(CNS) — Steward Health Care, a Texas company that owns several dozen hospitals and manages more than 100 smaller clinics nationwide, filed for Chapter 11 bankruptcy protection in the Southern District of Texas. Steward reported more than a billion dollars in debt across numerous creditors.
State and federal officials have drawn attention to Steward’s financial troubles, particularly in Massachusetts. U.S. Senators Elizabeth Warren and Edward Markey led the Massachusetts congressional delegation’s pressure on the company for transparency and honesty, while Governor Maura Healey led similar efforts at the state level.
The company cited a lack of funding from state and federal sources, rising inflation, and “skyrocketing labor costs” as key factors that led it to take on more debt and ultimately to file for bankruptcy. Healey, however, attributed the company's financial woes to “greed, mismanagement and lack of transparency on the part of Steward leadership.” And Warren admonished the company for the "years of mismanagement, private equity schemes, and executive profiteering" that put them in that deep financial distress.
Warren started putting the spotlight on Steward in January, after news reports in Boston revealed the company’s “dire financial condition.” Warren and Markey also called out Steward’s CEO and chairman Dr. Ralph de la Torre, and pushed the Federal Trade Commission and Department of Justice to “carefully scrutinize” Steward’s sale of its physician network to UnitedHealth Group.
In February, Healey sent state monitors to make sure that the Steward hospitals in the state were still operating smoothly. She called the company “a house of cards and a charade” that put patients, providers, and markets at risk. Ronald Mariano, Speaker of the Massachusetts House of Representatives, said “Steward has practiced the game of hide the numbers and they’ve been very successful at it.”
As part of Monday's Chapter 11 bankruptcy filing, Steward said it will take on nearly $300 million more in “debtor-in-possession financing” to keep its hospitals running. The company stated it “does not expect any interruptions in its day-to-day operations, which will continue in the ordinary course throughout the Chapter 11 process.” Healey and the congressional delegation have also emphasized the need to keep the Steward hospitals running.
More than 150 companies affiliated with Steward, including dozens of subsidiaries, had filed for bankruptcy themselves before. But Steward’s bankruptcy filing looks to consolidate all of those into one case for joint administration.
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