Steward Healthcare owes money to thousands of creditors, files for bankruptcy

BOSTON — Vernon Burton credits the medical staff at Carney Hospital for saving his life — twice.

“Since I had my stroke and all my accidents, I’ve been here,” Burton said. “Good hospital. I don’t know what’s wrong.”

What’s wrong is that Carney’s parent company, Steward Health Care Systems, is running out of money. And with the sale of its doctor group, Stewardship, stalled, the company said it elected to file for Chapter 11 bankruptcy. That allows Steward to continue to operate as it reorganizes its finances.

And those finances are, according to one source, a mess.

“The sheer amount of money that’s owed, there are over 100,000 creditors — and a number with major debts owed to them,” said Mary Bugbee, senior researcher and campaign coordinator for the Private Equity Stakeholder Project. “And Medical Properties Trust is essentially, potentially going to jump the line. And get their money back in a bankruptcy they arguably helped create.”

Medical Properties Trust (MPT) is a real estate investment firm based in Birmingham, Alabama. It specializes in scooping up hospital properties — and then renting them back to the hospitals. In 2016 Steward began selling off its nine Massachusetts hospital properties to MPT, in a deal eventually worth $1.25 billion.

Bugbee said MPT was operating in coordination with Cerberus Capital Management, which bought the Caritas chain in 2009 and eventually got out in 2020 after making a profit of more than $800 million.

Then, as the pandemic hit, Steward began falling behind on rent payments to MPT — eventually to the tune of $50 million.

Oddly enough, it is now MPT stepping in to help Steward get through its bankruptcy. It’s also taking over the construction of Norwood Hospital, which closed four years ago after a devastating flash flood. For the last five months, construction of the hospital stalled as Steward battled two insurers for larger settlements.

“They’re going to finish the interior of the building, seal it up, put on a roof,” said Tony Mazzucco, Norwood’s Town Manager. “And then they’re going to await a new tenant.”

Mazzucco said that new tenant will be able to fashion the hospital to its liking — and he’s confident there will be a new tenant.

“We can’t be down one hospital forever,” he said. “It’s straining the system.”

For now, Steward hospitals are operating normally. Patients should see no difference from before in terms of what insurance is accepted — and Steward employees still have jobs.

But some patients worry about the future of the eight hospitals Steward still operates (it closed down New England Sinai last month).

“Mammogram, I do diabetes, I do pain at Carney,” said Monica Brown, a patient for more than 30 years. “They’re very good, so I would hate to see anything bad happen to them because this is my hospital for everything.”

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