Steward faces ‘grave financial distress’ in US, ‘contemplates selling off hospitals’

US-based hospital company Steward Healthcare may soon start closing down hospitals in Boston, Massachusetts, as it faces massive financial problems and a deluge of court cases over unpaid bills, mirroring issues faced by its Maltese subsidiary.

The healthcare provider is in such “grave financial distress” that it “may be unable to continue operating some facilities,” which would lead to “massive layoffs and erosion of care,” according to a report published by the Boston Globe on Friday.

Steward Healthcare took over from Vitals Global Healthcare to fulfil a government concession for the operation and overhaul of three hospitals in Malta in 2015, later declared “fraudulent” and “collusionary” by the courts.

The Boston Globe report claimed “escalating financial difficulties for at least the past three years” have meant Steward has not been paying full rent to its hospitals’ landlord for months, leading it to “contemplate selling off hospitals nationally.”

As of the end of 2023, Steward accumulated $50 million in rental dues and has been given a bridge loan of $60 million and a deferral of rent until asset liquidation or mid-year 2024.

The report claimed that since 2022, Steward was faced with at least 14 lawsuits in Massachusetts alone over unpaid invoices. The sums “ranged from thousands to tens of millions of dollars.”

Its financial situation has resulted in the healthcare company asking for state bail-outs, voicing “a desire to transfer ownership of some hospitals, and at times said it may have to close some facilities,” the Boston Globe report claimed.

In Malta, the healthcare company formerly in charge of St Luke’s, Karin Grech and Gozo General hospitals similarly faces millions in unpaid dues to local vendors.

The unpaid bills join a €37 million outstanding VAT bill, recently placed on hold by the courts.

Steward, which took over the 30-year scandalous public hospital concession from Vitals Global Healthcare (VGH) following the latter’s insolvency just a few years after the deal was struck with disgraced former prime minister Joseph Muscat, had to pack its bags and leave last year following a Court decision that the deal was fraudulent.

Between 2015 and 2023, the government passed on to Steward some €400 million, even though insolvency issues cropped up at VGH soon after taking over the three public hospitals.

Steward pointed fingers at the government while VGH’s former director, Sri Ram Tumuluri, filed for whistleblower status in the US. He claimed he was coerced into handing over the concession to Steward for €1 under the threat of death and out of fear for the safety of his family.

A magisterial inquiry on the deal is awaiting conclusion.