Bankrupt Steward Health Care is selling the physician network as a foreclosed Massachusetts hospital

Bankrupt hospital operator Steward Health Care won approval from a bankruptcy judge on Friday to sell its national network of doctors to a private equity buyer, as its stalled efforts to sell Massachusetts hospitals prompted the state to step in and seize a hospital.

U.S. Bankruptcy Judge Christopher Lopez has approved the $245 million sale of Stewardship Health physician network to Rural Healthcare Group, a primary care provider network owned by Kinderhook Industries that operates in Tennessee and North Carolina. Lopez said at a court hearing in Houston that the deal is the best deal available to Steward, which is trying to sell all of its roughly 30 hospitals separately from the physician network.

Steward had previously planned to sell the physician network to a subsidiary of UnitedHealth Group, but the deal fell through after Steward filed for bankruptcy in May.

Steward told Lopez that it has found a buyer for three of its Florida hospitals and is making progress on efforts to sell six hospitals in Massachusetts.

Steward put all 31 of its hospitals up for sale when it filed for bankruptcy in an effort to pay off $9 billion in debt.

Steward has a $439.4 million offer from Orlando Health Inc. for Steward Melbourne Hospital, Steward Rockledge Hospital and Steward Sebastian River Medical Center, according to court documents. This offer is still subject to bigger and better offers.

Steward’s attorney, Ray Schrock, said Friday that the company is “very, very close” to finalizing deals for Massachusetts hospitals, but state officials, unhappy with the delays, moved to seize a hospital on Friday.

Massachusetts Gov. Maura Healey said Friday that the state will take control of Boston’s Saint Elizabeth Medical Center through eminent domain to ease the transition to a new owner and keep the hospital open.

Steward declined to comment on the state seizure of Saint Elizabeth’s.

Steward previously decided to close two hospitals in Massachusetts and plans to transition the remaining hospitals to new operators.

The company’s bankruptcy drew the attention of Massachusetts officials and U.S. senators, who criticized the company and its former private equity owners for selling the land beneath the hospitals to a real estate company, leaving the company with more than $6.6 billion in rent obligations on long term and leaving it on an unstable financial footing.

A US Senate panel plans to question the company’s CEO about Steward’s decline at a public hearing in September.

(Reporting by Dietrich Knauth; Editing by Leigh Jones and David Gregorio)

TOPICS
Massachusetts Mergers and Acquisitions