Florida hospital operator files for bankruptcy
TALLAHASSEE - A company that operates eight Florida hospitals filed for bankruptcy protection Monday, calling it a "necessary measure to allow the company to continue to provide necessary care to its patients in their communities without disruption."
Dallas-based Steward Health Care filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, the company said in a news release. It said it does not expect day-to-day operations to be interrupted, with hospitals, doctor's offices, and other facilities open.
"Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment. Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time," Ralph de la Torre, chief executive officer of Steward, said in a prepared statement.
Steward operates Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County; Florida Medical Center in Broward County; Melbourne Regional Medical Center and Rockledge Regional Medical Center in Brevard County; and Sebastian River Medical Center in Indian River County.
Steward in 2021 acquired the Miami-Dade and Broward hospitals from Tenet Healthcare Corp. It also has hospitals in Arizona, Arkansas, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas.
Monday's news release said Steward was finalizing an initial $75 million in what is known as debtor-in-possession financing from Medical Properties Trust, Inc. Debtor-in possession financing is a type of funding for companies in Chapter 11 bankruptcy.
Steward also said it could receive up to an additional $225 million "upon the satisfaction of certain conditions acceptable to Medical Properties Trust." Steward and Medical Properties Trust have reached deals in the past.
For example, Medical Properties Trust said in a 2021 news release that it had reached agreement to purchase the five South Florida hospitals from Tenet in conjunction with Steward's acquisition of the operation of the hospitals. The news release said Medical Properties Trust would lease the facilities to Steward.
Steward has taken other steps to deal with its financial issues, such as planning to sell its Stewardship Health physician group to Optum, a subsidiary of UnitedHealthcare, according to numerous news reports. But de la Torre's statement Monday indicated the Optum deal had been delayed.
"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," the statement said. "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's financial problems have drawn heavy attention in Massachusetts, where it operates nine hospitals. In a Feb. 20, letter Massachusetts Gov. Maura Healey accused Steward of refusing to submit financial records to the state.
Media reports said Healey later called for Steward to leave the state, and U.S. Sen. Elizabeth Warren, D-Mass., and U.S. Sen. Edward Markey, D-Mass., blasted the company in a March 7 letter to de la Torre.
"Steward's Massachusetts hospitals are in deep financial distress and appear to be in danger of closure because of years of mismanagement, private equity schemes, and executive profiteering," the letter said.
In Monday's news release about the bankruptcy filing, Steward pointed to factors such as "continuing to face challenges created by insufficient reimbursement by government payors as a result of decreasing reimbursement rates while at the same time facing skyrocketing labor costs, increased material and operational costs due to inflation, and the continued impacts of the COVID-19 pandemic."
"It is Steward's goal to resolve the Chapter 11 process as quickly as possible, with the help of the court, with a view to the long-term and sustainable financial health of the system," the news release said.
Among Steward's top executives is Ruben King-Shaw Jr., a former secretary of the Florida Agency for Health Care Administration who serves as the company's chief strategy officer, according to the company's website.