(Bloomberg) -- Steward Health Care System is selling its managed-care businesses for $245 million, a deal that would keep its primary-care doctors separate from the bankrupt firm’s troubled hospital system.
An affiliate of private investment firm Kinderhook Industries agreed to buy Steward Medical Group and Steward Health Care Network — collectively called Stewardship Health — outbidding lenders who had offered to cancel $225 million in debt in return for the managed-care business, according to court documents. Kinderhook’s Rural Healthcare Group plans to make significant investments in Stewardship’s infrastructure, according to a company statement.
The company’s Stewardship Health division serves more than 800,000 patients and employs 900 primary care doctors backed by 2,350 specialists in 10 states, the court documents showed.
The sale is a key step in Steward Health’s insolvency case. The company filed bankruptcy in May, blaming unexpected problems as it grew quickly between 2017 and 2021 as well as a decline in the number of patients using its hospitals during the pandemic.
It recently got a $30 million state lifeline — following some hurdles — for six Massachusetts hospitals after landlord Medical Properties Trust Inc. and Macquarie Asset Management struck a deal with their lender, Apollo Global Management. Apollo will take over the real estate those hospitals lease as part of the agreement.
Steward currently has more than 30 hospitals in eight states.
The managed-care sale must be approved by the federal judge in Texas who is overseeing the bankruptcy case. A hearing to consider approval of the sale will take place on Aug. 16, according to court documents.
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 Luca Casiraghi.
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