No public bids for Arizona’s Steward Health Care hospitals after bankruptcy

PHOENIX (AZFamily)—New information has emerged about the healthcare company under fire for problems with St. Luke’s Behavioral Health.

Earlier this year, Steward Health Care, which owns four hospitals in Arizona, filed for bankruptcy.

The state shut down St. Luke’s Behavioral Health this week after the HVAC system gave out, and about 100 psychiatric patients had to be transferred for their safety.

Steward Health Care also owns Tempe St. Luke’s Hospital. Arizona’s Family learned Tempe St. Luke’s was fined nearly $12,000 when their A/C broke last year because the hospital didn’t properly maintain the chiller.

Arizona’s Family previously reported that Steward filed for bankruptcy in May.

Since then, Arizona and other states are scrambling to find a buyer to keep those hospitals open. While this is all playing out in bankruptcy court in Texas, it will significantly impact our local patients.

“All around the country, we found Steward not paying its bills, being sued by vendors, under a lot of pressure financially and so when they declared bankruptcy I don’t think it was a huge shock,” said CBS News Investigative producer Michael Kaplan.

He says his team started looking into Steward Health Care nearly two years ago.

“We’ve found that the owners of Steward made financial moves that seemed to enrich themselves at the expense of the patients at their hospitals,” said Kaplan. “Things like selling off the real estate of their hospital properties, taking large dividends, buying expensive yachts.”

Despite widespread criticism, Kaplan says the company has told him it has done its best to operate in a challenging healthcare environment and insists it always puts patients first.

“Steward is this company that with the help of private equity investors bought up a number of hospitals around the country. Dozens, including ones in Arizona,” he said.

In court, Steward has been selling all of its facilities nationwide. So far, there have been no public bids for any Arizona hospitals, but other states are making progress.

“Arkansas, Louisiana, Massachusetts, and Florida all have bidders and it’s sort of been a range of companies that have come in to operate these hospitals,” said Kaplan.

The governor of Massachusetts stepped in today by seizing control of St. Elizabeth’s Medical Center.

“The state and Steward and its partners could not find reasonable terms to turn over that hospital, so the state actually seized it by eminent domain,” said Kaplan. “They found it another buyer and now are selling it at market price to that buyer.”

Kaplan explains that the complexity of negotiations and competing interests have repeatedly pushed back buyer deadlines.

A court document shows the next hearing involving Arizona is set for Sept. 10.

Meanwhile, Attorney General Kris Mayes tells Arizona’s Family she is trying to find a solution for Arizona’s patients.

“I’ve been in contact with hospital CEOs. At least one hospital entity in Arizona that is looking at purchasing this. I’m encouraging others to look at purchasing the hospital system out of the bankruptcy court,” said Mayes.

Kaplan says Steward hospitals in other states have closed for different reasons in the last few months.

He’s unaware of any that have been shut down by a state health department for severe violations like what we saw at St. Luke’s Behavioral Health.

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