Steward Healthcare filed updated financial statements for its 31 hospitals as part of Chapter 11 federal bankruptcy proceedings, and while the documents show steadily increasing revenues at Sebastian River Medical Center, they also reveal a business dogged by more than $70 million in past-due patient accounts, plus more than $1 billion owed by Steward hospitals to hundreds of vendors for everything from blood and surgical equipment to elevator repair and food.
Financial reports on file with the Florida Agency for Health Care Administration show Sebastian River Medical Center took in $114.6 million for calendar year 2021. The more recent financials filed July 10 with the Texas bankruptcy court report total revenues of $117.3 million for 2022, and $126.7 million for 2023. Partial-year gross revenues for Jan. 1 through April 30 of 2024 were $35.3 million.
On the receivables end, the hospital listed $10.9 million in accounts on the books as less than 90 days old, plus $70 million of receivables more than 90 days old – of which accountants determined $57.8 million was uncollectible.
As of the last official inventory conducted in October, Sebastian River Medical Center had on hand $4.7 million in supplies, $5.9 million in general equipment, $6 million in medical and office equipment, furniture and fixtures, plus $7.7 million in “leasehold improvements,” which presumably represents the recent tower expansion Steward built onto the North County hospital.
The hospital also listed $6 million in receivables other than patient accounts, and $21.5 million in receivables from other Steward hospitals and entities. On the flip side of the balance sheet, $37 million is owed in “inter-company payables” as an awful lot of money was shifted around from the local hospitals up to Steward corporate in debt service, lease payments and management fees. Millions also went back-and-forth among the various hospitals and physician groups – all these complex accounting practices making it almost impossible to get a clear picture of each hospital’s real financial situation.
Steward’s attorneys and consultants are in the process of marketing its 31 hospitals plus the Stewardship Health physicians’ group to the highest bidders, in accordance with a tight schedule set by the court.
It’s not yet known which hospital systems might bid on Sebastian River Medical Center, as the focus right now is auctioning the non-Florida hospitals, plus the Stewardship Health physicians group, which need to be disposed of before the eight Florida hospitals in Steward’s system go on the auction block.
But Indian River Hospital District Executive Director Frank Isele told the district’s Board of Trustees last week that United Healthcare Inc. had attempted to broker a deal for the Sebastian hospital, but that negotiations fell apart in June. Rumors have also circulated that Advent Health or HCA may be looking to invest in the Sebastian market, since both companies submitted bids for Indian River Medical Center but were outgunned by Cleveland Clinic for the Vero hospital.
When all the receipts are in from the various auctions, Steward needs to collect enough cash from the sale of the 31 hospitals plus Stewardship Health to pay off approximately $10 billion in debt. Much of that is owed to landlord Medical Properties Trust in back rent, and to lenders who extended high-interest “bridge loans” of hundreds of millions of dollars to a highly leveraged and struggling Steward corporation over the past year and a half before it finally declared bankruptcy on May 6.
But a detailed list of hundreds of creditors who have filed claims shows that Steward hospitals are deep in debt to hundreds of suppliers of all the things a hospital needs to operate.
Locally, Steward Sebastian River Medical Center owes a few thousand dollars here and there to Perkins Medical Supply, Sebastian Pathology Services, Advanced Sprinkler Pump Inc, E-Z Brew Coffee and Bottled Water, Southern Plumbing, Sherwin Williams, Stevens Printing, Teejay’s Awards, Treasure Coast Prosthetics, Vero Glass and Mirror, Treasure Coast Newspapers and Vero Beach Magazine.
The hospital owes more than $46,000 to Indian River County Utilities for water and sewer bills, plus $44,000 to Staples for office supplies, and $30,000 in back rent on ancillary office space in buildings not on hospital property owned by Medical Properties Trust.
Since the bills are paid by Steward corporate, using funds swept from each hospital’s bank accounts every night, most of the past-due accounts are from more than one hospital.
Combined with Steward’s Brevard County hospitals, the company owes $308,000 to Glover Oil in Melbourne, and $83,000 to Sysco Services for food.
To larger national firms that supply the specialized medical equipment, pharmaceuticals, supplies, consumables and even the healthcare professionals who make a hospital run, Steward corporate owes nearly $58 million.
Vero Beach 32963 has received reports of surgical equipment such as artificial joints not being available due to unpaid bills, causing surgeries to be cancelled or postponed. That’s not surprising in light of the detailed list of creditors included in Steward’s July 10 court filing. Just looking at the creditors with claims of six figures or more, there are more than 30 vendor names on the list.
The largest past-due accounts are owed to Sodexo food services ($1.9 million), pacemaker and insulin pump manufacturer Medtronic ($1.8 million), Phillips Healthcare ($766,000), arthroplasty joint manufacturer Arthrex ($497,000), Cross-Country Staffing ($430,000), Intuitive Surgical ($400,000), joint replacement manufacturer Exactech ($377,000), travel nurse supplier Aya Healthcare ($313,000), Neogenomics Laboratories ($306,000), Healigics ($299,000), Total Renal Care (231,000), Inspire Medical Systems ($205,000), Boston Scientific ($201,000) and Steris Corp. Instruments ($197,000).
Steward even owes $318,340 to OneBlood in Orlando for blood products – not exactly something that can be repossessed or resold.
Steward owes business income taxes in 10 different states, plus federal tax debt to the Internal Revenue Service, as Steward deferred paying FICA taxes under the CARES Act during the pandemic and $420,795 of that is still outstanding. The company is also heavily in hock to various state regulatory agencies, including $1.5 million it owes to the Florida Agency for Health Care Administration in penalties and fines for failure to file required financial reports to the state’s hospital licensing agency.
The company owes $1.8 million in insurance refunds, plus a quarter-million in refunds to more than 900 patients.
Steward corporate is under investigation for hefty payouts to top executives in the weeks and months before the company declared Chapter 11 bankruptcy on May 6, but locally, it appears that former Sebastian River Medical Center Chief Administrative Officer Ronald Bierman, who retired in June, received his regular salary of $337,500 plus employer paid benefits of $6,063 and reimbursements of $27,000. Looking at a schedule of other Steward hospital administrators, that salary is comparable to others who head-up hospitals but are not medical doctors.
Regional Chief Operating Officer for Florida James “Tony” Adams was named interim president of Sebastian River Medical Center to see the hospital through the bidding and sale process in August, and the handover to new owners.
