Arizona attorney general investigates Steward Health Care's bankruptcy
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Arizona Attorney General Kris Mayes has launched an investigation into Steward Health Care, which operates four hospitals and 22 clinics in Arizona, after its bankruptcy filing.
The Attorney General's Office was looking into whether it should intervene in the Dallas-based health system’s bankruptcy case because of its “potential negative effects on Arizona patients, providers, healthcare workers, and vendors,” her office announced in a news release Friday.
Steward Health Care, which filed for bankruptcy May 6 in Texas with a debt load of $9 billion, announced it would sell its 31 hospitals nationwide.
Steward's Arizona facilities employ about 2,000 people, the company said. Steward also operates hospitals in Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas.
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What happens next with the hospitals and clinics?
Steward Health Care is planning to auction its Arizona hospitals June 28. The hospitals have a total of 415 beds. They are:
St. Luke’s Behavioral Center in Phoenix
Tempe St. Luke’s Hospital in Tempe
Mountain Vista Medical Center in Mesa
Florence Hospital in Florence
“No matter who ultimately ends up owning and operating these facilities, I am committed to ensuring that no Arizonan is harmed by this bankruptcy, and I will fight to ensure that these hospitals remain open at all times to care for patients without any degradation of service,” Mayes said in the news release.
The company filed for bankruptcy protection to continue providing health care to patients without disruption, according to its news release. Company officials have said regular, day-to-day operations at Steward Health Care’s Arizona hospitals and clinics would continue.
Mayes will work to protect the confidentiality of patient health information and employee records and advocate for the facilities’ employees and vendors to be fairly paid what they are owed, the news release said.
“She will also fight to ensure that prospective buyers do not take advantage of Steward’s bankruptcy to acquire hospitals or medical practices when those buyers would otherwise be barred from acquiring them due to the antitrust laws,” it said.
Why did Steward file for bankruptcy?
Steward Health Care made one of the largest hospital bankruptcy filings in U.S. history. The private, for-profit health company said numerous factors led to the bankruptcy, including government reimbursement rates, higher material and operations costs due to inflation, the impact of the COVID-19 pandemic and surging labor costs.
Critics, which include some elected officials in Massachusetts, where the company closed a hospital earlier this year, have pointed to Steward Health Care’s previous private equity owners as the reason behind its bankruptcy.
The company’s former owner, private equity firm Cerberus Capital Management, transferred the ownership of Steward Health Care’s hospitals to its doctors in May 2020.
Cerberus had owned the company for about a decade and made a profit of $800 million over that time. The company’s ownership team also paid itself a $100 million dividend, and its CEO Ralph de la Torre purchased a $40 million yacht.
“Arizonans deserve to know more about the circumstances that led to Steward’s bankruptcy filing,” Mayes said. “I am deeply concerned about the potential impact this could have on Arizona patients and medical providers.”
Along with owning four Arizona hospitals, Steward Health Care also operates multiple medical practices throughout the state. While the company announced that it planned to sell its physician group to health care company Optum in March, the deal was not completed before Steward Health Care filed for bankruptcy.
Mayes said it was unclear what the company has planned for its Arizona holdings outside of the four hospitals, including its provider groups, amid its bankruptcy filing.
Madeline Nguyen is a breaking news reporter for The Republic. Reach her at Madeline.Nguyen@gannett.com or 480-619-0285. Follow her on X @madelineynguyen.
This article originally appeared on Arizona Republic: Kris Mayes to investigate Steward Health Care's bankruptcy
