Hearing details deal to keep local Steward hospitals open

DALLAS, Texas (WKBN) – The agreement that was hammered between Steward Health, its creditors and the property owner will allow for the health care system’s remaining hospitals to stay open while they are being sold and transitioned. That includes Trumbull Regional, Hillside Rehabilitation and Sharon Regional.

A hearing was held Wednesday morning in bankruptcy court in Texas where impacted parties were invited to voice any concerns and comments about the deal.

The agreement creates a security blanket partially funded by the $395 million sale of Space Coast Hospital in Florida and a $10 million escrow account that will be held by Medical Properties Trust (MPT -Steward’s land leasor) for payroll and operating costs. It also fends off more litigation that could tie up and slow down the transition of hospitals.

MPT has also agreed to waive billions of dollars in claims against Steward’s estate to allow for the transition of hospitals that are sold.

“This is a very good development for Steward, its stakeholders and millions of patients. The path should keep all remaining hospitals open,” said the attorney for Steward’s creditors.

Under the agreement, managers will be appointed and dispatched or assigned to hospitals to run operations until the facilities are sold. Court documents say the management team assigned to Trumbull and Hillside are Insight Foundation of Hillside and Insight Foundation of Trumbull.

Sharon Regional has a buyer’s agreement with Meadville Medical Center and is expected to close on Dec. 1, according to a representative from the Pennsylvania Attorney General’s Office. Pennsylvania has committed to fund the hospital with $4.5 million from September to December.

Union representatives from Trumbull and Hillside voiced concerns that the agreement is not clear on a successor clause for their bargaining agreements and asked that a line clarifying that be added to make sure that any new owner or management team would honor those bargaining agreements.

Equipment and housekeeping vendors voiced concerns about the agreement saying it was vague in how they would be notified or able to retrieve their property if a hospital ultimately closed because of a failed deal. They wanted more clarity on how their assets would be protected.

The agreement does not prevent a hospital from ultimately closing, but it does provide a path forward for a “best case scenario” to keep as many open as possible with MPT committing to pick up any default in payments by new operators within 30 days of a hospital’s sale.

The agreement is agreed upon in theory by Steward’s creditors and MPT with the stipulation that MPT reserves the right to determine and approve “viable” buyers.

A final hearing on the settlement is set for Sept. 17. An executed order is expected as soon as possible after that hearing.

The agreement comes months after Steward’s financial breakdown and Chapter 11 bankruptcy filing in May , but not soon enough for some hospitals that have already closed.

Steward operates, or once operated, more than 30 hospitals across Arizona, Ohio, Pennsylvania, Arkansas, Florida, Louisiana, Texas and Massachusetts.

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