Health

Steward Health Care Seeks Chapter 11 Amid Funding Hunt

May 6, 2024 1 min read

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Steward Health Care System LLC has initiated a Chapter 11 bankruptcy filing in the Southern District Court of Texas. The health care provider, which oversees 33 community hospitals across nine U.S. states and employs over 30,000 people, has reported assets and liabilities in the range of $1 billion to $10 billion. The filing is part of a strategy to restructure the company's debts while securing a rescue loan from Medical Properties Trust Inc., a real estate investment trust specializing in hospital facilities.

Medical Properties Trust has agreed to provide Steward Health with debtor-in-possession financing, starting with an initial $75 million and the possibility of extending up to an additional $225 million under certain conditions. The bankruptcy proceedings come after Steward Health faced challenges including higher operational costs, inadequate reimbursement from government payers, and the impact of the COVID-19 pandemic, which have strained the company's finances.

Steward Health has cited difficulties in vendor payments and collections as factors affecting its financial obligations, including rent and loan payments. Despite the bankruptcy, Steward Health anticipates that its hospitals will continue to operate without interruption, and the company does not expect the restructuring process to interfere with its provision of care to patients and employment for its staff. The move also aims to facilitate the potential transition of its Massachusetts hospitals to another operator. The delay in the sale of Steward Health's physician business unit, Stewardship Health, has also been mentioned as a contributing factor to the need for Chapter 11 protection.

#bankruptcy #finance #markets

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