Steward Owes $50M in Unpaid Rent, Sells Some Lab Services
YOUNGSTOWN, Ohio – Amid reports Steward Health Care System owes more than $50 million in unpaid leases to Medical Properties Trust Inc., it has sold select parts of its Ohio and Pennsylvania area outreach laboratory services business to Quest Diagnostics.
According to Quest Diagnostics, the relationship will broaden access to innovative, quality and cost-effective laboratory services, and Quest’s full-service laboratory in Pittsburgh, Pa., will provide testing for physicians and patients previously serviced by outreach laboratories operated by Steward in parts of Pennsylvania and Ohio.
A spokesperson at Trumbull Regional Medical Center said Tuesday the inpatient and outpatient lab locations at both Trumbull Regional and Sharon Regional Medical Center will be unaffected by the Quest transition, and Steward will continue to operate these services without disruption or change.
“Steward’s outreach laboratory operations in Ohio and Pennsylvania will gradually convert to Quest over the course of the next two months,” according to a news release. “Normal operations will be maintained at Trumbull Regional Medical Center and Sharon Regional Medical Center with no change or disruption to any business entities or service lines. This transaction [with Quest] will enable Steward to focus on its core care mission while ensuring providers and patients have continued access to high quality, innovative and cost-effective laboratory services.”
The spokesperson did not comment on the situation with Medical Properties Trust, which released a report late last week stating it was accelerating efforts to recover uncollected rents and outstanding loan obligations from Steward Health Care System.
After it made the announcement, Medical Properties Trust stock reportedly fell 31% on the New York Stock Exchange, but it has been declining throughout the year, dropping nearly 74% since Jan. 23, 2023.
In its third-quarter consolidated revenue report, Medical Properties Trust reported that of its nearly $306.6 million in total revenue, Steward accounted for nearly $70.7 million. According to Medical Property Trust, a hospital real estate investment trust company, Steward has been making partial rental payments but delayed paying a portion of its September and October rent.
Medical Properties Trust reports it has been working closely with Steward to devise a plan to strengthen Steward’s liquidity and restore its balance sheet, all in an attempt to recoup uncollected rent and outstanding loans from Steward.
Medical Properties Trust has reportedly agreed to provide a $60 million bridge loan. Among other agreements, Medical Properties Trust has agreed to defer unpaid rent as of Dec. 31, but partial cash rent payments are expected to recommence in February, including about $9 million in the first quarter of 2024 and about $44 million in the second quarter.
The agreement between Steward and Medical Properties Trust is reported to be a 22-year master lease.
Medical Properties Trust allegedly is not the only company owed money by Steward Health Care Systems. In Massachusetts, a civil action filed Dec. 13, 2023, by ProLink Healthcare LLC claims Steward failed to pay the staffing agency at least $45.7 million for temporary health care providers, nurses the company provided to bolster staffing levels during the Covid pandemic. The lawsuit lists the hospitals involved and claims Steward owes ProLink $801,583 for staffing at Sharon Regional Medical Center and $386,179 for Trumbull Regional Medical Center.
ProLink, based in Cincinnati, claims in the lawsuit that the last payment Steward made on its debt was in July 2023. ProLink says it paid the employees despite the lack of payment on the contract by Steward.
In early 2017, Steward Health Care System purchased ValleyCare Health System of Ohio, which comprised Trumbull Memorial Hospital in Warren, Hillside Rehabilitation Hospital in Howland Township and the now closed Northside Medical Center in Youngstown, as well as Sharon Regional Health System.
Pictured at top: Trumbull Regional Medical Center in Warren, which is owned by Steward Health Care System.
Copyright 2024 The Business Journal, Youngstown, Ohio.
