William Simpson
BOSTON- Health Care Administratorthe struggling healthcare provider that depended on the support of private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas and Florida, announced Monday who is declaring bankruptcy.
administrator, which is millions of dollars in debt, said it has “initiated a judicial restructuring process by filing voluntary petitions for relief” under Chapter 11 of the U.S. Bankruptcy Code. He filed the request in the Southern District of Texas.
The Dallas-based company currently has 30 hospitals in eight states, including nine in Massachusetts, where its simmering financial crisis raised concerns about patient safety.
Steward has been one of the focuses of a year-and-a-half CBS News investigation that reveals how private equity investors embezzled hundreds of millions of dollars of community hospitals with devastating consequences for public health. Records reviewed by CBS News showed Steward hospitals across the country with a trail of unpaid bills, sometimes risking a shortage of supplies that could save lives.
Last year, CBS News discovered that Steward redirected money from hospital operations Selling San Antonio’s Texas Vista Medical Center Real Estate before completely closing the installation.
The company’s bankruptcy filing lists 30 creditors who owe a total of more than $500 million, including the U.S. government, which owes more than $32 million to the federal government in reimbursements for insurance overpayments.
Experts tell CBS News that Steward’s debts are likely much greater, and when the dust settles, it could be one of the largest hospital bankruptcies in U.S. history. In a statement, the company said it trusts its owner, Medical Properties Trust, to provide enough financing to allow its hospitals to continue operating even after bankruptcy.
“The company is finalizing the terms of Medical Properties Trust’s debtor-in-possession financing for an initial financing of $75 million and up to an additional $225 million upon satisfaction of certain conditions acceptable to Medical Properties Trust,” it said. Steward in a statement.
No daily impact expected, says Steward Health Care
The company said declaring bankruptcy allows it to “continue to provide necessary care to its patients in its communities without interruption.”
Both Steward and Massachusetts officials said they did not expect disruptions to 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 that protects access to care, preserves jobs, and stabilizes our healthcare system.”
Despite these assurances, anxiety about the future viability of the company’s hospitals runs deep, especially in Massachusetts. For months, healthcare professionals have expressed concern about the impact of any potential closure.
“The potential loss of any of these facilities will 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 going through 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.
The Impact of Private Capital on Healthcare
A spokesperson for Steward previously said CBS News company executives always put patients first and said they “deny that any other considerations were placed ahead of this guiding principle.” The spokesperson said Steward has “actively and significantly invested” in its hospital system since its formation, including in Massachusetts, where it took over hospitals that were “failing” and “on the verge of closing.”
“Steward’s investment took the form of facility upgrades, equipment, technology and other significant improvements,” the spokesperson wrote.
However, Steward has become synonymous with the dangers of private capital investment in health care. The company began buying Massachusetts hospitals in 2010, with hundreds of millions of dollars in support from private equity giant Cerberus,
Cerberus exited its stake in Steward in January 2021 after making an $800 million profit over a decade, according to a Bloomberg report. Financial records show that Steward has also sold more than $1 billion worth of land and buildings from its hospitals since 2016 to Medical Properties Trust, which made a deal to buy hospital properties from private equity investors.
A 2021 filing with the Securities and Exchange Commission shows that Steward’s owners also paid millions in dividends. Around the same time, Steward CEO Ralph de la Torre acquired a 190-foot yacht estimated at US$40 million. In an email to CBS News, Steward confirmed that de la Torre owned the yacht.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment,” de la Torre said in the company’s statement, released at 3:30 a.m. Monday. “Filing for Chapter 11 restructuring is in the best interest of our patients, physicians, employees and communities at this time.”
