Bankrupt Steward Health puts its hospitals up for sale, discloses $9 billion in debt By Reuters

By Dietrich Knauth

NEW YORK (Reuters) – Bankrupt Steward Health Care has put all of its 31 U.S. hospitals up for sale, hoping to finalize transactions by the end of the summer to address its $9 billion in total liabilities, its attorneys said at a Tuesday court hearing in Houston.

Steward, which filed for bankruptcy protection on Monday, hopes to keep all of its hospitals open over the long term, Steward attorney Ray Schrock told U.S. Bankruptcy Judge Chris Lopez, who is overseeing the Chapter 11 proceedings.

“Our goal remains that there are zero hospitals closed on our watch,” Schrock said. “There’s going to be a change in ownership in many hospitals, we recognize that. But we don’t want to see any of these communities fail to be served.”

The privately-owned company closed a hospital in Massachusetts earlier this year, and officials in that state have criticized Steward’s management and its former private equity owners for making short-sighted financial decisions that undermined patients’ care. Massachusetts officials in particular criticized a series of transactions that sold off the company’s real estate and saddled it with long-term rent costs at its hospitals.

In court documents filed before the hearing, Steward said it had over $9 billion in total liabilities, including $1.2 billion in loans, $6.6 billion in long-term rent obligations, nearly $1 billion in unpaid bills from medical vendors and suppliers, and $290 million in unpaid employee wages and benefits.

Schrock said Steward has real value, despite carrying a $9 billion debt load. The company had $6 billion in annual revenue before filing for bankruptcy, and it has been pursuing a sale of its physician group, Stewardship Health Care, to UnitedHealth (NYSE:) subsidiary Optum Care for an amount that would repay the company’s loans and allow it to pay some of its vendors, Schrock said.

Steward had hoped to use the proceeds of that sale to avoid bankruptcy. But stalled regulatory approvals forced the company to seek short-term emergency financing that did not give Steward enough cash to continue operations for long, Schrock said.

“It never really stabilized the company,” Schrock said. “The company was always very close to running out of cash.”

At Tuesday’s hearing, Lopez allowed Steward to borrow $75 million from Medical Properties (NYSE:) Trust, which owns the real estate where Steward’s hospitals are…