Steward Health Care Files for Bankruptcy Under Chapter 11; Four Arizona Hospitals Remain Open During Process

Steward Health Care, a company operating hospitals in multiple states, including Arizona, has declared bankruptcy under Chapter 11. Steward, which manages 31 hospitals in eight US states, made the decision voluntarily, stating that it was a necessary move to keep delivering essential healthcare services to its patients without disruption. The company’s CEO, Dr. Joseph Weber, cited challenges created by insufficient reimbursements from government payers owing to decreasing rates, increasing labour costs, heightened operational costs caused by inflation, and the ongoing effects of the COVID-19 pandemic. Steward Health Care’s four hospitals in Arizona, including Florence Hospital, Tempe St. Luke’s Hospital, Mountain Vista Medical Center in Mesa, and St. Luke’s Behavioral Health Center in Phoenix, remain open, and the company expects no interruptions in daily operations as it goes through the Chapter 11 process. The company’s eight hospitals in Massachusetts, including St. Elizabeth’s Hospital and Carney Hospital, both located in Boston, were also mentioned. Some politicians, including Massachusetts Governor Maura Healey, criticised Steward Health Care for its financial difficulties, claiming that they were self-inflicted. Steward’s previous private equity owners, Senator Edward Markey and Senator Elizabeth Warren, both Democrats from Massachusetts, accused them of selling the business for parts and leaving with hundreds of millions of dollars while walking away. The company has sold its nationwide physician network to a subsidiary of UnitedHealth Group, according to an AP report released in March. The rising number of health care bankruptcies, noted in a 2024 study published by a health care restructuring consulting firm based in Tennessee, is becoming increasingly frequent, with 79 such filings in 2023, which represents the highest number in the past five years. Various reasons for healthcare organisations’ financial difficulties were highlighted in the report, including significant cost increases in recent years and the influence of higher interest rates on financing, access to capital, valuations, and transactions. The Arizona Attorney General’s Office has not responded to requests concerning their intentions regarding the bankruptcy.