Steward Health Plans to Sell Its Hospitals in Court Auctions
YOUNGSTOWN, Ohio – Bankrupt Steward Health Care told a U.S. Bankruptcy court in Texas on Tuesday that it is attempting to sell its 31 hospitals in the United States – including three in the Mahoning and Shenango valleys.
Steward attorney Ray Schrock said, “Our goal remains that there are zero hospitals closed on our watch. There’s going to be a change in ownership in many hospitals – we recognize that. But we don’t want to see any of these communities fail to be served.”
Steward operates Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland Township and Sharon Regional Hospital in Sharon, Pa. In total, the Dallas-based hospital system operates a network of hospitals that serve more than 2.2 million patients each year, making it the largest physician-owned system in the United States.
The privately owned company said it would hold auctions June 28 for its hospitals outside of Florida and July 30 for its Florida hospitals.
“What we don’t want to do is have a fire sale of the assets,” Schrock said. “There is a lot of value here.”
On Monday, Steward filed for protection under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas in Houston after months of financial turmoil.
The company has $9 billion in debt, according to court filings, and $6 billion in annual revenue. Talks are underway to sell Stewardship Health Care, its network of physicians, to Optum Care, a unit of UnitedHealth.
At a hearing yesterday in Houston, U.S. Bankruptcy Judge Christopher Lopez approved interim emergency measures that are critical to maintaining the normal course of services to the hospital system’s patients.
These measures include approving debtor in possession financing so Steward can pay its employees, utilities, insurance policies, critical vendor claims, taxes and other fees, according to court papers.
The court also granted to the debtor its ability to maintain existing refund programs and honor prepetition obligations.
“I think the debtors are exercising their sound business judgment,” Lopez said during the hearing. “This currently will allow the debtor to continue to operate and ease into the Chapter 11 process without any material disruptions to the care and service they provide to individuals.”
Also, Lopez approved an order that extends to July 9 the deadline for debtors to file with the court a schedule of assets and liabilities, current income and expenditures, schedules of executory contracts and unexpired leases and financial statements.
Alabama-based Medical Properties Trust, Steward’s major landlord, has agreed to fund $75 million so the hospital can continue operations and transition the hospitals to new owners.
“The company has not committed to providing additional funding beyond this amount,” MPT said in a statement Tuesday. “MPT expects Steward to use the financing to ensure continuity of patient care while accelerating the re-tenanting of the hospitals to new operators.”
Steward said Monday that it is working with MPT on an additional $225 million upon satisfying “certain conditions acceptable to Medical Properties.”
The hospital system’s financial woes have been brewing for months after it was revealed that it owed MPT at one time approximately $50 million in delinquent lease payments.
Steward said delays in the closing of the sale of its physician network to UnitedHealth Group, higher labor and material costs, insufficient government reimbursements and the aftermath of the Covid-19 pandemic forced the company to seek Chapter 11 protection.
Meanwhile, nurses at Hillside Rehabilitation Hospital in Howland on Tuesday expressed “deep concern for the patients” following the bankruptcy announcement.
“While receiving this traumatic news is undoubtedly challenging, as nurses, we remain steadfast in our commitment to the wellness, care, and healing of our patients,” said De Anna Fuchilla, chair of the Hillside Registered Nurses Association, a local unit of the Ohio Nurses Association. “Our community relies on Hillside for essential health care services, and we are committed to ensuring continued access to the care they require.”
The nurses at Hillside recently signed a three-year contract with the hospital in December 2023.
“We will exhaust every avenue to safeguard these vital health care services within the community and uphold the terms of our agreement,” said Rick Lucas, president and executive director of the ONA. “Our dedicated nurses work diligently to deliver high-quality care, improving patients’ lives as they journey toward recovery. The loss of Northside Hospital in 2018 underscores the urgent need for collective action.”
Copyright 2024 The Business Journal, Youngstown, Ohio.
