code. The filing was made in the Southern District of Texas.

The Dallas-based company currently has 30 hospitals in eight states, including nine in Massachusetts, where its financial crisis is raging. Raised concerns about patient safety.

Steward was one of the focus of a year-and-a-half-long CBS News investigation that revealed how private equity investors… They embezzled hundreds of millions of dollars From community hospitals with Devastating public health consequences. Steward hospitals across the country are grappling with a rash of unpaid bills, sometimes threatening shortages of potentially life-saving supplies, records reviewed by CBS News showed.

Last year, CBS News found that Steward redirected money away from hospital operations through… Texas Vista Medical Center Real Estate for Sale in San Antonio Before closing the facility completely.

The company’s bankruptcy filing includes 30 creditors who are owed a total of more than $500 million, including the U.S. government, which owes more than $32 million to the federal government in damages for insurance overpayments.

Experts tell CBS News that Steward’s debt is likely much higher, and when the dust settles, it could be one of the largest hospital bankruptcies in U.S. history. The company said in a statement that it is relying on its owner, Medical Properties Trust, to provide sufficient financing to allow its hospitals to continue operating through bankruptcy.

“The Company is finalizing terms for debtor-in-possession financing from Medical Properties Trust for initial financing of $75 million and up to an additional $225 million upon satisfaction of certain conditions acceptable to Medical Properties Trust,” Steward said in a statement.

Steward Health Care says there are no expected day-to-day effects

The company said that declaring bankruptcy allows it to “continue providing necessary care to its patients in their communities without interruption.”

Steward and Massachusetts officials said they do not anticipate any interruption in daily operations.

“Steward Hospitals remain open, and patients should not hesitate to seek care,” Massachusetts Health and Human Services Secretary Kate Walsh said in a statement, adding that the state is “working with Steward and any potential partners to support an orderly transfer of ownership.” “It protects access to care, preserves jobs and stabilizes our health care system.”

“It is safe to get care at Steward facilities. The facilities are open. You should not walk past them if you have chest pain, and if you are pregnant and about to give birth, please go to the hospital closest to you,” Massachusetts Public Health Commissioner Dr. Robert Goldstein said. .

Despite those assurances, concern about the company’s hospitals’ survival runs deep, especially in Massachusetts. For months, health care workers have expressed concern about the impact of any potential closure.

“The potential loss of any of these facilities would have devastating consequences for hundreds of thousands of residents from the South Shore to southern New Hampshire,” the Massachusetts Nurses Association said in a statement. “However, Steward’s passage of the reorganization process provides an opportunity for other stakeholders to take long-overdue action and center the voices of caregivers and patients,” the statement said in part.

Patients are concerned about hospitals in their neighborhoods.

“We need this hospital,” said Riazuddin, who has been seeing the same doctor at St. Elizabeth’s Medical Center in Boston for 22 years. “It’s a beautiful hospital.” “The neighborhood and everyone needs it.”

“It’s necessary,” Zadani Mahdi said as he headed to an appointment at St. Elizabeth’s Hospital on Monday. “I hope they keep this hospital open, honestly. There are a lot of patients that come here. I’ve been coming here since I was a little kid.”

Massachusetts Governor Maura Healey promised that the state would help Steward’s patients and that she would ensure that a situation like this would not happen again.

“I don’t want to lose sight of the fact that the situation stems from greed, mismanagement, and a lack of transparency on the part of the Steward leadership in Dallas, Texas. I’ve been clear about that, and I will continue to be,” Governor Healey said. “We must be clear about that. It is a situation that should not have been done.” “It will never happen, and we will work together to ensure the necessary steps are taken to make sure it never happens again.”

The Haley administration has launched a hotline (617-468-2189) and Site for patients Who have questions.

The impact of private equity on health care

A Steward spokesman previously said that CBS News executives always put patients first, and said they “deny putting any other considerations before this guideline.” Steward has “actively and purposefully invested” in its hospital system since its founding, including in Massachusetts, where it acquired hospitals that were “failing” and “on the verge of closing,” the spokesman said.

“Steward’s investment has taken the form of facility upgrades, equipment, technology and other significant improvements,” the spokesman wrote.

However, Steward has become synonymous with the risks of private equity investing in healthcare. The company began buying Massachusetts hospitals in 2010, with hundreds of millions of dollars in support from the United States. Private equity giant Cerberus,

Cerberus divested its stake in Steward by January 2021, after making an $800 million profit over a decade, according to Cerberus. Report from Bloomberg. Financial records show Steward has also sold more than $1 billion of its hospital land and buildings since 2016 to Medical Properties Trust, which He did a business Purchasing hospital properties from private equity investors.

A filing with the Securities and Exchange Commission from 2021 shows Steward’s owners also paid themselves millions of dollars in dividends. Around the same time, Steward CEO Ralph de la Torre I got a 190-foot yacht Its value is estimated at $40 million. In an email to CBS News, Steward confirmed that de la Torre owns the yacht.

“Steward Health Care has done everything in its power to operate successfully in an extremely challenging health care environment,” De La Torre said in a company statement issued at 3:30 a.m. Monday. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.”

Massachusetts Senator Ed Markey chirp“De la Torre and his morally bankrupt business model have failed our hospitals, our providers, and our patients. He and his private equity allies must be held accountable. I will continue to fight to keep hospitals open and protect patients and providers.”