Steward Health Care has reached an agreement to sell its nationwide network of physicians to a private equity firm. This move comes as the company faces bankruptcy proceedings and seeks approval to sell six hospitals in Massachusetts. Steward, based in Dallas, announced its bankruptcy on May 6.
In a statement released Monday, Steward confirmed it has signed a “definitive agreement” to transfer its Stewardship Health business to Rural Healthcare Group. This network includes approximately 5,000 physicians across Massachusetts and nine other states, serving around 400,000 patients. Rural Healthcare Group is an affiliate of Kinderhook Industries LLC, a private equity firm.
The sale is subject to regulatory approval. Steward expressed confidence that the transaction will ensure continued high-quality care for its patients. “Stewardship Health will continue to serve its loyal patients in Massachusetts under new ownership,” the company stated.
Mark Rich, President of Steward Health Care, noted that Kinderhook Industries brings over 20 years of experience in investing in healthcare businesses that support vulnerable populations.
Earlier, Steward had announced a deal to sell its physician network to Optum, a unit of UnitedHealth. However, that agreement was never finalized.
Steward and its CEO, Ralph de la Torre, have faced significant criticism for decisions leading to the bankruptcy. Massachusetts Governor Maura Healey has publicly criticized de la Torre and expressed hope that federal authorities will take legal action against him. “I hope the feds go hard after him and he ends up in jail,” Healey said.
In response to the bankruptcy, Steward has been selling off its hospitals. A bankruptcy judge recently approved the closure of Carney Hospital in Boston and Nashoba Valley Medical Center in Ayer, scheduled for August 31 due to a lack of qualified bids for these facilities.
Boston Mayor Michelle Wu announced plans to use the city’s zoning and permitting process to ensure that the Carney Hospital property remains a healthcare resource, rather than being converted into luxury condos. “We want to ensure that the zoning does not allow for a rapid shift to high-end residential development,” Wu stated.
Steward faces challenges with lease payments for hospital properties sold to another company. Both Steward and the state have argued that these lease obligations complicate the sale of the hospitals.
Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston recently approved Steward’s request to eliminate the master lease binding the Massachusetts hospitals.
Additionally, Massachusetts has agreed to provide about $30 million to support the operations of six hospitals that Steward is transferring to new owners. This funding will be advanced from Medicaid payments owed to Steward.
A U.S. Senate committee has authorized an investigation into Steward’s bankruptcy and has issued a subpoena for de la Torre.
Steward Health Care currently operates over 30 hospitals in states including Arizona, Ohio, Pennsylvania, Arkansas, Florida, Louisiana, Texas, and Massachusetts.
