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Steward Health Care, which operates dozens of hospitals across the country, is seeking Chapter 11 bankruptcy protection, according to a press release.
The Dallas-based healthcare company said filing for bankruptcy on Monday was “a necessary measure” to continue providing care. It follows the March sale of its physician group, Stewardship Health, to UnitedHealth Group’s subsidiary, Optum.
The Chapter 11 bankruptcy process, also known as a “reorganization” bankruptcy, allows the debtor to remain in possession of the entity and continue conducting business, according to US Courts.
The health system, which operates 30 hospitals in eight states—Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania, and Texas—said in the press release it would keep the doors to its hospitals, medical centers, and doctor’s offices open following the bankruptcy announcement.
Steward Health, formerly owned by private-equity (PE) firm Cerberus, has faced ongoing financial woes and now is following the trend of PE-backed healthcare companies filing for bankruptcy. US lawmakers have blamed PE involvement for the system’s struggles, as well as mismanagement from company leadership.
“This is deeply troubling behavior that appears to represent a yearslong pattern,” US Senators Elizabeth Warren and Ed Markey wrote in a letter to Steward Health’s Chairman and CEO, Dr. Ralph de la Torre, on March 7.
“In total, Steward appears to be hundreds of millions of dollars in debt, raising questions about unpaid vendors, patient care, and job losses for frontline healthcare workers, while creating ongoing uncertainty about whether hospitals will close, and if not, how they will be restructured,” the letter said.