The sale of Sebastian River Medical Center and other hospitals in Florida is in jeopardy because their owner Steward Health Care is suing the landlord Medical Property Trust.
The healthcare company alleges that Medical Property Trust (MPT) engaged in “undermining conduct” and intentionally sabotaged the sale of its hospitals, including Sebastian River Medical Center, by attempting to maximize profits at Steward’s expense, according to a lawsuit filed Monday.
The litigation could have significant implications for access to health care in the state.
The landlord denies Steward’s allegations and accuses the health care provider of delaying the hospital’s sale process to make more money. Steward Health Care has put 31 U.S. hospitals up for sale, including eight in Florida, to reduce its debt after the company filed for bankruptcy in May.
Steward Health Care no longer owns the land on which its hospitals are located. Years ago, the company sold the properties to MPT and has paid nearly $900 million in rent since then.
The acquisition of Steward’s hospitals requires negotiations with Steward regarding the hospital buildings and operations and with Medical Property Trust regarding the underlying real estate.
In court documents, Steward said MPT threatened the future of Sebastian River Medical Center and other hospitals in Florida. Steward alleges that Medical Property Trust imposed unfair terms on potential buyers and rigged the bidding process, putting patient care at risk.
Steward also accuses the landlord of demanding that all proceeds from the sale of Steward’s hospitals go to MPT, leaving the company without sufficient funds to maintain its operations and ensure patient care.
However, the property owner countered Steward’s allegations by claiming that he had violated court-approved procedures to exclude the landlord from the sale negotiations.
The sale of Stewards hospitals is complicated by the fact that prospective buyers must submit separate bids for the hospital property and indicate what they are willing to pay the MPT for the property, as set out in the court-approved bidding procedures.
According to court documents, MPT argues that Steward deviated from court-approved bidding procedures by requiring bidders to submit a single bid for the entire hospital enterprise rather than separate bids for the property and operations.
The landlord also claims that Steward is attempting to alter the sales process in order to maximize profits from the sale of the property, as hospital operations are generally unprofitable.
Steward Health Care has agreed to sell Sebastian River Medical Center, Rockledge Regional Medical Center, Melbourne Regional Medical Center and its Steward Medical Group practices in North Florida to Orlando Health for up to $439.4 million. Other interested buyers have until August 26, 2024 to submit higher bids.
