Steward Health Care files for Chapter 11 bankruptcy

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Struggling Steward Health Care files for bankruptcy

Struggling Steward Health Care files for bankruptcy 00:47

BOSTON – Steward Health Care, the struggling wellness attraction supplier that relied connected backing from backstage equity investors to rapidly get dozens of assemblage hospitals, including facilities successful Massachusetts, Texas and Florida, announced Monday that it is filing for bankruptcy.

Steward, which is millions of dollars successful debt, said it has "commenced an in-court restructuring process done the filing of voluntary petitions for relief" nether Chapter 11 of the U.S. Bankruptcy Code. It submitted the filing successful the Southern District of Texas. 

The Dallas-based institution presently owns 30 hospitals crossed 8 states, including 9 successful Massachusetts, wherever its smoldering fiscal situation has raised concerns astir diligent safety

Steward has been 1 absorption of a year-and-a-half-long CBS News probe revealing however backstage equity investors have siphoned hundreds of millions of dollars from assemblage hospitals with devastating nationalist wellness consequences. Records reviewed by CBS News showed Steward hospitals astir the state with a way of unpaid bills, astatine times risking a shortage of perchance lifesaving supplies.

Last year, CBS News recovered Steward redirected wealth distant from infirmary operations by selling disconnected the existent property of San Antonio's Texas Vista Medical Center earlier closing the installation altogether.

The company's bankruptcy filing lists 30 creditors who are owed a full of much than $500 million, including the U.S. government, which is owed much than $32 cardinal to the national authorities successful reimbursements for security overpayments. 

Experts archer CBS News that Steward's debts are apt overmuch higher, and erstwhile the particulate settles, it could beryllium 1 of the largest infirmary bankruptcies successful U.S. history. In a statement, the institution said it is relying connected its landlord, Medical Properties Trust, to supply capable backing to let its hospitals to proceed to run done bankruptcy. 

"The Company is finalizing the presumption of debtor-in-possession financing from Medical Properties Trust for archetypal backing of $75 cardinal and up to an further $225 cardinal upon the restitution of definite conditions acceptable to Medical Properties Trust," Steward said successful a statement.

No day-to-day impacts expected, Steward Health Care says

The institution said declaring bankruptcy allows it to "continue to supply indispensable attraction to its patients successful their communities without disruption."

Both Steward and Massachusetts officials said they expected nary interruptions successful day-to-day operations.

"Steward hospitals stay open, and patients should not hesitate to question care," said Massachusetts Health and Human Services Secretary Kate Walsh successful a statement, adding that the authorities "is moving with Steward and immoderate imaginable partners to enactment an orderly transportation of ownership that protects entree to care, preserves jobs and stabilizes our wellness attraction system."

Despite those assurances, anxiousness implicit the aboriginal viability of the company's hospitals runs deep, peculiarly successful Massachusetts. For months, wellness attraction workers person voiced interest implicit the interaction of immoderate imaginable closure. 

"The imaginable nonaccomplishment of immoderate of these facilities volition person devastating consequences for hundreds of thousands of residents from the South Shore to confederate New Hampshire," the Massachusetts Nurses Association said successful a statement. "However, Steward going done the process of reorganization provides an accidental for different stakeholders to instrumentality long-awaited enactment and halfway the voices of caregivers and patients," the connection said successful part.

Private equity's interaction connected wellness care

A spokesperson for Steward antecedently told CBS News institution executives ever enactment patients archetypal and said they "deny that immoderate different considerations were placed up of that guiding principle." The spokesperson said Steward "has actively and meaningfully invested" successful its infirmary strategy since its formation, including successful Massachusetts, wherever it took implicit hospitals that were "failing" and "about to close."

"Steward's concern has taken the signifier of installation upgrades, equipment, technology, and different meaningful improvements," the spokesperson wrote.

Yet Steward has go synonymous with the perils of backstage equity concern successful wellness care. The institution started buying up Massachusetts hospitals successful 2010, with hundreds of millions of dollars successful backing from private equity elephantine Cerberus

Mother’s decease sparks interest astir infirmary investment 06:43

Cerberus shed its involvement successful Steward by January 2021, aft making an $800 cardinal nett successful a decade, according to a study from Bloomberg. Financial records amusement Steward has besides sold disconnected much than $1 cardinal of its hospitals' onshore and buildings since 2016 to Medical Properties Trust, which has made a business of buying up infirmary existent property from backstage equity investors. 

A filing with the Securities and Exchange Commission from 2021 shows Steward's owners besides paid themselves millions successful dividends. Around the aforesaid time, Steward CEO Ralph de la Torre acquired a 190-foot yacht estimated to beryllium worthy $40 million. In an email to CBS News, Steward confirmed de la Torre owned the yacht.

"Steward Health Care has done everything successful its powerfulness to run successfully successful a highly challenging wellness attraction environment," de la Torre said successful the company's statement, released astatine 3:30 a.m. Monday morning. "Filing for Chapter 11 restructuring is successful the champion interests of our patients, physicians, employees, and communities astatine this time."

Matt Schooley

Matt Schooley is simply a integer shaper astatine CBS Boston. He has been a subordinate of the WBZ quality squad for the past decade.

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