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Steward Health Care has asked the judge in its bankruptcy case to liberate it from what it calls "expensive and burdensome" lease agreements, including three for hospitals in the Mahoning and Shenango valleys.
Doing so, according to a motion filed in Steward Health's bankruptcy case, would help the ailing Dallas-based company to more easily sell Trumbull Regional Medical Center, Hillside Rehabilitation Center, Sharon Regional Medical Center and other facilities in Louisiana, Arkansas, Arizona, Texas and Florida.
Medical Properties Trust, based in Birmingham, Alabama, owns the property and holds the 144 lease agreements.
The motion claims Steward Health's sale process has been "challenged by the self-interested involvement and interference" of Medical Properties Trust, which has imposed "daunting requirements" on potential hospital buyers.
That includes demanding hospital buyers get permission from Medical Properties Trust to terminate the lease and sign a new agreement to acquire or lease the property, the filing states.
Medical Properties Trust's "undermining behavior and brinkmanship jeopardizes the future of dozens of hospitals, tens of thousands of jobs and the safety of patients. This cannot be tolerated," the motion states.
"The rent and other payment obligations" under the lease agreements "are substantial and have crippled" Steward Health's operations for years, the motion states.
Since 2022, Steward Health has paid more than $870 million to Medical Properties Trust between two master lease agreements, including $605 million for the facilities in Ohio, Pennsylvania, Louisiana, Arkansas, Arizona, Texas and Florida, the motion states. The amounts, the motion states, account for some rent concessions in 2024 and debtor-in-possession financing from Medical Properties Trust.
Medical Properties Trust had not responded to the motion Monday.
A company spokesperson stated in an email Medical Properties Trust has been "collaborative and accommodating to help ensure Steward's hospitals can remain open."
"We categorically reject any accusation that MPT has interfered with Steward's marketing and sales efforts -- on the contrary, we have proactively worked with potential bidders to address real estate-related matters. Steward's lawyers are wrongly blaming MPT for holding up sales when in fact Steward has refused to sell hospitals in order to extract value from MPT. The rent that Steward agreed to pay in the leases with MPT is a small fraction of Steward's revenues, and in fact is dwarfed by the fees being charged by the professionals in this bankruptcy case. Despite Steward's recent attempts to rewrite history, their own statements at the outset of the bankruptcy process make clear their financial stress is a product of their own operating failures -- not rent obligations," the spokesperson said.
Steward Health, according to the motion, has requested all bidders submit bids that "contemplate a total enterprise value" for operations and real estate. Also, the company wants in connection to the sale of certain hospitals, for the court to order proceeds from real estate and operations to be placed in an escrow account "pending a determination ... regarding allocation of value" between Steward Health and Medical Properties Trust.
The motion also stated Steward Health intends to file an adversary lawsuit seeking a determination of the value of its assets underlying the leases.
Steward announced its bankruptcy May 6, and two days later said it planned to sell off the more than 30 hospitals it operates nationwide.
In July, the company canceled auctions for Trumbull Regional, Hillside and Sharon Regional, saying it had not received qualified bids. Earlier this month, Steward Health indefinitely postponed sale hearings on the three facilities, however, the company did not provide a reason.
Also this month, a group of health care professionals and community and business leaders called themselves Warren City Hospital, which formed May 14 as a nonprofit corporation according to the Ohio Secretary of State's Office, emerged with plans to acquire Trumbull Regional assets and operate the hospital.