What You Should Know:
– Steward Health Care, the nation’s largest physician-led hospital operator, announced today that it has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas.
– Steward assures patients and the broader community that day-to-day operations will continue uninterrupted throughout the Chapter 11 process. Hospitals, medical centers, and physician offices will remain open and fully functional. The company’s commitment to its employees also remains unchanged.
Seeking Financial Restructuring to Ensure Continued Care
Steward cited the Chapter 11 filing as a necessary step to ensure the continued delivery of essential healthcare services to its communities. The company has secured initial debtor-in-possession financing of $75 million from Medical Properties Trust, with the potential for an additional $225 million upon meeting specific conditions.
A Multifaceted Challenge
Steward identified several key factors contributing to its financial difficulties:
- Insufficient Reimbursement: Declining government insurance reimbursements have strained the company’s finances.
- Rising Costs: Steward faces escalating labor costs, material expenses, and operational overhead due to inflation.
- Lingering Pandemic Effects: The ongoing COVID-19 pandemic continues to impact Steward’s operations.
A Commitment to a Sustainable Future
Steward expressed its intention to navigate the Chapter 11 process swiftly, aiming for a long-term and financially stable future. The company has enlisted legal counsel, financial advisors, and investment banking services to guide the restructuring efforts.
“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,” said Dr. Ralph de la Torre, Chief Executive Officer of Steward. “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. 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. By working collaboratively with stakeholders in this court-supervised controlled environment, and having the benefit of our earlier strategic efforts, 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.”
