BOSTON — Bankrupt Steward Health Care System said it plans to sell all its hospitals — including eight in Massachusetts — to help pay off $9 billion in outstanding liabilities.
The privately owned health care group is preparing to put its 31 U.S. hospitals up for sale as early as next month and hopes to finalize transactions by the end of the summer, the company’s attorneys said at a Tuesday hearing in a U.S. Bankruptcy Court in Texas.
Steward, which filed for bankruptcy protection on Monday, plans to keep all of its hospitals open over the long term, attorney Ray Schrock told U.S. Bankruptcy Judge Chris Lopez, who is overseeing the company’s 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.”
In court filings, Steward disclosed that it has $9 billion in liabilities, including $1.2 billion in loans, $6.6 billion in rent obligations, $1 billion owed to medical vendors and suppliers, and $290 million in unpaid employee wages and benefits.
The company plans to hold auctions on June 28 for its hospitals outside of Florida, according to court filings. The deadline was negotiated as part of a $75 million bankruptcy loan, but Schrock said Steward may seek more time to sell its hospitals if necessary.
“What we don’t want to do is have a fire sale of the assets,” Schrock told the judge, according to published reports. “There is a lot of value here.”
Steward, the largest private for-profit hospital chain in the country, operates 31 hospitals across eight states — including Holy Family Hospital in Methuen and Haverhill — and employs more than 30,000 people, according to its website.
The company also operated New England Sinai Hospital in Stoughton, which closed in April, leaving behind millions of dollars in unpaid rent and fees.
Steward’s management has cited an increase in operating costs and insufficient federal government-program reimbursement among the factors leading to the Chapter 11 bankruptcy filing.
Gov. Maura Healey has blamed “greed and mismanagement by Steward’s management, and says the bankruptcy process will increase transparency in the company’s hospital system.
Healey has stressed that medical care will continue at the Steward hospitals throughout the bankruptcy proceedings and that patients won’t go without medical care.
“Ultimately, this is a step toward our goal to getting Steward out of Massachusetts, and it allows us to do that to protect access to care, preserve jobs, and stabilize our health care system,” she told reporters at a Tuesday briefing on the company’s bankruptcy filing.
The Healey administration has activated an “emergency operations plan” in response to Steward’s financial woes, including a command center to monitor the company’s hospitals in the state and manage the fallout of a bankruptcy filing.
In a court fling ahead of Tuesday’s bankruptcy hearing in Texas, Attorney General Andrea Campbell argued that Steward “extracted value” from its Massachusetts hospitals to “pay substantial dividends to investors and expand their network in other states.”
“These diversions have threatened to impact the debtors’ hospitals’ ability to provide health care within the commonwealth,” she wrote. “The debtors’ hospitals have been left without adequate resources to timely acquire and maintain needed equipment and infrastructure or even ensure an uninterrupted supply of emergency room drugs. Many are in disrepair.”
Healey and members of the state’s congressional delegation, including Sen. Elizabeth Warren, have criticized the private equity firm Cerberus Capital Management’s role in Steward’s finances. Cerberus created Steward after buying St. Elizabeth’s and five other Catholic hospitals in Massachusetts in 2010, according to the company’s website.
In a statement, the company’s CEO, Ralph de la Torre, said the bankruptcy proceeding will ensure that the company is “better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure the continued care and service of our patients and our communities.”
Material from the Associated Press was used in this report.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.