US-based integrated healthcare system and physician-led hospital operator Steward Health Care has filed for bankruptcy.
The company initiated an in-court restructuring process by filing voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code.
This step was taken to ensure the continued provision of care to patients without disruption, the company noted.
Steward Health Care operates over 30 hospitals across multiple US states and is currently finalising debtor-in-possession financing terms with Medical Properties Trust.
The initial funding sought is $75m, with the possibility of an additional $225m contingent on meeting certain conditions.
This financial support is vital for Steward's restructuring efforts.
The bankruptcy filing is not expected to affect Steward's daily operations.
The company assured us that its medical centres, hospitals, and physician's offices would remain open.
Steward Health Care explained the key rationale behind the filing is that the company continues to face challenges brought on by government payors who are paying less due to declining reimbursement rates in addition to rising labour costs.
Furthermore, the rise in material and operational expenditures driven by inflation and the continued impacts of Covid-19 led to the voluntary Chapter 11 case.
Steward Health Care CEO Dr Ralph de la Torre said: “In the past several months, we have secured bridge financing and progressed the sale of our Stewardship Health business in order to help stabilise operations at all of our hospitals.
“With the delay in closing of the Stewardship Health transaction, Steward was forced to seek alternative methods of bridging its operations.
“By working collaboratively with stakeholders in this court-supervised controlled environment and having the benefit of our earlier strategic efforts, Steward will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure the continued care and service of our patients and our communities.”
Last year, the company concluded the divestiture of its Utah healthcare sites to CommonSpirit Health.
