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- 🏥💸 Hospitals in the Hot Seat: Lawsuits, Pay Cuts and CMS Shakeups
🏥💸 Hospitals in the Hot Seat: Lawsuits, Pay Cuts and CMS Shakeups
From Steward Health’s “sue your way out of bankruptcy” plan to Medicare’s plot twist on specialist pay and CMS quietly retooling outpatient rules, yeah it’s been a week. Grab your coffee, this one’s a ride.
Steward Health Bets 🤝 on Litigation to Repay Creditors
A Houston bankruptcy judge approved Steward Health Care’s liquidation plan, allowing it to repay creditors with proceeds from lawsuits targeting former executives and owners.
Key Points
Steward Health Care won court approval to use litigation proceeds to repay Chapter 11 expenses and creditors.
The network filed bankruptcy with $9 billion in debt after Cerberus Capital Management sold hospital land and expanded aggressively.
Judge Lopez said Steward only needs to recover 13% of its $3 billion legal claims to repay expenses by mid‑2027.
Steward sued former CEO Ralph de la Torre and Cerberus, alleging they drained assets for personal gain.
Why It Matters
This ruling signals a rare reliance on litigation recoveries to sustain a massive health network’s bankruptcy, testing whether insider clawbacks can meaningfully offset billions in debt. It underscores the precarious financial footing of large private equity-backed hospital systems, with ripple effects for vendors, patients, and state health agencies.
Takeaway
Healthcare operators facing insolvency may need to consider aggressive legal strategies against former insiders to stabilize creditor payouts and preserve operational continuity for critical facilities.