Hospitals Taken Over From Bankrupt Operators Face New Issues
The operators that took over hospitals from two bankrupt tenants of REIT Medical Properties Trust are reportedly dealing with similar financial problems and are failing to pay their bills.
MPT-owned hospitals that were taken over from Steward Health Care and Prospect Medical Holdings after they filed for bankruptcy over the last two years are falling behind on payments to vendors and creditors, Bloomberg reported, citing court filings.
Several former Steward hospitals being run by Michael Sarian and Faisal Gill, who were put in place by MPT following the operator's May 2024 bankruptcy filing, are being sued by vendors and service providers. They have allegedly failed to pay for everything from medical staffing to fire protection and security systems, according to the documents obtained by Bloomberg.
HVAC providers Trane Technologies and Johnson Controls International have filed liens against some of the facilities these operators are running, Bloomberg reported. Other vendors have reportedly stopped providing services altogether.
Healthcare Systems of America, a firm tied to Sarian and Gill, is also reportedly behind on its tax obligations to two Texas counties.
An employee at an HSA facility in Florida alleged in a whistleblower lawsuit that managers have refused to pay for elevator repairs and told him to mislead regulators about safety violations. HSA also manages former Prospect hospitals in California that have failed to pay their full rent, Bloomberg reported.
The unpaid bills at these MPT-owned properties suggest new financial issues could be looming for the publicly traded landlord, which reported more than $1B in losses over the last two years stemming from the bankruptcies of its two tenants.
MPT reached a settlement with Prospect Medical Holdings one month after the operator’s January 2025 bankruptcy and weeks after the REIT secured $2.5B in debt.
The settlement paved the way for the sale of 11 hospitals across three states, including four former Crozer Health properties in suburban Philadelphia. MPT also relinquished ownership of several former Steward hospitals in Massachusetts to its lender.
But even new owners and operators face a difficult environment for managing hospitals. Cuts to Medicaid and Affordable Care Act funding have meant fewer insured people to bring in revenue to hospitals, which have also faced rising costs of labor and other expenses. In Pennsylvania, a January report found 37% of its hospitals are operating at a loss and predicted that up to 14 will close in the next five years.
