Steward Health Care, the embattled company that owns eight hospitals in Massachusetts, filed for Chapter 11 bankruptcy on Monday, according to a statement posted to the company’s website Monday morning.
The company has been the subject of intense scrutiny from state and federal officials in Massachusetts as more information came to light about its precarious financial position, which includes tens of millions of dollars in debt, MassLive reported. On Friday, the state activated an “emergency operations plan” to ensure patients had continued access to the hospital system.
Steward is finalizing the terms of a $75 million debtor-in-possession financing agreement with Medical Properties Trust, its de-facto landlord, that could provide the company an additional $225 million “upon the satisfaction of certain conditions acceptable to Medical Properties Trust.” Debtor-in-possession financing is only available to companies in bankruptcy, and serves as a lifeline for companies in financial distress, according to Corporate Finance Institute.
Despite the bankruptcy filing, Steward intends for its hospitals, medical centers and physician’s offices to remain open and continue serving patients.
Filing for bankruptcy was a “necessary measure to allow the company to continue to provide necessary care to its patients in their communities without disruption,” the statement reads.
Ralph de la Torre, the company’s chief executive officer, said Steward has done “everything in its power” to operate successfully in what he dubbed a “highly challenging health care environment.” Filing for Chapter 11 bankruptcy is “in the best interests of our patients, physicians, employees, and communities at this time,” he said.
In March, Steward announced that it planned to sell its network of doctors to a wing of the for-profit UnitedHealth Group for an undisclosed sum, WBUR reported at the time.
And in April, the company followed through on its planned shuttering of New England Sinai Hospital in Stoughton, a move that resulted in the loss of 39 rehabilitation service beds, 119 chronic care beds, and all ambulatory care at the hospital, according to a filing the struggling health care company made with state regulators in January.
The court-supervised bankruptcy process will leave Steward “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.”
Company officials also blamed the filing on Steward receiving insufficient reimbursements from government payors like Medicare and Medicaid while it faced “skyrocketing” labor costs, the impacts of the COVID-19 pandemic and increased material and operational costs from inflation.
“It is Steward’s goal to resolve the Chapter 11 process as quickly as possible, with the help of the court, with a view to the long-term and sustainable financial health of the system,” the statement reads.
Steward announced in February that it had secured an additional $150 million in bridge financing, on top of a $600 million loan it received in the summer of 2023, according to Business Wire. That loan would allow Steward “to reset its operations and address vendor obligations,” the wire service reported.
