Bankrupt Steward Health Care Secures $225M Loan To Keep Hospitals Open
Eight hospitals in Massachusetts and more than 20 others across the country run by bankrupt Steward Health Care have been given a lifeline to stay open.
The Dallas-based hospital operator secured commitments for a new $225M loan three days before it was set to run out of money, The Boston Globe reported Tuesday. The lenders weren't disclosed.
The capital injection, which still needs to be approved by a bankruptcy judge, would allow Steward's hospitals to maintain operations until the end of the month, when it has an auction scheduled to sell its 31 hospitals.
The landlord for most of Steward's hospitals, Medical Properties Trust, provided a $75M loan to Steward when it filed for Chapter 11 bankruptcy on May 6. But MPT declined to provide additional money for this deal, and the lenders were other members of a group that had provided pre-bankruptcy bridge financing, the Globe reported.
MPT, the largest hospital REIT in the country, reported a net loss of $736M in the first quarter, primarily driven by Steward's struggles. The REIT's $639M in impairment charges included the loss of $360M it lent to the operator in 2021.
The REIT's business model of buying real estate from health systems, signing them to leases for the space and then lending them money when they struggle to afford the payments has come under fire. The two U.S. senators from Massachusetts wrote in an April letter it had "the appearance of a Ponzi scheme that continues to harm Steward-owned hospitals."
Steward reached an agreement with lenders last month to sell all of its hospitals in two separate auctions by the end of June. Steward operates Massachusetts hospitals in Brighton, Dorchester, Brockton, Taunton, Fall River, Ayer, Methuen and Haverhill. It also has hospitals in Arizona, Arkansas, Florida, Louisiana, Ohio, Pennsylvania and Texas.
It isn't the only hospital tenant causing financial headaches for MPT. Another of its tenants, Prospect Medical Holdings, didn't pay rent in April or May, MPT reported in its most recent earnings statement.
