Private equity-owned Rural Healthcare Group plans to acquire Steward Health Care’s physician group for $245 million.
Steward Health Care, which filed for Chapter 11 bankruptcy protection in May, signed a definitive agreement to sell Stewardship Health, the for-profit health system’s physician group that spans nine states. The proposal requires approval from the U.S. Bankruptcy Court for the Southern District of Texas and must clear the customary regulatory process.
Rural Healthcare Group owns and operates 17 primary care clinics in North Carolina and Tennessee. It is owned by the private equity firm Kinderhook Industries, which has several additional healthcare companies in its portfolio, including another primary care physician group and a concierge provider.
Kinderhook offered $245 million in cash for Stewardship, according to Monday court filing.
“Kinderhook has over 20 years of experience investing in mid-sized healthcare businesses that serve the nation's most vulnerable populations,” Mark Rich, president of Dallas-based Steward Health Care, said in a news release Monday.
Related: UnitedHealth Group's Optum drops Steward physician group bid
Rural Healthcare Group plans to make significant investments in Stewardship’s infrastructure and allow providers to continue seeing patients in existing clinics, the company said in the news release.
The transaction, if completed, would separate Stewardship from Steward Health Care, and the clinics would be independently operated, according to the news release.
Massachusetts state legislators had expressed concern about how new operators of the physician group would impact hospital operations in the state. The effects of splitting the physician group from Steward’s 31-hospital network, as well as whether sale proceeds would be used to stabilize those facilities, are unclear.
The Massachusetts Health Policy Commission has not received a notice of material change from Rural Healthcare Group and Steward, a spokesperson said. The commission is reviewing the terms of the sale and will be in contact with the parties to discuss the state’s regulatory review requirements, according to the spokesperson.
The Stewardship proposal comes less than two months after a failed bid to sell the physician group. In March, UnitedHealth Group division Optum announced plans to buy Stewardship. However, the companies called off that deal citing a challenging Justice Department review.
Steward has continued to delay the sale proceedings for its hospital network as it tries to attract more bidders. The hospital chain recently announced plans to shutter two Massachusetts hospitals and is close to solidifying a deal to sell its remaining six facilities in the state, a company representative said during a hearing last week.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.
