Steward offered specifics on how it intends to auction off its assets in motions filed in bankruptcy court last week, including a timeline for selling its hospitals and physician group as well as contingency plans, including possible closures, if the assets fail to lure qualified bidders.
The physician-owned healthcare network, which filed for Chapter 11 bankruptcy earlier this month, operates 31 hospitals and a physician group, Stewardship Health, in Massachusetts, Arizona, Ohio, Pennsylvania, Arkansas, Louisiana, Texas and Florida.
All of its assets are up for sale — and Steward is looking to sell quickly, according to the filings.
Steward says it is in advanced discussions with Optum and hopes to finalize an agreement in the near-term for the company to serve as the stalking horse bidder for its physician group, Stewardship Health — the initial bid that sets the floor price during auction.
In March, UnitedHealth subsidiary Optum Care emerged as the leading bidder and issued a letter of intent to purchase Stewardship. However, the parties never submitted the required documents to Massachusetts state regulators to finalize the deal, state officials told Healthcare Dive on Friday.
As for its hospitals, Steward said it’s received “numerous indications of interest” for its portfolio after contacting nearly 260 potential buyers prior to filing for bankruptcy, according to the filings.
But, should Steward fail to generate a qualified bid for some facilities during auction, the hospitals could shutter. Qualified bids must include written evidence of available cash to make the purchase, at least a 10% cash deposit to cover the purchase price and evidence the bidder has made all necessary filings, among other things.
Under the proposed timeline, buyers will have until June 24 to submit bids for Stewardship Health and Steward’s non-Florida hospitals for a sale hearing on July 2.
Steward suggested a parallel timeline for its Florida hospitals and remaining assets, laying out a schedule of July 26 for bids and August 2 for finalizing sales. Bankruptcy Judge Christopher Lopez will determine whether to approve the timeline at a June 3 hearing.
The filing is the first quantification of the marketing process. However, both Steward’s legal team and its landlord, Medical Properties Trust, have discussed the hospital sale process previously, painting in turns grim and optimistic outlooks for Steward’s odds of selling its portfolio by July.
When Steward last appeared last before Lopez at the company’s first bankruptcy hearing earlier this month, Steward’s attorney, Ray Schrock, told the court the proposed sale timeline was likely “not feasible.”
Days later, MPT CEO Edward Aldag projected confidence that Steward could close the deals, telling investors that Steward was “way down the road with many different people.”
While Schrock maintained there is “billions of dollars of value” in the Steward system overall, he acknowledged that some hospitals were more profitable than others.
If a qualified buyer does not emerge for some hospitals, debtors may seek alternative methods of disposing of the facilities, including closure, according to the filings.
The impact of closures during bankruptcy could be far reaching, said Brad Beauvais, a professor of healthcare management at Texas State University who studies hospital bankruptcies.
“People would have to go further for care,” Beauvais said. “Hospitals can be cultural centers, where people go for everything… When those hospitals vanish — it's damaging.”
