Indian River County Hospital District

Hospital chaos as Steward files for bankruptcy

Vero Beach 32963

May 09, 2024

BY LISA ZAHNER, Staff Writer

Sebastian River Medical Center, Indian River County’s northern hospital and fifth largest private-sector employer, along with its parent company Steward and 165 other hospitals clinics and physician groups around the country filed for Chapter 11 bankruptcy protection Monday, and the company hurtled into damage-control mode.

A memo to doctors with privileges at the hospital read like a
slick marketing piece, attempting to paint Monday’s events as a mere housekeeping matter.

“This is a voluntary process that allows Steward to address its affairs, debts, and operations in a controlled environment under the protection of the court,” Dr. Michael Callum, executive vice president for physician services for Steward Health Care, emailed physicians at 9:27 a.m. Eastern.

“To be clear – all of our hospitals remain open and filing for Chapter 11 does not mean we are reducing our scope of services. This process will have no impact on the quality of care our patients receive. We remain committed to our patients, staff, and communities, and will continue to partner with you to provide safe, high-quality care every day,” Callum wrote.

But will vendors of expensive medical equipment and supplies continue to ship product out to Steward hospitals? Will patients continue to choose Sebastian River Medical Center for their non-emergency, elective and outpatient care? Will the 750 doctors, nurses and other clinical and support
staff remain at Sebastian River Medical Center when the healthcare job market is red hot?

Cleveland Clinic Indian River Hospital offered the following statement when asked if the hospital was prepared for a potential influx of patients, or even doctors and employees opting to bail on SRMC and Steward Health Care.

“We are constantly looking for ways to increase capacity and serve our community. Over the last five years, we’ve invested in expanding quality medical services to meet the needs of the people
we serve,” spokesperson Raquel Gonzalez Rivas said.

Indian River County Hospital District Executive Director Frank Isele also has been monitoring the deteriorating situation with Sebastian River Medical Center and Steward corporate.

“At this time we are uncertain of how this will directly impact Sebastian River Medical Center’s provision of services to our residents in Indian River County,” Isele said. “However, Indian River County Hospital District stands ready to convene our community providers and partners and Cleveland Clinic Indian
River to be sure the healthcare needs of Indian River County residents are met.”

Callum tried to reassure the doctors by, in part by saying hey, Chapter 11 isn’t so bad. In fact, it’s a popular thing to do.

“This is an action that many organizations before Steward have undertaken, and one that many after Steward will undertake,” the memo said.

For months, the truth about Steward Health Care’s financial woes has been
seeping out in news headlines, with the Boston Globe leading the pack, uncovering plans to close or liquidate hospitals seen as most valuable to stave off the inevitable reckoning with its creditors.

Vero Beach 32963 began digging around about SRMC’s financial situation in 2023, reporting in January that the hospital was six months behind in its water and sewer utility bills, and that cash-flow issues were forcing the delay or cancellation of surgeries due to missing orthopedic equipment.

In February, we reported on the hospital’s most recent audited financial statements from 2021, that Steward was years behind on paying its taxes, and that millions flowing upward to corporate in fees, rent and debt service payments was leaving the local hospitals in the red, or only marginally profitable.

Court documents show that Steward and its hospitals owe between $1 billion and $10 billion to more than 100,000 vendors, subsidiaries, individuals and to its powerful landlord, the publicly traded Medical Properties Trust, which is, coincidentally, one of its own affiliated companies.

The separate 200-page pleadings Steward filed for each of its entities state, amid the muck of legalese, that it’s using the federal bankruptcy mechanism to restructure its debt to its largest creditor, MPT.

To expand, Steward purchased hospitals in Florida, Texas and other states. To buy each new hospital, the company showed that it already owned numerous hospitals worth hundreds of millions of dollars, and took out Asset-Based Loans. Then Steward sold hospital properties to MPT and leased the hospitals back.

Steward then billed each hospital the lease payment to MPT, plus monthly payments toward a portion of Steward’s debt. On top of that, the hospitals pay Steward hefty management fees for doing things like facilities maintenance, legal work, accounting and paying the bills for the local hospitals.

Money was going up the food chain – siphoned out of each hospital’s bank accounts on a nightly basis – but it was not coming back down quite as rapidly, so the bills at Sebastian River Medical Center were not getting paid. Recently, Steward and SRMC defaulted on lawsuits filed by its landscaping service and a fresh-food delivery company. Only after the court awarded a judgment to the plaintiffs did the vendors get their invoices paid.

Will the court see through what many in the industry have called an elaborate shell game to allow Steward to settle up with MPT, while leaving many of the other 99,999-plus creditors high and dry, or waiting months or even years to get paid?

While Steward’s public relations department launched a colorful, ready to-go website explaining the Chapter 11 proceeding to the largely financially illiterate media touting variations on the “everything is going to be OK” talking point, the court documents filed on Monday reveal some very early casualties of the proceedings.

Section 5 of the document on Page 7 is entitled, “Termination of the Deferred Compensation Plans and Notification of Insolvency to Trustees of Trusts.”

