Steward Healthcare files for US bankruptcy to pay back $500 million to creditors

Steward Health Care, the American healthcare provider whose international arm had acquired Malta’s controversial hospitals’ PPP, has filed for bankruptcy in Texas.

The struggling health care provider had relied on backing from private equity investors like Medical Properties Trust (MPW), to purchase dozens of community hospitals, including facilities in Massachusetts, Texas and Florida.

But with hospitals unable to pay back rents to MPW, Steward ended up in millions of dollars in debt, and has now commenced in-court restructuring process through Chapter 11 bankruptcy.

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Steward owns 30 hospitals across eight American states, including nine in Massachusetts.

A CBS News investigation revealed that private equity investors had siphoned hundreds of millions of dollars from community hospitals with devastating public health consequences.

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The company's bankruptcy filing lists 30 creditors who are owed a total of more than $500 million, including the U.S. government, which is owed more than $32 million to the federal government in reimbursements for insurance overpayments.

The company said it is relying on its landlord, Medical Properties Trust, to provide sufficient funding to allow its hospitals to continue to operate through bankruptcy.

Steward will seek up to $300 million in financing from Medical Properties Trust, after failing to quickly close a sale of its physician group Stewardship Health. The company is asking for $75 million to start its bankruptcy case, with up to $225 million at a later date.

The company started buying up Massachusetts hospitals in 2010, with hundreds of millions of dollars in backing from private equity giant Cerberus. In 2021, Steward sold off more than $1 billion of its hospitals’ land and buildings to Medical Properties Trust, whose business is buying up hospital real estate from private equity investors.

Filings with the Securities and Exchange Commission from 2021 shows Steward’s owners also paid themselves millions in dividends, with CEO Ralph de la Torre coming under fire for his $40 million, 190-foot yacht he acquired during this time.