Steward Health Care, a major hospital network, has filed for bankruptcy and is in the process of selling all of its 31 hospitals in the United States, six of which are located in Texas. This drastic measure comes in response to a total debt of approximately $9 billion, as revealed by the company’s lawyers during a court hearing in Houston.
Despite the bankruptcy filing, Dallas-based Steward Health Care is committed to keeping all of its hospitals operational in the long term, as stated by Ray Schrock, the company’s attorney who reassured the US bankruptcy judge, CNN reports.
“Our goal remains to have no hospitals closed under our responsibility,” Schrock said. He emphasized that while there will be a change of ownership in many hospitals, Steward is dedicated to ensuring that none of the impacted communities go unserved.
The decision to sell off the hospitals follows the closure of a hospital in Massachusetts earlier this year, which raised concerns from state officials regarding the financial management of Steward and its former private equity owners. Particularly, criticisms were directed at a series of transactions that left the company in debt with long-term rental costs at its hospitals.
Court documents unveiled that Steward faces a significant $9 billion in liabilities, including loans, long-term rental obligations, unpaid bills from medical providers, and unpaid salaries and benefits for employees. Despite this financial burden, Schrock noted that Steward has real value, with annual revenues of $6 billion before the bankruptcy filing.
In an attempt to alleviate its debt and pay some of its providers, Steward sold its physician group, Stewardship Health Care, to UnitedHealth subsidiary Optum Care. However, stalled regulatory approvals necessitated Steward to seek emergency financing, leading to the bankruptcy declaration.
Steward is currently conducting auctions for all of its hospitals in an effort to avoid a fire sale of its assets. “There is a lot of value here,” Schrock stressed, emphasizing the company’s commitment to financial recovery despite the current challenges.