Steward Health Care, the healthcare provider that swiftly acquired numerous community hospitals with private equity backing, including facilities in Massachusetts, Texas, and Florida, revealed on Monday its decision to file for bankruptcy. The company, drowning in debt, initiated a Chapter 11 restructuring process, filing voluntary petitions in the Southern District of Texas.
With 30 hospitals across eight states, including nine in Massachusetts, Steward’s financial woes have sparked concerns about patient safety, particularly in Massachusetts. An investigative report by CBS News highlighted how private equity investors drained funds from community hospitals, jeopardizing public health. Unpaid bills and shortages of critical supplies underscored the crisis.
The bankruptcy filing lists over $500 million owed to 30 creditors, including $32 million to the federal government. Experts anticipate the debts to be much higher, potentially marking one of the largest hospital bankruptcies in U.S. history. Steward aims to secure funding from Medical Properties Trust to sustain operations during bankruptcy.
Steward assured that patient care would continue uninterrupted, echoed by Massachusetts officials. Despite the reassurances, apprehension lingers among healthcare workers and patients, fearing the impact of potential closures.
Governor Maura Healey pledged support for affected patients and vowed to prevent similar crises in the future, attributing the situation to greed, mismanagement, and lack of transparency on Steward’s part. A hotline and website were launched for patient inquiries.
Steward’s assertion of prioritizing patient care contrasts with its association with the risks of private equity investment in healthcare. Cerberus, a major private equity firm, backed Steward’s acquisitions before divesting in 2021, reaping substantial profits. Financial records reveal large dividends to owners and extravagant expenditures, including CEO Ralph de la Torre’s purchase of a multimillion-dollar yacht.
De la Torre defended the Chapter 11 filing as in the best interest of patients and communities. However, Massachusetts Senator Ed Markey criticized Steward’s leadership and called for accountability.
In essence, Steward Health Care’s bankruptcy underscores the complex interplay between private equity investment and healthcare provision, raising questions about financial prioritization over patient welfare.
