US hospitals are emerging from bankruptcy only to falter again

The bankruptcy of Steward Health Care walloped the Massachusetts health care landscape. Six of its hospital campuses in the state were taken over by new operators, while two others — Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer — closed their doors after Steward’s financial implosion. Meanwhile, in Rhode Island just last month, the Centurion Foundation took over Roger Williams Medical Center and Our Lady of Fatima Hospital, two safety-net hospitals that had become cash-strapped under Prospect Medical Holdings ownership.

The renewed strain also underscores a broader problem in the hospital industry: bankruptcy is often proving to be less a reset than a handoff. Distressed facilities are being passed to new operators, often with lease relief, asset sales, or emergency financing to keep them open. Even as overall health care Chapter 11 filings fell in 2025, hospital bankruptcies rose, according to Gibbins Advisors, suggesting many hospitals remain financially fragile even after leaving court.

Some of the former Steward hospitals taken over by Michael Sarian and Faisal Gill — two executives chosen by MPT to run the facilities — have been hit in recent months with lawsuits from vendors and service providers, court filings show. The unpaid bills span a wide range of basic services, including medical staffing, physician coverage, plumbing, fire protection, and security systems.

HSA and NOR recently removed Sarian as chief executive officer and replaced him with Gill, even as the hospitals themselves were dealing with growing operational and financial strain. The two executives are now fighting in court, trading accusations of improper fund transfers and a conspiracy to replace Sarian at the helm of the companies.

MPT has said it expects the former Steward and Prospect hospitals sold to HSA and NOR Healthcare Systems Corp. — another company created by Sarian and Gill to take over several Prospect hospitals in California — to resume paying full rent by the end of this year and that Sarian’s companies would be better operators than their predecessors.

MPT didn’t respond to requests for comment.

“Under Mike’s leadership we had issues which right now I am working with vendors to correct,” Gill said in an email, adding that he’s secured an additional $30 million for new equipment at the HSA hospitals.

Trane Technologies plc, Johnson Controls International, and other service providers have filed liens against some of the hospitals, according to court records. Equipment lessors are trying to recover their machines. Several vendors and health care companies have said they stopped providing services altogether.

The strain extends beyond vendor disputes. In Texas, hospitals run by Healthcare Systems of America, or HSA, one of the operating companies tied to Sarian and Gill, are also behind on tax payments owed to two counties, court papers show. In Florida, meanwhile, an employee at one HSA hospital alleged in a whistleblower lawsuit that managers told him to mislead government regulators about building-safety violations and refused to pay to repair an elevator. HSA denies the allegations, Gill said in an email, and has moved to dismiss the complaint. The company argues the plaintiff failed to show that the relevant statute was violated.

For patients and the communities around these facilities, the risk is that mounting financial stress starts to show up in everyday care. When hospitals miss payments to vendors and service providers cut back, they can struggle to maintain equipment, staff departments, and keep up with repairs, basic building operations, and other routine functions essential to patient care.

Medical staff at some HSA hospitals in Florida continue to contend with broken equipment and lack of supplies, but HSA has been more responsive when they raised concerns than Steward had been, DeQuasia Canales, a union official who represents workers at a number of HSA facilities, told Bloomberg in an interview. “That’s a low bar,” said Canales, referencing deterioration in facilities run by Steward.

The management dispute has added another layer of uncertainty. In February, MPT sent HSA a notice of default over unpaid rent and other obligations, including delinquent Texas taxes. In a California lawsuit filed in February, seeking to remove Sarian as chief executive officer, NOR alleged that it bounced $4 million of checks to health care providers in January and had built up about $20 million in unpaid payroll taxes over time. In response to questions from Bloomberg, Gill said NOR is now current on the payroll tax liability, which he said had built up under Prospect’s ownership.

A spokesperson and a lawyer for Prospect didn’t respond to requests for comment.

Gill, in court papers, has accused Sarian of improperly moving more than $50 million out of NOR and another company the two manage and transferring the funds to HSA, which is solely owned by him, since 2021. Sarian, in an email, said claims that he siphoned money out of the businesses are false, and his lawyer said he has been the victim of deceptive colleagues.

Sarian, in his own court filings, has accused Gill and a minority investor of working together to force him out and take control of part of his ownership stake in the companies.

Those accusations remain contested, and the executive feud may take time to sort out in court. But the more immediate problem for MPT is that the hospitals it helped rescue are again facing missed payments and questions about day-to-day operations. The turmoil is another test of whether the operators it backed can stabilize the facilities and restore rent.

Dana Gerber of the Globe staff contributed to this report.