Dallas, Texas-based Steward Health Care has filed for Chapter 11 bankruptcy following a months-long saga of financial distress, according to a May 6 news release from the health system.
Here are six things physicians need to know:
1. Steward will receive initial funding of $75 million and up to an additional $225 million from Medical Properties Trust to maintain existing operations, according to the release.
2. The health system's 30 hospitals and physician practices will continue operating during the bankruptcy proceedings.
3. The for-profit, physician-led health system faced financial challenges and liquidity issues in the last few months, citing low reimbursement from government payers and increasing operating costs, among other factors. In January, Steward Health Care System was approximately $50 million behind on its rent at year-end to Medical Properties Trust.
4. In March, Steward announced controversial plans to sell its physician network to Optum, parent company of ASC chain SCA Health. Ralph de la Torre, MD, CEO of Steward, said in the release that delays in finalizing the deal contributed to financial issues.
"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," Dr. de la Torre said. "By working collaboratively with stakeholders in this court-supervised controlled environment, and having the benefit of our earlier strategic efforts, Steward will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure the continued care and service of our patients and our communities."
5. Steward's financial situation has been scrutinized by lawmakers as the system reported hospital closures and vendor complaints of unpaid bills.
6. The Massachusetts Nurses Association and 1199SSEIU United Healthcare Workers East issued a statement responding to the filing, calling on lawmakers and healthcare industry leaders to take needed steps to keep existing hospitals and clinics open.
"One only need look at what has happened in Southeastern Mass with the loss of Norwood Hospital and Brockton Hospital, where the influx of patients has stressed the region’s already overburdened emergency departments, to see what lies in store with the loss of these other facilities. No amount of contingency planning between the DPH and hospital executives can stem the inevitable and unnecessary injury and death that would result from a failure to preserve these resources," the statement said.
7. Additionally, Steward placed its 31 U.S. hospitals up for purchase to help offload its $9 billion debt.