Steward Health Care files for bankruptcy, citing rising labor costs and reduced reimbursement
For-profit chain Steward Health Care announced it is filing for bankruptcy protections, but it does not foresee a disruption of operations at its 31 hospitals, physician offices or other care sites in the U.S.
In a press release, Steward said it is working to finalize a restructuring deal in the U.S. Bankruptcy Court for the Southern District of Texas, one that would allow for an influx of new funds from Medical Properties Trust, which has an ownership stake in the health system. The release mentioned that the funding is expected to be $75 million, with an additional $225 million possible if Steward meets unspecified conditions.
The health system noted that the Chapter 11 bankruptcy filing is a result of “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.”
Headquartered in Dallas, Steward is primarily physician-owned. It is the largest physician-run healthcare network in the country, serving more than 12 million patients each year in Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas. The health system said the bankruptcy filing was done to ensure it can continue to treat patients without interruption.
The financial woes of Steward were revealed earlier this year, when it was reported that the organization was $50 million behind in rent to the Medical Properties Trust, which serves as its landlord. Steward employs more than 40,000 people nationwide.
Steward has faced regulatory scrutiny over its finances, particularly in Massachusetts, where it operates eight hospitals. The governor’s office released a statement about the bankruptcy filing, saying they were prepared for this to happen and advising patients in the state to continue to seek care normally.
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