SEBASTIAN, Fla. — Steward Health Care System, the operator of Sebastian River Medical Center, filed for Chapter 11 Bankruptcy Monday, a chapter of the United States Bankruptcy Code that allows individuals and businesses to reorganize their finances while continuing to operate.
Steward Health is one of the largest private hospital operators in the country, and in addition to running Sebastian's only hospital, operates medical centers in Brevard, Broward and Miami-Dade counties.
In Sebastian, the health care hub is the community's go-to for most health care needs and just completed an $80 million expansion in 2020.
"All there is is this hospital," said resident Deborah Young, who has sought treatment at the hospital before. "I was surprised. "People want to go to the closest place there is, and this is it.”
In a news release, the company said primary factors for filing bankruptcy, included skyrocketing labor costs, increased material and operational costs due to inflation, and the continued impacts of the COVID-19 pandemic.
"With the additional financing in this process, we are confident that we will keep hospitals open, supplied, and operating so that our care of our patients and our employees is maintained," the company said in an official statement.
WPTV went straight to an expert source, Harvard Health Policy and Management Professor Dr. John McDonough, to find the truth.
"Bankruptcy is a way to clean up debts and get the financial house in order, but on the other hand, for places like an acute care hospital, there are reputational risks," McDonough said.
By that, he means if current staff have other opportunities, with the uncertainty of bankruptcy, staff may be more likely to leave, and said less providers, often means less quality care.
"It's also an unwelcome sign in terms of people who might want to come there and start working, because who wants to come into a place that’s in bankruptcy," McDonough said.
McDonough also points to other cases where bankruptcy didn't end well.
Hahnemann University Hospital in Philadelphiaclosed its doors and laid off its more than 2,500 staff members in July 2019 after filing for bankruptcy.
Delaware County Memorial Hospital in suburban Philadelphia also closed its doors in 2022, four years after the company that bought it out promised to keep it open.
Steward Health itself closed a hospital in Quincy in 2014 despite the company's promise to keep it open for 6.5 to 10 years.
In its own filing, Steward Health said it has heard from multiple potential buyers for some Massachusetts hospitals, but the state's attorney general, Andrea Joy Campbell told our NBC affiliate in Boston Steward's financial crisis is a "dire situation" for the health care of the area.
"These guarantees are kind of worth nothing in terms of what actually will happen and I think it's important for them to say it," McDonough said.
Sebastian River Medical and Steward Health Care System didn't respond to WPTV's request for further comment.
The hospital's website showed it employs about 600 staff and as of March had more than 18,500 patient days, patients who otherwise would have to go to Vero Beach or Palm Bay for care.
"That would not be good, because I'm sure they’re overwhelmed," Young said. "Everyone’s overwhelmed, because it's growing, and growing and so fast."
Indian River officials project the county to grow by 25% in the next 25 years, and WPTV previously reported on how growth on the Treasure Coast is straining the area's healthcare network.
WPTV took the problem to city, county, regional and state officials, including the state's Agency for Health Care Administration.
U.S. Congressman Bill Posey issued WPTV a statement saying he's also been in touch with AHCA since January to address the issue.
Sebastian councilman Fred Jones told WPTV he has concerns about the health care system filing bankruptcy but has no say in the matter since the hospital is technically outside city limits.
Both AHCA and Attorney General Ashley Moody's office told WPTV they are looking into the situation.
"And I shall stay optimistic with that," Young said.
To read Steward Health's full news release, click here.
