Real estate investment trusts are moving to the forefront in financing expansions of for-profit hospital chains.
Medical Properties Trust, one of the few REITs that specialize in hospital real-estate investment, is helping launch the national expansion of nine-hospital Steward Health Care System of Boston through a planned $1.2 billion purchase of Steward's hospital real estate. The firm will lease the property back to Steward.
As part of the deal announced in September, Birmingham, Ala.-based Medical Properties Trust, or MPT, also invested $50 million in Steward equity and committed to spending up to another $1 billion for the real estate of hospitals that Steward acquires nationally, said MPT CEO Ed Aldag.
Steward CEO Dr. Ralph de la Torre said his organization will look to acquire health systems outside of Boston. It is looking for hospitals that sit at the center of a fully developed delivery network of ambulatory, diagnostic and physician facilities, or where that continuum of care can be built out by Steward.
That's the approach that Steward has used in Massachusetts. Just buying hospitals is a recipe for trouble, de la Torre said. “You need to be able to develop an integrated model” to deliver the best care for patients and the lowest costs for payers.