Bankrupt Steward Health Gets Approval for Managed-Care Unit Sale

(Bloomberg) -- Bankrupt Steward Health Care System won court approval to sell its managed-care business for $245 million and said it’s close to finalizing sales agreements for most of its Massachusetts hospitals.

Judge Christopher Lopez said Friday he’d approve the sale of the troubled health systems so-called Stewardship Health business to an affiliate of investment firm Kinderhook Industries. The deal, which includes Steward Medical Group and Steward Health Care Network, topped a rival offer from Steward’s lenders and keeps the company’s primary-care doctors separate from its troubled hospital system. 

Steward lawyer Ray Schrock said during a court hearing that the firm has made substantial progress on proposed purchase agreements for five of its six Massachusetts hospitals, though advisers are still working to sell all of the hospitals in the state. Discussions related to the sales have included Massachusetts authorities, which is advancing $30 million in payments through various state programs to support the hospitals’ operations, Schrock said.

Stewardship Health, the managed-care business, serves more than 800,000 patients a year and employs 900 primary care doctors backed by 2,350 specialists in 10 states, according to court documents. The sale to Kinderhook affiliate Rural Healthcare Group is subject closing conditions.

The transaction won court approval days after Steward announced it had an agreement to sell its hospitals in northern Florida to Orland Health for up to $439 million, according to court documents. The transaction is in the form of a stalking horse bid, meaning it’s subject to better offers should any materialize in the coming weeks. Orlando Health is a private, not-for-profit healthcare organization.

Steward filed Chapter 11 in May and has been working to sell its hospitals to new owners. The company operates about 30 hospitals in Florida, Massachusetts, Texas, and other states.

The bankruptcy case is Steward Health Care System LLC, 24-90213, US Bankruptcy Court for the Southern District Court of Texas (Houston.)

--With assistance from Steven Church.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.