Just days after Dallas-based Steward Health Care announced the sale of its medical group, the bankrupt provider organization has entered into an agreement to sell its Northern Florida operations to Orlando Health.
The operations being sold include Rockledge Regional Medical Center, Melbourne Regional Medical Center, Sebastian River Medical Center, and Steward Medical Group Practices in Northern Florida. Local news sources said that a proposed agreement would have Orlando Health pay $439.4 million in cash, although that amount could change.
Currently in Chapter 11, Steward is in the process of selling all of the 30 hospitals it operates across Arizona, Ohio, Pennsylvania, Arkansas, Florida, Louisiana, Texas, and Massachusetts.
Orlando Health’s qualified bid has been designated as the “stalking horse” and, subject to the terms of the agreement, its bid will be subject to higher or better qualified bids received by August 26, 2024, at which time a bankruptcy court-approved auction may occur.
Nonprofit Orlando Health is in expansion mode. It recently agreed to purchase Tenet Healthcare’s 70% majority ownership interest in Brookwood Baptist Health in Birmingham, Ala., for approximately $910 million in cash (after-tax proceeds of approximately $790 million).
Brookwood Baptist Health consists of five hospitals across Central Alabama with more than 1,700 beds, more than 70 primary and specialty care clinics, approximately 1,500 affiliated physicians and more than 7,300 employees. It was formed in 2015 following a merger agreement between Tenet and Baptist Health System.
“The emergence of Orlando Health, a premier health system with extensive operations in and around Florida, as the leading qualified bid committed to purchasing these assets reinforces the attractiveness of these best-in-class assets,” said Mark Rich, president of Steward Health Care, in a statement. “We look forward to reviewing any additional bids that are received between now and August 26th, and are encouraged by Orlando Health’s vote of confidence in our Northern Florida operations.”
Orlando Health is a 3,487-bed system that includes 17 hospitals, 10 free-standing emergency rooms and 9 Hospital Care at Home programs, with additional facilities under development. In addition, the system also includes skilled nursing facilities, an in-patient behavioral health facility under the management of Acadia Healthcare, and more than 375 outpatient facilities.
The transaction is subject to Bankruptcy Court and regulatory approval, and is expected to close in the fourth quarter of 2024 should Orlando Health emerge as the winning buyer.
Earlier this week, Steward sold its Steward Health Care Network and the primary care providers of Steward Medical Group, which it refers to as “Stewardship Health” for a reported $245 million.
The buyer is Rural Healthcare Group, an affiliate of private investment firm Kinderhook Industries LLC. Founded in 2022, RHG is headquartered in Nashville and has 17 clinics across Tennessee and North Carolina. Its CEO, Benson Sloan, previously served as vice president at naviHealth, an Optum/United-owned post-acute service provider.
