Steward Health Care Receives $225M Loan To Keep 31 Hospitals Open Across MA, FL & TX

Eight hospitals in Massachusetts and over 20 others nationwide, operated by the bankrupt Steward Health Care, have received crucial financial support to remain operational. Steward Health Care, based in Dallas, secured a $225 million loan just days before running out of funds, as reported by The Boston Globe.

Funding and Bankruptcy Proceedings

The identity of the lenders remains undisclosed, but this capital infusion requires approval from a bankruptcy judge. This funding will allow Steward’s hospitals to continue operations until the end of the month, aligning with the scheduled auction of its 31 hospitals.

Previous Financial Support

Previously, Medical Properties Trust (MPT), Steward’s primary landlord, provided a $75 million loan when Steward filed for Chapter 11 bankruptcy in early May. However, MPT declined to participate in the latest funding round. The current loan involves other members of a group that had offered pre-bankruptcy bridge financing.

Financial Struggles of MPT

MPT, the largest hospital real estate investment trust (REIT) in the U.S., reported a significant net loss of $736 million in the first quarter, largely due to Steward's financial difficulties. This loss includes $639 million in impairment charges, with $360 million related to a loan to Steward in 2021. MPT's business model, which involves purchasing hospital real estate and leasing it back to operators while providing financial support, has faced criticism. Massachusetts senators have described it as resembling a Ponzi scheme, impacting Steward-owned hospitals adversely.

Future Auctions and Broader Impact

Steward has arranged with its lenders to sell all its hospitals through two auctions by the end of June. In Massachusetts, Steward operates hospitals in Brighton, Dorchester, Brockton, Taunton, Fall River, Ayer, Methuen, and Haverhill. Nationally, it has facilities in states including Arizona, Arkansas, Florida, Louisiana, Ohio, Pennsylvania, and Texas.

Additional Tenant Issues for MPT

Steward isn’t MPT’s only troubled tenant. Prospect Medical Holdings, another hospital operator renting from MPT, failed to pay rent for two consecutive months, further complicating MPT’s financial situation.