Steward Health Care offloads physician network to Rural Healthcare Group

Steward Health Care has found a buyer for its embattled physicians network, Stewardship Health. Rural Healthcare Group, an affiliate of Kinderhook Industries, has agreed to purchase Stewardship Health for $245 million, according to bankruptcy court documents filed this week.

Stewardship combines Steward Health Care Network and the primary care providers of Steward Medical Group, with an integrated primary care network of about 5,000 employed and affiliated providers in nine states. Stewardship offers value-based care across Medicaid and commercial populations, managing 400,000 attributed lives, according to the company. Rural Healthcare Group, which is based in Nashville, operates 17 clinics in two states.

“As part of the ongoing Chapter 11 proceedings, following a robust and active bidding process, Steward Health Care is pleased to have reached an agreement with Rural Healthcare Group,” said Mark Rich, president of Steward Health Care. “Kinderhook has over 20 years of experience investing in mid-sized health care businesses that serve the nations’ most vulnerable populations.

“Kinderhook’s investments are focused on protecting access to high-quality health care in communities that are truly underserved. Rural Healthcare Group is a well-respected group of health care professionals that specifically focuses on underserved and underinsured areas. We are confident that Stewardship Health will continue its stellar treatment of the patient population as a result of this transaction.”

Rural Healthcare Group plans to make significant investments in Stewardship’s infrastructure, which will enable providers to continue seeing patients in existing clinics across the Stewardship network, CEO Benson Sloan said.

“We are excited to bring our mission and approach to the state of Massachusetts and the other states where Stewardship operates and supports primary care clinics,” he said. “In many ways, Rural Healthcare Group has directly preserved and restored primary care in our Tennessee and North Carolina markets as both independent providers and health systems have sought us out to ensure long-term continuity of care in their communities. A thriving primary care infrastructure is critical to supporting local hospitals and specialists, as primary care providers are instrumental in ensuring patients are directed to the appropriate facilities at the right time.”

Read more: Senate panel votes to subpoena Steward Health CEO about hospitals’ bankruptcy

A potential transaction to sell Stewardship to UnitedHealth Group’s Optum fell through earlier this year. The deal, unveiled in March, was a cornerstone of Steward Health Care’s liquidation plans but came under fire from prominent lawmakers and other critics of the two companies. Steward sought Chapter 11 bankruptcy in May and is actively working to offload its hospitals.

The for-profit health system also has received bankruptcy court approval to close two of its Massachusetts hospitals, Boston-based Carney Hospital and Ayer-based Nashoba Valley Medical Center, by August 31. A third Steward hospital, Holy Family Hospital in Haverhill, Mass. also faces closure because of an altered bid from a potential owner.

The purchase is subject to bankruptcy court approval, and the transaction will close pending completion of all closing conditions, including regulatory approval.