Steward is asking the bankruptcy court to accept its declaration that its two deferred compensation plans, one which appears to involve regular employees and one that’s strictly for executives, are “insolvent” and thus, are hereby “irrevocably terminated.” That doesn’t sound like business as usual for the people who were promised deferred compensation benefits.

Sebastian River Medical Center Board of Trustees member Wesley Davis, who has served on the hospital board since he was a county commissioner, said he was not given a heads up about the Chapter 11 filing. Presumably employees were notified on Monday about the Chapter 11 filing and how it will impact them. The phone of Steward’s marketing director, went straight to voicemail, and questions emailed to spokesperson Cathy Pague went unanswered as of press time.

WILLIAM COONEY, M.D.

SEAT 7

William P Cooney M.D. is an orthopedic surgeon (retired) who has been a resident of Vero Beach since 2004. He practiced orthopedic surgery at Indian River Medical Center from 2006-2015 within the orthopedic practice of Prosports. He served on the IRMC Foundation for four years. Prior to this, he was a Professor of Orthopedics at Mayo Clinic in Rochester Minnesota, Chair of the Division of Hand Surgery and Vice president of the Department of Orthopedic Surgery. He served as the Vice Chairman of the Mayo Clinic Development Department. He has been President of the American Society for Surgery of the Hand, Orthopedic Research and Education Foundation, Consultant at Shrine Hospital systems. He was editor in chief of the Journal of Orthopedic Surgery and co-editor of the Journal of Hand Surgery. He held grants in hand and wrist surgery sponsored by National Institute of Health (NIH) and Stryker Orthopedics and has over 250 publications in the field of orthopedic surgery, hand, wrist and elbow surgery and microsurgery- free tissue transfers. Within Indian River County, he has served as Chairman of the Board and President of the Hope for Families Homeless Center, Board of the Indian River Hospital Foundation, We Care and Whole Family Health Center medical practices.

Term:  1/23-12/24   |   1/24-12/29

Origination: Elected (2 OC)

Occupation: Retired Surgeon

Email: w.cooney@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

KERRY BARTLETT

SEAT 6

Kerry Bartlett,  of Vero Beach, has more than 30 years experience in philanthropy, including as vice president of the VNA & Hospice Foundation; VNA chief advancement officer from 2001-2007; and executive director of the Indian River Community Foundation from 2008-2014. Kerry is the founder of The Bartlett Company, which focuses on nonprofit and philanthropic consulting. She also is a managing director for Carter, a Vero Beach company that specializes in advancing philanthropy worldwide. Kerry has spent more than 25 years in the nonprofit sector as a fund development professional and has particular expertise in annual funds, major gifts, endowment campaigns and legacy giving. Kerry is also known for creating and implementing effective donor-centered stewardship programs that build, maintain and strengthen nonprofits’ relationships.

Term:  3/21-12/22   |   1/23-12/26

Origination: Appointed by Governor Ron DeSantis
Elected NOC

Occupation: Philanthropic Consultant/Managing Director

Email: k.bartlett@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

KAREN DEIGL

SEAT 5

Karen has been President and CEO of Senior Resource Association, where she successfully advocates for older adults and their families, since 2006. In that role, she helps provide activities, education and services benefiting older and disabled adults in Indian River County. In addition, Karen provides oversight of the community mass transit system for residents and visitors of the county. As CEO, Karen is responsible for a $7 million operational annual budget and managing more than 100 employees. She ensures that fiscally sound and responsible solutions are created to provide healthcare and a better quality of life for all Indian River County residents. Karen earned a BS in Health Administration from Florida Atlantic University and an MHA from the University of Florida. She was elected to the Indian River County Hospital District Board of Trustees in 2016, and joined the Board in January 2017.

Term:  1/17-12/20   |   1/21-12/24   |   1/24-12/29

Origination: Elected 1 OC | Elected NOC

Occupation: President/CEO

Email: k.deigl@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

PAUL WESTCOTT

SEAT 4

Paul Westcott has been a Board Certified Workers' Compensation Attorney since 1999. In addition, Paul has earned his certification from the Florida Supreme Court as a Circuit Civil and Family Law Mediator. Receiving his Bachelor of Arts degree in both Economics and Political Science at Florida Southern College, he continued his education at Stetson University College of Law. He graduated from Stetson in 1988, having been a published member of the Stetson Law Review. Paul has been a member of the Florida Bar since 1988.  He began his practice in a combined civil litigation and transactional practice before serving as an Assistant State Attorney.  He began his career in Workers' Compensation with Rissman, Weisberg, Barrett, Hurt, Donahue & McClain P.A., where he handled Workers' Compensation cases at the trial and appellate levels.  In 1997, Paul opened the Ft. Pierce office of Hurley, Rogner, Miller, Cox, Waranch & Westcott P.A. handling workers' compensation cases at all levels throughout central and south Florida, while managing the operations of that office.  During his nearly 25 year career in Workers' Compensation, he lectured on a wide range of industry topics.


