June 21, 2024
Steward Health Care to sell all of its hospitals
Steward Health Care to sell all of its hospitals

Photo: Vasko/Getty Images

Steward Health Care will sell all of its 31 hospitals, according to documents submitted to the U.S. Bankruptcy Court in Houston on Tuesday.

Under the oversight of a Transformation Committee and with the assistance of its advisors, Steward initiated various marketing and sale processes before the commencement of Chapter 11, according to the court documents posted by Kroll.

“Concurrently with the Stewardship Health marketing process, beginning in late January, Steward also initiated a phased marketing process for the sale of its hospital facilities,” court documents said. “Presently, the company is marketing all of its hospitals.”

Steward owns 31 hospitals across eight states in Massachusetts, Arizona, Ohio, Pennsylvania, Arkansas, Louisiana, Texas and Florida.

The marketing of hospitals in Arizona, Southern Massachusetts, Arkansas, Louisiana, Pennsylvania and Ohio began in January; the marketing of hospitals in Northern Massachusetts in late February; the marketing of hospitals in Texarkana and Port Arthur, Texas in March; and the marketing of hospitals in Florida and in Houston, Odessa, and Big Spring, Texas, in April.

The plan is to explore reorganization around a rationalized hospital portfolio and then work with stakeholders to find solutions for hospitals that cannot be sold, Steward said.

Landlord Medical Properties Trust, which is financing the reorganization, will pursue value maximizing sales, while also in parallel exploring a reorganization around a smaller footprint of hospitals, the documents said.

“Steward’s goal is that zero hospitals are closed as part of this process,” said hearing materials.

WHY THIS MATTERS 

The court hearing was held the day after Steward announced it was filing for Chapter 11 bankruptcy.

A final hearing on certain of the first-day motions is scheduled for June 3, at 1 p.m. CT.

In first-day motion documents, Steward outlined its plan of action, from security and financial to maintaining high-quality patient care and doctor relations. Its final goal is to emerge from Chapter 11.

The plan includes a letter of intent executed with Optum on March 19, when Steward agreed to sell its physician group to Optum Care.

THE LARGER TREND

Steward, as other hospitals, suffered from COVID-19 declines in patient visits, labor costs and inflationary pressures, reimbursement and volume trends, payer mix challenges, and lower collections in accounts receivable, it said. 

Starting in 2023, Steward’s strained liquidity caused disruptions in vendor relationships affecting the company’s operations and ability to drive revenue.

“In particular, Steward’s hospitals in Northern Massachusetts have been adversely affected, leading to significant vendor, regulatory and political pressure,” court documents said.

On Monday, Steward Health Care, among the largest physician-led hospital operators in the country, announced it had filed for Chapter 11 bankruptcy.

Steward said it was finalizing a deal with its landlord, Medical Properties Trust, on the terms of a bankruptcy loan of up to $300 million. The deal is for initial funding of $75 million and up to an additional $225 million.

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