The sale of Sebastian River Medical Center and other Florida hospitals is in jeopardy as their owner, Steward Health Care, sues its landlord, Medical Property Trust.
The health company alleges that Medical Property Trust (MPT) has engaged in “undermining behavior” that has deliberately 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 legal dispute could have significant implications for healthcare access in the state.
The landlord denies Steward’s allegations and accuses the healthcare provider of delaying the hospital sale process to make more money. Steward Health Care has listed 31 U.S. hospitals for sale, including eight in Florida, to reduce its debt after filing for bankruptcy in May.
Steward Health Care no longer owns the land under its hospitals. Years ago, the company sold the real estate to MPT and has since paid almost $900 million in rent.
Acquiring Steward’s hospitals requires negotiating with Steward for the hospital buildings and operations and Medical Property Trust for the underlying real estate.
In court documents, Steward said MPT threatens the future of Sebastian River Medical Center and other Florida hospitals. Steward alleges that Medical Property Trust has imposed unfair terms on potential buyers and manipulated the bidding process, putting patient care at risk.
Steward also accuses the landlord of demanding that all value from the sale of Steward’s hospitals be directed to MPT, leaving the company with insufficient funds to maintain its operations and safeguard patient care.
However, the land owner has countered Steward’s allegations by accusing the healthcare provider of violating court-approved procedures to exclude the landlord from the sale negotiations.
The sale of Steward’s hospitals are complicated by the requirement that potential buyers submit separate bids for the hospital property and what they’re willing to pay for the property from the MPT, as outlined in the court-approved bidding procedures.
According to court documents, MPT argues that Steward has deviated from the 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 change the sale process to maximize profits from the sale of the real estate, as the 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 northern Florida to Orlando Health for up to $439.4 million. Other interested buyers have until August 26, 2024, to submit higher bids.
