Bankrupt hospital operator Steward Health Care received approval from a bankruptcy judge Friday to sell its national physician network to a private buyer, while its efforts to sell Massachusetts hospitals stalled, leading the state to step in and seize one of them.
Bankruptcy Judge Christopher Lopez on Friday approved the $245 million sale of physician network Stewardship Health to Rural Healthcare Group, a network of primary care providers owned by Kinderhook Industries and operating in Tennessee and North Carolina. At a court hearing in Houston, Lopez said the deal was the best deal available for 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 that deal fell through after Steward filed for bankruptcy in May.
Steward told Lopez that it had found a buyer for three of its hospitals in Florida and was making progress in its efforts to sell six hospitals in Massachusetts.
Steward put its 31 hospitals up for sale when it filed for bankruptcy to reduce its $9 billion debt.
Steward has received 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. That offer is still subject to higher and more attractive offers.
Steward’s attorney, Ray Schrock, said Friday that the company was “very, very close” to reaching deals for Massachusetts hospitals, but state officials, unhappy with the delays, moved to seize one hospital Friday.
Massachusetts Gov. Maura Healey said Friday that the state will take control of Saint Elizabeths Medical Center in Boston through expropriation to ease the transition to new ownership and allow the hospital to remain open.
Mr Steward declined to comment on the state’s seizure of St Elizabeth’s.
Steward has already decided to close two hospitals in Massachusetts and plans to turn the remaining hospitals over to new operators.
The company’s bankruptcy has drawn the attention of Massachusetts officials and U.S. senators, who have criticized the company and its former private shareholders for selling its hospital land to a real estate company, saddled it with long-term lease obligations worth more than $6.6 billion and leaving it on shaky financial footing.
A U.S. Senate committee plans to question the company’s CEO about Steward’s decline at a public hearing in September. (Reporting by Dietrich Knauth; Writing by Leigh Jones and David Gregorio)
