Embattled health system Steward Health Care filed for bankruptcy on Monday, a move it says is critical to continue to treat patients as it navigates its financial issues.
In a press release, the provider confirmed that the filing was submitted in court in the Southern District of Texas. Steward is also "finalizing" a debtor-in-financing arrangement with Medical Properties Trust, which will provide an initial $75 million. There's potential to secure an extra $225 million should Steward meet "certain conditions acceptable to Medical Properties Trust."
Steward said it does not expect the Chapter 11 proceedings to interrupt its daily operations, and its hospitals, medical centers and doctor's offices are still open.
“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment. Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees, and communities at this time,” said Ralph de la Torre, M.D., CEO of Steward, in the press release.
"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," he added. "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."
The health system also said that a major factor in its decision to file for bankruptcy was continued challenges around reimbursement from government payers, which is making it harder for Steward to respond to rising labor costs, inflation and ongoing expenses from COVID-19.
Steward said it's aiming to move quickly on the bankruptcy proceedings, "with a view to the long-term and sustainable financial health of the system."
Steward is the largest physician-owned hospital operator in the country, running 331 hospitals across eight states. It first got into financial trouble earlier this year when it revealed that it was $50 million behind on rent owned to Medical Properties Trust.
Under fire from regulators, particularly in Massachusetts, who were concerned about potential hospital closures, the health system released a lengthy recovery plan that does include a restructuring, which Monday's bankruptcy filing intends to accelerate.
Kate Walsh, Massachusetts' Secretary of Health and Human Services, said in a statement Monday that the governor's office has been preparing for this.
"The Healy-Driscoll administration 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," Walsh said.
The Massachusetts Health Policy Commission also said in a statement that it's been in close communication with the governor's office following the bankruptcy filing.