BOSTON — Steward Health Care has announced it has secured an agreement to sell its nationwide physicians network to a private equity firm, Rural Healthcare Group, an affiliate of Kinderhook Industries LLC.
This deal is set against the backdrop of Steward’s ongoing bankruptcy proceedings. The Dallas-based healthcare provider, which filed for bankruptcy on May 6, is also preparing to appear before a bankruptcy court judge on Friday regarding its plan to divest six Massachusetts hospitals.
In a statement released Monday, Steward disclosed it has entered into a “definitive agreement” to transfer its Stewardship Health division, which comprises approximately 5,000 physicians across Massachusetts and nine other states, to Rural Healthcare Group. This network serves about 400,000 patients. The transaction remains subject to regulatory approval.
Steward Health Care expressed confidence that the deal will yield positive outcomes for both patients and physicians. “Stewardship Health will continue to cater to its dedicated patient base in Massachusetts under new ownership,” the company stated.
Mark Rich, President of Steward Health Care, highlighted Kinderhook’s extensive experience in the healthcare sector, noting their “over 20 years of investing in mid-sized health care businesses that support the nation’s most vulnerable populations.”
This latest transaction follows an earlier attempt by Steward to sell its physicians network to Optum, a division of UnitedHealth Group. That proposed deal, announced in March, ultimately fell through.
The company and its CEO, Ralph de la Torre, have faced significant criticism, including from Massachusetts Governor Maura Healey, for decisions leading up to the bankruptcy. Healey has criticized both de la Torre and Steward’s management and expressed hopes for federal action against them. “I have repeatedly voiced my dissatisfaction with Ralph de la Torre and Steward’s management,” Healey stated. “I hope federal authorities pursue him vigorously.”
In the wake of its bankruptcy declaration, Steward has announced plans to sell all 30 of its hospitals nationwide. Last month, a bankruptcy judge approved Steward’s decision to close two Massachusetts hospitals, Carney Hospital in Boston and Nashoba Valley Medical Center in Ayer, by the end of August, citing a lack of qualified bids.
Boston Mayor Michelle Wu has pledged to use the city’s planning and zoning processes to ensure that the Carney Hospital site remains a healthcare resource and is not converted into luxury real estate. “We want to ensure that the zoning status does not inadvertently allow for the development of a high-end condominium complex without proper scrutiny,” Wu emphasized on WBUR radio.
Steward also faces challenges related to lease payments for the properties of its hospitals. The company and state officials have argued that the requirement for buyers to assume existing lease payments, rather than negotiate new leases or purchase the properties outright, is complicating the sale process.
Last month, U.S. Bankruptcy Judge Christopher Lopez approved Steward’s motion to terminate the master lease agreements for its Massachusetts hospitals. Additionally, the state has committed approximately $30 million in advance Medicaid funds to support the operations of six hospitals Steward is attempting to transfer to new owners.