Steward Health Care System Files for Bankruptcy, Seeking to Restructure with Medical Properties Trust Inc.

Steward Health Care System LLC, a Massachusetts-based firm operating 33 community hospitals in nine US states with more than 30,000 employees, filed for bankruptcy on Monday. The company sought Chapter 11 protection in the Southern District Court of Texas, listing assets and liabilities between $1 billion and $10 billion. This filing allowed Steward Health to keep operating as it pursued approval for a restructuring plan.

As part of the restructuring agreement, Medical Properties Trust Inc., a US real estate trust focusing on health care facilities, is prepared to provide initial debtor-in-possession funding of $75 million in debt and an additional loan of up to $225 million if certain conditions are met. Medical Properties had previously given Steward Health a $60 million bridge loan and deferred some rent payments. The news of the bankruptcy caused Medical Properties’ share price to fall 18% in premarket trading.

Steward Health’s CEO Ralph de la Torre attributed the bankruptcy filing to higher costs and insufficient reimbursement from government payors. The delay in the sale of its physician business unit led to the search for alternative funding sources. De la Torre stated that through the bankruptcy process, Steward will be able to better position itself to transition ownership of its Massachusetts-based hospitals, keep all hospitals open to serve patients, and ensure continued care and service to communities. The case is filed as Steward Health Care Holdings LLC, with the number 24-90212, in the US Bankruptcy Court for the Southern District Court of Texas.