One of the Largest Hospital Chains, With 30,000+ Employees, Files For Bankruptcy

Steward Health Care System LLC, one of the largest hospital chains in the country, has filed for Chapter 11 bankruptcy protection.

Ralph de la Torre, Steward Health’s CEO, attributed the company’s decision to seek Chapter 11 protection to a combination of escalating costs and inadequate reimbursement from government payors.

With assets and liabilities estimated between $1 billion and $10 billion, Steward Health’s bankruptcy petition allows the company to continue operating its 33 community hospitals across Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania, Texas, and Utah while seeking approval for a restructuring plan.

The Massachusetts-based firm, which employs over 30,000 people, has been grappling with liquidity issues in recent months.

As part of the restructuring deal, Medical Properties Trust Inc., a US real estate trust specializing in healthcare facilities and Steward Health’s landlord, is set to provide initial debtor-in-possession funding of $75 million.

An additional loan of up to $225 million may be granted if certain conditions are met. In January, Medical Properties had already extended a $60 million bridge loan to Steward Health and deferred some of its rent arrears.

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The unfortunate demise of Steward Health reflects the immense pressure healthcare companies face from an aging population and inadequate reimbursement rates from Medicare and Medicaid.

This situation is further compounded by the unspoken burden of migrants using emergency rooms as their primary form of healthcare, placing additional strain on an already stretched system.

According to de la Torre, the delay in the sale of Steward Health’s physician business unit, Stewardship Health, forced the company to seek alternative funding sources.

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He emphasized that the bankruptcy process would enable Steward Health 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.”