Update: Gov. Maura T. Healey plans to discuss the Steward Health Care situation and what her administration has done to prepare in advance for the bankruptcy filing. Healey is expected to be joined for the 9:45 a.m. press conference at the Massachusetts State House by Health and Human Services Secretary Kate Walsh; Department of Public Health Commissioner Robert Goldstein; Attorney General Andrea Joy Campbell; Julie Pinkham, Massachusetts Nurses Association; and Tim Foley, SEIU 1199.
The owner of Holy Family Hospitals in Haverhill and Methuen this morning filed for bankruptcy protection, but says it plans to continue to operate all of its hospitals by borrowing from its landlord.
Dallas-based Steward Health Care filed under Chapter 11 of the federal bankruptcy code in the U.S. Bankruptcy Court for the Southern District of Texas. The filing was not unexpected as the for-profit hospital owner, as WHAV has reported for at least a year, was unable to pay many of its bills, including one to a dialysis vendor serving its patients.
In a statement issued early this morning, Steward CEO Ralph de la Torre said “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.” He said the company secured bridge financing and moved to sell its physician practice, Stewardship Health, to “help stabilize operations at all of our hospitals.”
de la Torre said the delay in selling the physicians’ group caused Steward to “seek alternative methods of bridging its operations.” The statement reports the hospital company is receiving debtor-in-possession financing from Medical Properties Trust—the company that bought all of Steward’s properties and rented them back—of $75 million for now and “up to an additional $225 million upon the satisfaction of certain conditions acceptable to Medical Properties Trust.”
WHAV was among the first to report nearly eight years ago that Steward was to sell and lease back properties for $1.25 billion to pay off debt, make capital improvements and expand its business.
In today’s filing, the company said a “primary factor” behind its bankruptcy filing is “insufficient reimbursement” by the government “while at the same time facing skyrocketing labor costs, increased material and operational costs due to inflation and the continued impacts of the COVID-19 pandemic.”
A little more than a year ago, Holy Family Hospitals’ embattled finances came to light when it filed in Essex County Superior Court to keep Waltham-based Fresenius’ from turning off renal replacement therapy and dialysis services. Besides Holy Family Hospital, Morton Hospital, Taunton, and St. Anne’s Hospital, Fall River, use Waltham-based Fresenius’ renal replacement therapy and dialysis services.
This past February, the company outlined, what it called, a “six-point action plan” to save the company, including selling its controversial private jets and other “non-essential assets” and hiring Alix Partners, a turnaround consultant, to advise on restructuring the company.
WHAV was the first to report in January that Craig A. Jesiolowski, president of Holy Family Hospital since 2016, said he was resigning to become president of two hospitals—a tertiary medical center and a community hospital in Illinois.