Steward Health Care has made tangible progress in its bankruptcy case over the past week that may include new owners for five South Florida hospitals owned by the struggling company.
Steward has announced a settlement agreement that allows for the transfer of hospitals in several states to its landlord, Medical Properties Trust, which would operate the facilities while seeking new owners.
The deal, which still requires court approval, would include Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County and Florida Medical Center in Broward County.
The bankrupt company says it has also resolved a dispute regarding “billions of dollars" it owes to MPT.
Steward also says the arrangement is supported by its secured lenders and a committee of its unsecured creditors.
“MPT (will) fund and take over existing operations, and following sale of hospitals, will make payments to lenders and creditors with proceeds from the transactions,” Steward said in a news release Friday.
The South Florida hospitals were among 31 owned by Dallas-based Steward, which has been struggling to shed debt since it filed for Chapter 11 in U.S. Bankruptcy Court in Houston in May.
A major thorn in finding new owners for many of the hospitals has been MPT’s ownership of the land and buildings.
The companies have been sparring in court over which will get the bulk of the proceeds from sales, and Stewart filed a complaint that accused MPT of interfering in sales negotiations.
In August, Steward asked the judge to reject a master lease it had with MPT for its hospitals in Florida and other states. In response, MPT said that if that happened it should receive the “keys” to the hospitals and that it was “able and willing to keep them running until they can find new operators.”
With the squabbles apparently resolved, Steward said it would like quick approval of the settlement by bankruptcy Judge Christopher Lopez.
“This is a crucial and positive development … in our ongoing effort to transition Steward hospitals to new operators, pay Steward’s debts, and support our patients, employees and the communities we have had the privilege of serving for many years,” CEO Dr. Ralph de la Torre said in the news release.
The transfer would not include the “qualified” $439 million bid from Orlando Health to purchase Melbourne Regional Medical Center, Rockledge Regional Medical Center and Sebastian River Medical Center. However, it allows Steward to retain proceeds from the purchase to pay lenders and creditors.
Lopez will hold a hearing on these “Space Coast” hospitals Sept. 10.
Meantime, the judge approved Steward’s sale of five Massachusetts hospitals to new owners on Wednesday for a total of $343 million from three different buyers.
The majority of those funds will go to real estate, with a small fraction paying for hospital operations, Boston NPR affiliate WBUR reports.
Massachusetts and federal officials voiced approval for the deals. But there was a strong objection from a group of Steward’s lenders, who want a share of the proceeds. Lopez said he would set aside $17 million from the sales and decide later on how it would be allocated.
Steward closed two Massachusetts facilities, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, on Saturday. The company said it could not find qualified bidders.
Also on Wednesday, a Senate panel that subpoenaed de la Torre was told that the CEO would not testify as ordered at a Sept. 12 hearing looking into Steward's bankruptcy.
In a letter, de la Torre’s attorney told the bipartisan Committee on Healthcare, Education, Labor and Pensions that his client wants to reschedule until after the bankruptcy case was complete.
On Thursday, committee members said they would vote to hold de la Torre in contempt of Congress if he fails to show.
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