The Sebastian River Medical Center, now operating under bankruptcy protection, may not have looked very spiffy in recent times with its lawn not mowed and its shrubbery untrimmed – but it could be a crown jewel among the 31 hospitals its parent company, Steward Health Systems, has put up for sale.
The north county hospital is believed to have been a comparatively good financial performer – though it’s hard to tell since Steward has been fined by the Florida Agency for Healthcare Administration (AHCA) for not filing audited reports since those for 2021. And Sebastian River boasts state-of-the-art technology in its operating rooms.
But the big question is not so much whether other hospital groups are interested in it (most observers believe some are), but whether Sebastian River can keep the lights on and the staff continuing to show up for work each day until the bankruptcy court judge approves a new owner for the hospital at a hearing now pushed back until Aug. 22.
“We run out of money next week,” Steward’s Chief Restructuring Officer, Tyler Cowan, told the court at a hearing Monday. “From my perspective, this is a liquidity crisis. We want to bring in dollars kind of no later than next Tuesday.”
Ever since Medical Properties Trust, Inc., which owns the physical plant Sebastian River occupies as well as those of most of Steward’s other hospitals, backed out of an earlier agreement to lend the chain more money to help it get through the bankruptcy period, the chain has been looking for another lender.
Steward officials say the company is burning through roughly $25 million per week.
Beyond huge legal expenses and probably forced to pay cash these days for supplies and equipment, Steward is facing the need to give doctors and other key employees financial incentives to stay with the company during the Chapter 11 restructuring process.
“Our competitors are circling and we have to keep people,” Steward’s main attorney Ray Schrock said.
When it declared a Chapter 11 reorganization bankruptcy last month, Steward said it would attempt to sell all of its 31 hospitals at two different auctions.
As a whole, Steward’s eight Florida hospitals are making money, while most of the health system’s properties in the Northeast, especially those in Massachusetts, are hemorrhaging cash.
Steward runs its three hospitals along the Treasure Coast, in Rockledge, Melbourne and Sebastian, as a unit, but since the bankruptcy declaration, the Rockledge and Melbourne operations appear to be plagued by more problems than Sebastian.
Managers at other healthcare facilities in the Melbourne area said they have been overwhelmed by job applications from Steward employees trying to depart what they fear is a sinking ship, but the staff at Sebastian is believed to be more stable and confident in the future of the facility. Departing employees are being replaced normally as a hiring freeze has been lifted.
The upgrades at Sebastian completed in the summer of 2020 that make it a desirable property included a 90,000-square foot expansion of the physical plant and the installation of state-of-the-art technology, especially in operating rooms with the addition of 22 new pre-operative bays, 12 post-operative patient suites, three endoscopic procedure rooms, and six large operating rooms with a capacity to expand to eight.
The operating rooms “include the Steris Integration System which offers physicians ultra-high-definition detail and true 4K video image resolution of surgical sites during surgery,” said Cathy Pague, director of marketing for Steward’s Treasure Coast area operations who is based in Rockledge.
“Sebastian River Medical Center is open to serve the community and proud of the work the team members have done to ensure the hospital is thriving and as asset to our community,” Pague said.
The Sebastian hospital has won three different awards for excellence for its bariatric surgery center, including one from the American Society for Metabolic and Bariatric Surgery. It was also recognized as one of the seven best Florida hospitals for outpatient hip and knee replacements.
The hospital uses the Mako Robotic Arm-Assisted Technology in joint replacement surgeries, which allows surgeons to view a comprehensive 3D virtual model of the patent’s anatomy developed from a CT scan prior to surgery, reducing the risk of complications.
In its bankruptcy filing, Stewart listed Stryker Corporation, which makes the Mako system, as a major creditor to which it owed millions of dollars.
Staff writer Lisa Zahner contributed to this report.
