A deal is in the works to hand 5 Miami-area hospitals to a new owner. What’s next?
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Hospitals in trouble
A large national healthcare company has filed for bankruptcy. A look at how Steward’s situation is affecting hospitals in South Florida.
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Palmetto General, North Shore Medical Center and three other South Florida hospitals owned by a healthcare giant in bankruptcy could have new owners soon.
A deal is in the works between Steward Health Care System and its landlord to let the hospitals stay open under interim operators.
The five hospitals in Miami-Dade and Broward had been put up for sale as Steward tried to shed debt. But the sale became complicated when the healthcare company and Medical Properties Trust, the company that owns the land under the hospitals, got into a dispute over unpaid rent.
Under a proposed settlement, which would need to be approved by the bankruptcy judge, the landlord would take over Steward’s hospitals in Miami-Dade, Broward and others in several states. Medical Properties Trust would then partner with other health companies to temporarily run the hospitals.
Steward Health attorney Ray Schrock announced the plan on Friday during an emergency hearing in Houston bankruptcy court. The proposed settlement is still tentative and nothing has been signed yet. But Steward made an “agreement in principle on the broad outlines of a deal” with the landlord, secured lenders and creditors during a mediation session with a judge, the attorney said.
As part of the deal, Medical Properties Trust would stop pursuing claims against Steward for money owed, including billions related to the lease of Steward’s hospitals in Florida and other states, Schrock said. In turn, Steward would also stop pursuing claims against the landlord.
Schrock said that Steward “feels very good” about the proposed settlement, which would help the company’s efforts to reorganize under Chapter 11 and help keep hospitals open.
South Florida hospitals
Steward owns five hospitals in South Florida: Palmetto General Hospital in Hialeah, Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center in North Miami-Dade and Florida Medical Center in Lauderdale Lakes.
The companies did not disclose information on who would run the hospitals when Steward exits. The deal would not apply to the three Space Coast hospitals Steward is selling to Central Florida’s Orlando Health.
Steward Health and Medical Properties Trust didn’t respond on Friday to the Miami Herald’s request for comment.
Healthcare workers are concerned about the uncertain future of the South Florida hospitals.
For Roxey Nelson, executive vice president of 1199SEIU, United Healthcare Workers East, a union that represents healthcare workers across the country, including at several South Florida hospitals owned by Steward, the proposed agreement is “a step in the right direction” but still worrisome to not know who will be in charge.
Through the bankruptcy process, the union has served as an official bankruptcy watchdog over Steward’s reorganization plans.
“We understand why this is the best path that we have, but we here in South Florida ... have true concerns about who’s the operator and what is the plan and ... even the commitment to keeping these hospitals open, we still don’t feel clear about that,” Nelson said. “It’s still unanswered.”
Changes for the hospital company
Steward Health has tried to quickly sell all 31 of its U.S. hospitals to thin debt since filing for bankruptcy under Chapter 11 in May. It recently signed sale agreements for six of its Massachusetts hospitals and three of its hospitals in northern Florida.
But finalizing the sale of the hospitals has been complicated, with Steward and its landlord accusing each other of attempting to interfere with potential deals to try to make more money. Friday’s emergency hearing comes just days after Steward asked the judge to let it out of its hospital lease with Medical Properties Trust.
Steward sold all of its South Florida real estate to Medical Properties Trust in 2021, and has since paid rent to operate its hospitals on the properties it used to own. It made similar deals with the landlord for its other hospitals across the country.
Steward, in court filings, described the lease to have its hospitals on MPT’s land as having “crippled” its operations for years. Medical Properties Trust response: No rent payment, no hospitals.
Steward’s attorney told the judge he’s hopeful that the proposed agreement will be approved Sept. 10, the same day a court hearing is scheduled to finalize the sale of Steward’s three Space Coast hospitals to Orlando Health.
If all goes as planned, Medical Properties Trust will take control of the South Florida hospitals on Sept. 11, he said.
This story was originally published August 30, 2024 at 8:24 PM with the headline "A deal is in the works to hand 5 Miami-area hospitals to a new owner. What’s next?."
