ODESSA, Texas — Financial challenges have forced Steward Health Care to file for a form of bankruptcy.
Steward Health operates both Odessa Regional Medical Center and Scenic Mountain Medical Center in Big Spring.
While this is not an ideal place for Steward Health and it’s hospitals to be, they say it was a necessary move made for it’s patients and employees. The filing is of voluntary petitions of relief under chapter 11 of the U.S. bankruptcy code.
Steward announced that this decision was voluntary in order to maintain normal day-to-day operations, adding that their hospitals, medical centers and physician’s offices are open and continuing to serve patients and the broader community and that their commitment to their employees will not change.
Our regional hospitals connected to the decision chimed in regarding the announcement.
Stacey Brown, President of both ORMC and SMMC, said the following in a joint statement:
Odessa Regional Medical Center and Scenic Mountain Medical Center have served this region for almost 50 years. Our hospitals and clinics remain open and ready to take care of our patients, both locally and in the surrounding region. We appreciate your patience as we work through this process. It is important to remember that our commitment to excellence in patient care remains unwavering, both today and always.
CEO of Steward Dr. Ralph de la Torre shared the need behind this filing.
“In the past several months we have secured bridge financing and progressed the sale of our Stewardship Health business in order to help stabilize operations at all of our hospitals," de la Torre said. "With the delay in closing of the Stewardship Health transaction, Steward was forced to seek alternative methods of bridging its operations. With the additional financing in this process, we are confident that we will keep hospitals open, supplied, and operating so that our care of our patients and our employees is maintained.”
Steward added in their announcement that the other primary factor driving this voluntary Chapter 11 case is, in large part, due to Steward continuing to face challenges created by insufficient reimbursement by government payors as a result of decreasing reimbursement rates while at the same time facing skyrocketing labor costs, increased material and operational costs due to inflation, and the continued impacts of the COVID-19 pandemic.
According to the United States bankruptcy code, chapter 11 bankruptcy is frequently referred to as “reorganization” bankruptcy.
A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.
In this case, Steward is the debtor and they are remaining in possession, usually meaning they have the powers and duties of a trustee, may continue to operate their business, and may, with court approval, borrow new money.
In this filing, Steward will be a debtor-in-possession financing from Medical Properties Trust for an initial funding total of $75 million and up to an additional $225 million upon the satisfaction of certain conditions acceptable to Medical Properties Trust.
Steward says its goal is to resolve the chapter 11 process as quickly as possible, with the help of the U.S. Bankruptcy Court for the Southern District of Texas, with a view to the long-term and sustainable financial health of the system.