Navigating the Aftermath of Steward Health Care's Bankruptcy: A Fiduciary Financial Advisor’s Guide for Affected Physicians

As a physician, your commitment to patient care has always been unwavering. Yet, the recent bankruptcy of Steward Health Care—a significant event in the healthcare sector—has perhaps cast a feeling uncertainty over your professional and financial future. Whether you've been laid off, reassigned, or are facing potential changes, it's essential to approach this transition with clarity and purpose.

Understanding the Situation - What a facility closure or Steward Health Care's Bankruptcy might mean for former Steward physicians and affiliated providers...

Steward Health Care, once a prominent operator of over 30 hospitals nationwide, filed for Chapter 11 bankruptcy protection in May 2024. This decision was influenced by declining reimbursement rates, escalating operational costs, and the financial strain of the COVID-19 pandemic. In Massachusetts alone, the closure of Carney Hospital and Nashoba Valley Medical Center led to the loss of over 1,200 jobs . Additionally, the sale of Steward's physician group to Optum has further complicated the landscape for many medical professionals .

The fallout has continued with recent hospital closures in Warren, OH.

For a current update (as of 5/7/25) of the national fallout of the Steward bankruptcy for providers and where things currently stand, Healthcave Dive provides an excellent summary of the situation and the lay of the land currently, in our view here: https://www.healthcaredive.com/news/steward-health-care-bankruptcy-one-year-anniversary/747348/

A Financial Advisor's Checklist for what to consider doing next...

Review Your Most Recent Employment Contract

• You may want to examine clauses related to termination, severance, and post-employment benefits.

• Determine if you're entitled to compensation for unused vacation or sick days.

• You should understand that if your current employer is in bankruptcy they may be allowed to break their contract with you, but if the employer you have a contract with is not in bankruptcy - they generally are expected to honor their contract.

• This is just a general overview of the law can work in bankruptcy but if you have any questions you should discuss them with an employment lawyer or a bankruptcy lawyer that is licensed in the state where you work.

2. Assess Retirement and Deferred Compensation Plans

• Understand the status of your 401(k), pension, or deferred compensation.

• As a general rule "deferred compensation" plans from a non-government employer are subject to creditor claims and are part of the general assets of your employer so if your employer is in bankruptcy you may lose the assets in your non-qualified deferred compensation plan. This is not your 401(k), 403(b), or defined benefit plan - these are things like a 457(b) plan from a non-profit employer or a top hat deferred compensation plan.

• In our experience with other bankruptices, our clients did not lose access to their 401(k) plans

• Review your statements and ensure that all contributions that you made showed up in your transaction history. You can generally find this information on your employer 401(k) or 403(b) website.

  
  

3. Read all your paperwork carefully and learn about any deadlines to file a Proof of Claim

• If you are owed wages, bonuses, or other compensation, file a proof of claim with the bankruptcy court.

• Gather all relevant documentation, such as pay stubs and contracts, to support your claim .

• The legal system generally works on firm deadlines and so it is important to look closely for any deadlines to file proof of claims in any correspondence you may receive.

  
  

4. Understand Your Insurance Coverage

• Verify the status of your health, malpractice, and workers' compensation insurance.

• Be aware of any potential lapse in tail coverage post-employment, potentially exposing you to unprotected malpractice liability

5. Explore New Employment Opportunities

• Update your CV and professional profiles to reflect your experience and skills.

• Network with peers and consider reaching out to recruitment agencies specializing in healthcare placements.

• Discuss your situation with a fiduciary financial advisor who has clients all of the country and can discuss the merits of various job opportunities with you and help you understand how those offers stack up to what other clients may be getting elsewhere (the discussions are confidential but the information is always useful to have).

  
  

6. If you feel overwhelmed in this moment, Consider consulting with a Fiduciary Financial Advisor

• A fiduciary financial advisor can help you better understand your options and navigate the complexities of severance packages, retirement planning, and investment strategies, in light of a career change

• They can also assist in budgeting during periods of unemployment and planning for future financial goals.

• Finally, anyone who has worked with physicians long enough has seen these changes before. For example, our firm has personal experience with this when our physician clients went through the Envision Bankruptcy a few years back and had to change jobs. Here is how the Envision Healthcare Bankruptcy played out for reference for Steward physicians who are early in this process: https://www.envisionhealth.com/news/2023/envision-healthcare-reaches-restructuring-agreement#:~:text=Emergency%20medicine%20and%20anesthesiology%20clinicians,policies%2C%20leading%20to%20financial%20instability.

Offering Support and Guidance...

Transitioning from a longstanding position can be daunting, but remember, you're not alone.

As financial advisory firm specializing in serving physicians, we understand the unique challenges you face. Our role is to provide you with personalized strategies no matter what life throws at you -- ensuring that you not only recover but thrive in this new chapter of your professional life. Our clients who were impacted by the Envision bankruptcy a few years back ended up moving on to even better positions with time, so that bankruptcy was a catalyst for growth and the Steward bankruptcy can be the same for physicians with the right mindset, in our view.

If you need assistance reviewing your financial situation or exploring new career paths, we're here to help. Feel free to fill out our contact form to schedule a call today, and let's chart a course toward a secure and fulfilling future.

About Daniel Harris

Daniel Harris is the founder of D.R. Harris & Co., a Stanford graduate, and an experienced advisor to doctors facing complex financial challenges in today’s healthcare landscape. Learn more about Daniel here.

Who We Serve: We provide specialized financial planning for physicians at two pivotal career stages:

1. Pre-retiree and retiree physicians (typically age 50 and up) who are preparing to transition into retirement and want to convert their assets into a sustainable, tax-efficient income plan.

2. Early-career physicians (typically age 30–45) who are in completing training and stepping into their first attending roles—looking to build a strong financial foundation, buy a home, grow their families, manage debt, and start investing with confidence.

Disclosure: This article is written for educational and entertainment purposes only. We are not your financial advisor unless you have a signed written advisory agreement with us. We believe the information in this article is correct to the best of our knowledge at the time it was written, but before acting on any of the information you read in this article, you should verify all our statements independently with your own professional advisors and by doing your own independent research.  You can generally find information about your retirement plan in your plan document, your participant fee disclosure, or from your employer’s HR or benefits departments.  These are generally the most authoritative sources as our information may be incorrect or out of date, despite our best efforts to provide you with accurate information.  Please verify all this information with your employer before acting on anything you read about in this article.

Additionally, while we provide a general overview of the concepts of bankruptcy law, we are not your lawyer and this is not legal advice. We're not licensed to practice law in your state and the only person who can give you reliable and credible legal advice in your state is an attorney licensed in your state, which is not us. If you have any questions about your legal rights at your employer, we highly recommmend that you contact a local employment attorney, licensed in your state, that can help you understand your rights and the law. Our role is simply to provide a general educational overview on what happens to contracts in bankruptcy, based of our general knowledge, but for the specifics of your contract with your contract with your employer you have to talk to a licensed employment attorney or bankruptcy attorney in your state because we don't know that information and you should rely on what your attorney says, not what this article says if the information is not consistent between the two sources. Once again, to be extremely clear, we are not your lawyer, and we do not provide legal advice for a fee to any financial advisory client of our firm.