In a significant development, Steward Health Care, a struggling health care provider known for its rapid acquisition of community hospitals, has announced its decision to file for bankruptcy. With debts amounting to millions of dollars, the company filed for Chapter 11 restructuring under the U.S. Bankruptcy Code.

Headquartered in Dallas, Steward Health Care currently owns 30 hospitals across eight states, including nine in Massachusetts. The financial crisis faced by the company has raised concerns about patient safety in Massachusetts, where its operations have come under scrutiny. An investigation conducted by CBS News revealed how private equity investors have drained significant amounts of money from community hospitals, resulting in adverse public health consequences.

Records reviewed by CBS News disclosed a distressing trail of unpaid bills at Steward hospitals around the country, leading to potential shortages of life-saving supplies. Last year, Steward diverted funds away from hospital operations by selling off the real estate of San Antonio's Texas Vista Medical Center, ultimately leading to its closure.

The bankruptcy filing by Steward indicates that the company owes over $500 million to 30 creditors, which includes the U.S. government. The government is seeking reimbursements for insurance overpayments, amounting to more than $32 million. Experts suggest that Steward's actual debts might be higher, potentially making it one of the largest hospital bankruptcies in U.S. history.

Steward Health Care is relying on its landlord, Medical Properties Trust, for necessary funding during the bankruptcy process. The company stated that it is finalizing terms for debtor-in-possession financing from Medical Properties Trust, with an initial funding of $75 million and a potential additional $225 million, subject to certain conditions.

Steward Health Care emphasized that declaring bankruptcy allows them to continue providing essential care to patients without any disruption. Both Steward and Massachusetts officials assured the public that day-to-day operations would continue, with patients urged not to hesitate in seeking care.

Despite these assurances, concerns about the viability of Steward's hospitals persist, particularly in Massachusetts. Health care workers have expressed apprehension about the potential impact of closures. The Massachusetts Nurses Association stressed the consequences of losing any of these facilities for hundreds of thousands of residents, calling for action to prioritize the voices of caregivers and patients.

Governor Maura Healey assured affected patients that the state would assist them, vowing to prevent similar situations from occurring in the future. She criticized Steward's leadership in Dallas, Texas, attributing the situation to greed, mismanagement, and lack of transparency. Steward's spokesperson previously denied any prioritization of considerations above patient care.

Steward Health Care's financial troubles have spotlighted the risks associated with private equity investment in the health care sector. Cerberus, a private equity giant, had backed Steward's acquisition of Massachusetts hospitals in 2010 before shedding its stake in January 2021, reportedly earning an $800 million profit over a decade. Steward also sold over $1 billion of its hospital's assets to Medical Properties Trust, raising concerns about the reliance on private equity investors.

The filing of bankruptcy by Steward Health Care marks a critical juncture for the company and the communities it serves. As the bankruptcy process unfolds, the focus remains on safeguarding patient care, preserving jobs, and stabilizing the health care system.