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Bankrupt Steward Health Finds Buyers For Two Hospitals Amid Senate Probe

Jonathan Randles

22 July 2024 at 11:58 am·2-min read

(Bloomberg) -- Bankrupt Steward Health said it found buyers for two of its hospitals in Arkansas and Louisiana, as the nation’s largest for-profit health system braces for a bipartisan Senate investigation into its financial woes.

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Steward is selling the Wadley Regional Medical Center in Hope, Arkansas, to Pafford Health Systems Inc. and Glenwood Regional Medical Center in West Monroe, Louisiana, to an affiliate of American Healthcare Systems. Pafford and AHS have agreed to pay $200,000 and $500,000 for the hospitals, respectively, and assume certain liabilities, according to court documents filed on Sunday.

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The deals, which must be approved by a bankruptcy judge, ensure both hospitals will remain open and operating under new owners. Dallas-based Steward has been marketing its portfolio of more than 30 hospitals in bankruptcy amid scrutiny from state and federal lawmakers.

The heads of a powerful Senate health committee announced last week they plan to hold a vote on July 25 to compel Steward Chief Executive Officer Ralph de la Torre to testify. Lawmakers intend to question de la Torre “about the bankruptcy of Steward Health Care and the financial arrangements leading up to its insolvency,” Chairman Bernie Sanders (I-Vt.) and ranking member Bill Cassidy (R-La.) said in a joint statement.

Lawmakers have also questioned the role Steward’s former majority owner, private equity firm Cerberus Capital Management, has had in its financial woes. Cerberus and de la Torre formed Steward in 2010 after acquiring six hospitals run by a nonprofit health-care system; it then continued to expand.

Steward management acquired Cerberus’s stake in 2020 by issuing the private equity firm a $350 million convertible note. Steward borrowed $335 million the following year to buy out the Cerberus debt, according to court documents.

Cerberus has defended its past ownership of Steward and said it helped save failing hospitals.

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Steward said it had about $1.2 billion in long-term debt and about $6.6 billion in lease obligations when it filed for Chapter 11 protection in May.

The case is Steward Health Care System LLC, 24-90213, US Bankruptcy Court for the Southern District Court of Texas.

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