With Steward Health Care’s bankruptcy filing, state officials, nurses focus on preserving patient care

Some elected officials say they aren’t surprised that Steward Health Care has filed for bankruptcy, but they are focused on ensuring patient care.

Massachusetts Gov. Maura Healey is anxious to see new ownership of Steward Health Care's hospitals in the state.

Based in Dallas, Texas, Steward announced Monday that the for-profit system has sought bankruptcy protection in the state of Texas. Steward, which operates 31 hospitals in eight states, pointed to difficulties with reimbursements and higher costs in recent years. The system says its hospitals and medical offices will remain open.

Steward is placing all of its 31 hospitals up for sale to address $9 billion in liabilities, the system’s attorneys said in bankruptcy court Tuesday, Reuters reports. Steward's attorneys said the system doesn't want to see any hospitals closed, and the company is also aiming to avoid a fire sale because the hospitals have a great deal of value, Reuters reports.

Steward has faced increasing criticism and scrutiny over its troubled finances, with state officials and lawmakers demanding more transparency from the health system. Elected officials vowed to protect patients, even as nursing unions raised more concerns about patient care in light of the bankruptcy filing.

Massachusetts Gov. Maura Healey, who has previously called for Steward to transfer ownership of the system’s eight hospitals in that state, said state officials were anticipating the bankruptcy filing and had prepared for it. The state established a command center to ensure quality care, and she assured residents that hospitals remain open and they should keep their appointments.

But she didn’t hold back from scolding Steward.

“This situation stems from and is rooted in greed, mismanagement, and lack of transparency on the part of Steward leadership in Dallas, Texas,” Healey said in a news conference Monday. “I’ve been clear about that. I’ll continue to be clear about that. It’s a situation that should never have happened, and we will be working together to ensure that there are steps taken to make sure this does not happen again.”

Steward closed a rehabilitation hospital in Massachusetts, New England Sinai Hospital, in April.

‘Years of disastrous decisions’

Ralph de la Torre, MD, chief executive officer of Steward, emphasized the system’s commitment to care for patients and resolve its financial woes. He pointed to the sale of its Stewardship Health business to help get on a more secure footing.

“Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment,” de la Torre said in a statement. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees, and communities at this time.”

Sen. Elizabeth Warren, D-Mass., an ardent critic of Steward, said she would be closely monitoring the bankruptcy process and called for the ouster of Steward’s leadership team.

“After years of disastrous decisions, CEO Ralph de la Torre should be fired, along with Steward’s entire executive team,” Warren said in a statement Monday. “Regulators need to seek all possible means to claw back the riches sucked out of these hospitals. No matter where they try to shift the blame, Steward executives are responsible for this crisis.”

Warren also excoriated “Wall Street private equity vultures looting our health care system.”

The senator and other members of Massachusetts’ congressional delegation have faulted Steward’s current and former owners for the system’s current financial conditions.

Massachusetts lawmakers have pointed to Cerberus Capital Management, the private equity firm that owned the Massachusetts hospitals from 2010 until 2021. The lawmakers have questioned Cerberus’ sale of the hospitals’ properties to Medical Properties Trust, which resulted in Steward paying millions of dollars in lease payments annually. Warren and Massachusetts lawmakers said that deal exacerbated Steward’s financial troubles.

Steward said it is finalizing terms of $75 million in financing from Medical Properties Trust, and “up to an additional $225 million upon the satisfaction of certain conditions acceptable to Medical Properties Trust.”

In a statement Monday, Medical Properties Trust said it has “approved the funding of $75 million in debtor-in-possession financing. The Company has not committed to providing additional funding beyond this amount. MPT expects Steward to use the financing to ensure continuity of patient care while accelerating the re-tenanting of hospitals to new operators.”

Medical Properties Trust has also suffered steep losses of late. The company reported a $664 million loss in the fourth quarter of 2023, and said the losses were primarily related to Steward’s troubles.

Pushing for new ownership

The health system said it filed for bankruptcy to ensure the continuity of patient care.

“Steward took this voluntary step today as a necessary measure to allow the Company to continue to provide necessary care to its patients in their communities without disruption,” the system said in a news release. “Steward does not expect any interruptions in its day-to-day operations, which will continue in the ordinary course throughout the Chapter 11 process.”

Steward pointed to inadequate reimbursement from government payers for services, along with the continued financial fallout from the COVID-19 pandemic. The system also pointed to “skyrocketing” labor costs, and with higher supply costs as well. Steward said it hopes to emerge from Chapter 11 as quickly as possible and is aiming for long-term stability.

The system is aiming to “responsibly transfer ownership of its Massachusetts-based hospitals,” de la Torre said Monday.

Healey and other Massachusetts leaders say they are anxious for those hospitals to have new ownership.

“Ultimately, this is a step toward our goal of getting Steward out of Massachusetts,” Healey said at her news conference Monday. “And it allows us to do that, to protect access to care, preserve jobs and stabilize our healthcare system.”

The Massachusetts Nurses Association and 1199SEIU issued a joint statement expressing concern about patient care and urged state officials to swiftly work to find new, nonprofit ownership of the hospitals. “Inaction would worsen health inequities, create hospital deserts, and weaken the entire healthcare infrastructure for all patients in Massachusetts,” the nurses’ statement said.

Nurses also say they’re worried about the fate of a Steward-owned hospital in Ohio, the Hillside Rehabilitation Hospital. The Ohio Nurses Association (ONA) and AFT, representing Hillside’s registered nurses, issued a statement expressing “deep concern for the patients and community reliant on the hospital’s services.”

“We will exhaust every avenue to safeguard these vital healthcare services within the community and uphold the terms of our agreement,” Rick Lucas, president and executive director of the Ohio Nurses Association, said in a statement.

‘This news is hard to hear’

Robert Goldstein, MD, commissioner of the Massachusetts Department of Public Health, said the filing was not unexpected, following months of questions, concerns and rumors. He stressed that officials were working to ensure patient care, but acknowledged the bankruptcy filing is alarming to patients and staff.

“We know that this news is hard to hear,” Goldstein said at Healey’s news conference. “It’s hard to hear for the many people in the commonwealth who count on the care, services and providers at Steward hospitals. It's hard to hear for the staff at these hospitals who deliver care to patients and families. It’s hard to hear in these communities, where Steward hospitals have been major employers, safety nets and trusted pillars.”

Kate Walsh, Massachusetts health and human services secretary, said officials are closely watching the Steward hospitals.

“We’re also continuing to monitor these hospitals daily, to ensure that the quality of care meets the high standards you’ve come to expect,” Walsh said.

Steward has been shedding some of its properties in the last couple of years. In 2023, Steward sold five Utah hospitals to CommonSpirit Health.