Dallas-based Steward Healthcare System is selling its managed-care business for $245 million, a deal that will separate the company’s primary care physicians from its troubled hospital system, which emerged from bankruptcy.
According to court documents, an affiliate of private investment firm Kinderhook Industries has agreed to acquire Steward Medical Group and Steward Healthcare Network, collectively known as Stewardship Health, for a price higher than lenders had offered to wipe out $225 million in debt in exchange for the managed-care business. Kinderhook’s Rural Healthcare Group plans to invest heavily in Stewardship’s infrastructure, according to a company statement.
The company’s Stewardship Health division serves more than 800,000 patients in 10 states and employs 900 primary care physicians supported by 2,350 specialists, according to court documents.
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The sale marks a significant step in Steward Health’s bankruptcy process, which it filed for bankruptcy in May, citing unforeseen problems during rapid growth from 2017 to 2021 and a decline in the number of patients using its hospitals during the pandemic.
The company recently secured a $30 million bailout from the state for six Massachusetts hospitals after landlords Medical Properties Trust and Macquarie Asset Management struck a deal with lender Apollo Global Management LLC to take over the properties the hospitals lease as part of the deal.
Steward owns more than 30 hospitals in eight states.
The sale of the managed care companies must be approved by a federal judge in Texas who is overseeing the bankruptcy case. A hearing to consider approving the sale is scheduled for Friday, according to court documents.
Stephen Church and Aradhana Aravindan contributed to Bloomberg News with assistance from Luca Casiraghi.
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