BOSTON – Steward Well being Care, the struggling well being care supplier that relied on backing from personal fairness traders to rapidly purchase dozens of group hospitals, together with amenities in Massachusetts, Texas and Florida, introduced Monday that it’s submitting for chapter.

Steward, which is hundreds of thousands of {dollars} in debt, stated it has “commenced an in-court restructuring course of via the submitting of voluntary petitions for reduction” underneath Chapter 11 of the U.S. Chapter Code. It submitted the submitting within the Southern District of Texas. 

The Dallas-based firm presently owns 30 hospitals throughout eight states, together with 9 in Massachusetts, the place its smoldering monetary disaster has raised issues about affected person security. 

Steward has been one focus of a year-and-a-half-long CBS Information investigation revealing how personal fairness traders have siphoned lots of of hundreds of thousands of {dollars} from group hospitals with devastating public well being penalties. Information reviewed by CBS Information confirmed Steward hospitals across the nation with a path of unpaid payments, at occasions risking a scarcity of probably lifesaving provides.

Final 12 months, CBS Information discovered Steward redirected cash away from hospital operations by promoting off the actual property of San Antonio’s Texas Vista Medical Middle earlier than closing the power altogether.

The corporate’s chapter submitting lists 30 collectors who’re owed a complete of greater than $500 million, together with the U.S. authorities, which is owed greater than $32 million to the federal authorities in reimbursements for insurance coverage overpayments. 

Consultants inform CBS Information that Steward’s money owed are possible a lot greater, and when the mud settles, it may very well be one of many largest hospital bankruptcies in U.S. historical past. In an announcement, the corporate stated it’s counting on its landlord, Medical Properties Belief, to supply enough funding to permit its hospitals to proceed to function via chapter. 

“The Firm is finalizing the phrases of debtor-in-possession financing from Medical Properties Belief for preliminary funding of $75 million and as much as a further $225 million upon the satisfaction of sure circumstances acceptable to Medical Properties Belief,” Steward stated in an announcement.

No day-to-day impacts anticipated, Steward Well being Care says

The corporate stated declaring chapter permits it to “proceed to supply essential care to its sufferers of their communities with out disruption.”

Each Steward and Massachusetts officers stated they anticipated no interruptions in day-to-day operations.

“Steward hospitals stay open, and sufferers shouldn’t hesitate to hunt care,” stated Massachusetts Well being and Human Providers Secretary Kate Walsh in an announcement, including that the state “is working with Steward and any potential companions to help an orderly switch of possession that protects entry to care, preserves jobs and stabilizes our well being care system.”

“It’s protected to get care in Steward amenities. The amenities are open. You shouldn’t drive previous it in case you are having chest pains, for those who’re a pregnant individual about to ship, please go to the hospital closest to you,” Massachusetts Public Well being Commissioner Dr. Robert Goldstein stated.

Regardless of these assurances, nervousness over the longer term viability of the corporate’s hospitals runs deep, significantly in Massachusetts. For months, well being care staff have voiced concern over the influence of any potential closure. 

“The potential lack of any of those amenities could have devastating penalties for lots of of hundreds of residents from the South Shore to southern New Hampshire,” the Massachusetts Nurses Affiliation stated in an announcement. “Nevertheless, Steward going via the method of reorganization supplies a possibility for different stakeholders to take long-awaited motion and heart the voices of caregivers and sufferers,” the assertion stated partially.

And sufferers are involved in regards to the hospitals of their neighborhoods.

“We’d like this hospital. This can be a good hospital,” stated Riaz Udein, who’s been going to the identical physician at St. Elizabeth’s Medical Middle in Boston for 22 years. “The neighborhood and all people want it.”

“It is wanted,” stated Zadani Mehdi, strolling into an appointment at St. Elizabeth’s on Monday. “I hope they do hold this hospital open, actually. There are loads of sufferers that come right here. I have been coming right here since a bit of child.”

Massachusetts Governor Maura Healey promised that the state would assist Steward sufferers and that they might make sure that a scenario like this doesn’t occur once more.

“I don’t need to lose sight of the truth that the scenario stems from and is rooted in greed, mismanagement, and lack of transparency on the a part of Steward management in Dallas, Texas. I’ve been clear about that, and I’ll proceed to be clear about that. It’s a scenario that ought to by no means have occurred, and we shall be working collectively to make sure that there are steps taken to make it possible for this doesn’t occur once more,” Governor Healey stated.  

The Healey administration has launched a hotline (617-468-2189) and web site for sufferers who’ve questions.  

Personal fairness’s influence on well being care

A spokesperson for Steward beforehand instructed CBS Information firm executives all the time put sufferers first and stated they “deny that some other concerns had been positioned forward of that tenet.” The spokesperson stated Steward “has actively and meaningfully invested” in its hospital system since its formation, together with in Massachusetts, the place it took over hospitals that had been “failing” and “about to shut.”

“Steward’s funding has taken the type of facility upgrades, gear, know-how, and different significant enhancements,” the spokesperson wrote.

But Steward has turn out to be synonymous with the perils of personal fairness funding in well being care. The corporate began shopping for up Massachusetts hospitals in 2010, with lots of of hundreds of thousands of {dollars} in backing from personal fairness big Cerberus, 

Cerberus shed its stake in Steward by January 2021, after making an $800 million revenue in a decade, based on a report from Bloomberg. Monetary data present Steward has additionally bought off greater than $1 billion of its hospitals’ land and buildings since 2016 to Medical Properties Belief, which has made a enterprise of shopping for up hospital actual property from personal fairness traders. 

A submitting with the Securities and Trade Fee from 2021 reveals Steward’s house owners additionally paid themselves hundreds of thousands in dividends. Across the identical time, Steward CEO Ralph de la Torre acquired a 190-foot yacht estimated to be value $40 million. In an e-mail to CBS Information, Steward confirmed de la Torre owned the yacht.

“Steward Well being Care has executed all the things in its energy to function efficiently in a extremely difficult well being care surroundings,” de la Torre stated within the firm’s assertion, launched at 3:30 a.m. Monday morning. “Submitting for Chapter 11 restructuring is in one of the best pursuits of our sufferers, physicians, staff, and communities right now.”

Massachusetts Sen. Ed Markey tweeted, “De la Torre and his morally bankrupt enterprise mannequin have failed our hospitals, our suppliers, and our sufferers. He and his personal fairness allies should be held accountable. I am going to hold preventing to maintain hospitals open and defend sufferers and suppliers.”