Steward Health Care plans to sell all 31 of its hospitals as part its Chapter 11 bankruptcy reorganization.
The for-profit health system, which filed for Chapter 11 bankruptcy protection Monday, plans to find buyers for its eight-state hospital network, Ray Schrock, a lawyer representing Steward, said during a Tuesday bankruptcy court hearing.
Related: What Steward Health Care's bankruptcy means for patient care
The potential sale will be complicated given that some of the hospitals are profitable and others are not, and each state has its own interests and priorities, said Schrock, an attorney at Weil, Gotshal & Manges.
“We’re trying to sell all of these hospitals,” Schrock said during the hearing. “As we’re conducting a massive M&A process like this, we need to get it done efficiently, we need to get it done fast, but we also need to do it safely. We think that there’s a home for all of these facilities.”
Steward declined to comment Wednesday.
Massachusetts policymakers hope Steward’s reorganization will expedite the sale of its eight hospitals in the state. Steward also has hospitals in Pennsylvania, Ohio, Florida, Louisiana, Arkansas, Texas and Arizona.
The system has struggled to pay rent and vendors. Steward executives and representatives have blamed the financial decline on its hospitals serving a disproportionate share of Medicare and Medicaid patients, lagging reimbursement rates, a drop in patient volume, rising labor costs, inflation, a shift in care delivery from the hospital to outpatient facilities and regulatory and political pressures.
“Certain of Steward’s hospitals, including those in northern Massachusetts, have suffered more significant financial stress than others on account of lagging and lower Medicaid reimbursement rates when compared to patient mix, putting pressure on the entire Steward system,” John Castellano, an AlixPartners consultant appointed Steward's chief restructuring officer, said in a Monday court filing.
Steward owes its top 30 unsecured creditors, including staffing agencies, device manufacturers and claims processing vendors, more than $600 million, according to its Monday bankruptcy filing. It owes its 11,360 employees nearly $290 million in unpaid compensation, Steward said in a Tuesday court filing.
Also, as of Sunday, Steward hospitals had accrued nearly $12.5 million in outstanding rent, $144.8 million in deferred rent, $9.2 million in late rent payment penalties and $15.2 million in delinquent property taxes, the system said.
Steward’s landlord, Medical Properties Trust, on Monday approved $75 million in debtor-in-possession financing for Steward, which is expected to use the funding to maintain care access and expedite potential hospital sales.
In a statement Wednesday, Medical Properties Trust said “nowhere in its Chapter 11 materials does Steward cite rent as a core contributing factor to its financial stress."
