Dallas-based Steward Health Care filed for Chapter 11 bankruptcy and is working out terms of debtor-in-possession financing from real estate investment firm Medical Properties Trust for initial funding of $75 million and up to an additional $225 million upon the satisfaction of certain conditions.
The company said that it did not expect any interruptions in its day-to-day operations during the Chapter 11 process and that its hospitals, medical centers and physician’s offices remain open.
Steward has faced significant financial trouble in Massachusetts, where it now operates eight hospitals. The company revealed a plan to sell its physician network to Optum in a notice to the Massachusetts Health Policy Commission on March 26.
“The deal is part of Steward's effort to climb out of a financial hole that has shaken the Massachusetts healthcare industry,” WBUR in Boston reported at the time. “Public officials and healthcare leaders are deeply concerned the company could shutter medical services amid its financial troubles, which could reduce patients' access to care and destabilize the state's healthcare system.”
Since January, the Commonwealth’s Department of Public Health has had monitors in Steward hospitals to assess whether the facilities have the necessary supplies, equipment, and staffing to deliver safe and effective care. Those monitors remain in place.
On May 3, the Department of Public Health activated its Emergency Operations Plan, including a regionally focused Incident Command System to lead a coordinated response to clinical quality and access in Eastern Massachusetts, in the context of Steward Hospitals’ financial challenges.
“This week, the Massachusetts Department of Public Health activated its Emergency Operation Plan as part of our ongoing commitment to ensure patient safety, protect access to care and preserve jobs. This next step is part of our continued response to Steward Health Care’s financial challenges,” said Health and Human Services Secretary Kate Walsh, in a statement.
“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,” said Ralph de la Torre, M.D., CEO of Steward, in a statement.
“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," de la Torre added. "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.”