Term: 
1/23-12/26   |   1/21-12/24

Origination: Elected 1 OC 

Occupation: Attorney & Mediator

Email: p.westcott@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

CHUCK MACKETT, M.D.

SEAT 3

Charles “Chuck” Mackett MD is a practicing primary care physician who has a long and storied career in military, academic and executive medicine. Dr. Mackett recently retired from Cleveland Clinic Indian River Hospital where he served for fourteen years as Chief Medical Officer, Chief of Staff and President of Indian River Medical Associates. Dr. Mackett serves on the Board of Directors of the We Care Foundation of Indian River County and the Mental Health Collaborative of Indian River County. He currently cares for patients at Treasure Coast Community Health. These experiences give Dr. Mackett a unique perspective regarding mental health, substance abuse, maternal-child care, care for veterans, preventive medicine and access to high quality medical care.

Dr. Mackett is a graduate with honors from the University of Notre Dame and is a graduate from the SUNY Upstate Medical Center in Syracuse, NY. He is a member of the Alpha Omega Alpha National Medical Honor Society and earned his Master of Medical Management degree from Carnegie Mellon University. Dr. Mackett is trained in Aerospace Medicine and is board certified in Family Medicine and Geriatrics. He is a combat veteran, former Air Force Hospital Commander and flight surgeon who served in Germany, Haiti, Japan, Korea, Romania and Iraq. His many military decorations include two Legions of Merit, a Bronze Star Medal, a Defense Meritorious Service Medal and three Air Force Meritorious Service Medals. Dr. Mackett is an Outstanding Graduate of the Air War College.

A native of Upstate New York, Dr. Mackett and his family first moved to Florida in 1996 when he served as Fight Commander and Residency Program Director at Eglin Air Force Base before later serving as Medical Group Commander at Patrick and MacDill Air Force Bases. Dr. Mackett served as Associate Professor, Executive Vice Chairman of Family Medicine and Consultant in the International and Commercial Services Division at the University of Pittsburgh Medical Center before returning permanently to Florida and Vero Beach in 2009.

As a Hospital District Trustee, Dr. Mackett plans to advocate for improved access to mental health services and access to affordable high quality primary and specialty care for all residents of Indian River County particularly mothers, children, the elderly, the underserved and veterans.

Term: 1/24-12/29

Origination: Elected NOC

Occupation:  Primary Care Physician

Email: c.mackett@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

MICHAEL KINT

SEAT 2

Born and raised in Illinois, Michael was a Theatre and Speech Instructor at Lincoln College when he moved to Indian River County in 1984. He was the Director of Education for the Riverside Theatre for a decade, helping to build the Riverside Children’s Theatre and directing many productions. Michael is well known in the community for his 25 years of service at the United Way of Indian River County, 16 of those years as the CEO. He is very proud of his work with dozens of nonprofit agencies and his commitment to creating and strengthening community collaboratives. Michael was also an Adjunct Faculty member at Barry University for 20 years. He has served on many boards and committees over the years, including: Children’s Services Advisory Committee Needs Assessment, Chair of the Emergency Food and Shelter Program for many years, and he was a founding member of the Mental Health Collaborative, the Senior Collaborative of IRC and the IRC Executive Roundtable. As a Hospital District Trustee he is committed to serving all the citizens of our county. In particular, he hopes to see enhanced availability and affordability for behavioral/mental health for all in need.

Term: 1/23- 12/26

Origination: Elected 1 OC

Occupation: Retired CEO United Way

Email: kintm.irchd@gmail.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960

ALLEN JONES

SEAT 1

In 1973, Mr. Jones began a 27 year career with Merrill Lynch, eventually becoming a senior executive of the company, Senior executive positions included Chairman and CEO of Merrill Lynch Life Insurance Company, serving on the Private Client Executive Committee and various other leadership roles including leading the effort to transition Merrill Lynch to a fee based rather than commission based business. Prior to joining Merrill Lynch, Mr. Jones’ professional career began in the United States Air Force from 1964-1968, achieving the rank of Captain. He then worked with Investment Company Dabbs, Sullivan, Trulock located in Little Rock, Arkansas rising to partner before the firm was sold and joining Merrill Lynch. Mr. Jones received his B.S.B.A in 1964 from University of Arkansas. He further completed advanced management courses at the Kellogg School of Business at Northwestern University, the Wharton School of Business at the University of Pennsylvania and Stanford University. His past community service efforts include serving on the Board of Directors for the John’s Island Club from 2008-2010; Board of Directors for the Indian River Medical Center from 2007-2010; Chairman of the Indian River Medical Center Foundation from 2006-2010; Board of Directors of the Bedens Brook Golf Club; Board of Directors of the Princeton Community Hospital from 1994-1999 and the Chairman of the American Health Association, in Houston, Texas.

Term: 1/24-12/29

Origination: Elected 2 OC

Occupation: Retired CEO

Email: a.jones@irchd.com

Address: 1705 19th Pl Suite G3, Vero Beach, FL 32960