Sign in Subscribe
Hospitals

Steward Health Care's Massachusetts Hospitals Sold to New Operators under $343 Million Deal

Strategic Insights

— 1 min read

A landmark deal was reached this week in bankruptcy court, where six of Steward's Massachusetts hospitals will be operated by new entities under a $343 million agreement. This comes after two Steward-owned hospitals in the state closed last weekend and the sale of its doctors group was announced. Critics argue that this situation highlights the risks of private equity involvement in healthcare and the potential uncertainty of sale-leaseback deals.

Key Takeaways:

  • The sale of six Massachusetts hospitals to new operators is valued at $343 million, a significant drop from the lease base of $1.67 billion.
  • The assessed value of the six hospitals in 2024 was over $400 million, indicating that the market valued them at even lower rates than the government did.
  • MPT, the real estate investment trust that owns the hospitals' real estate, argued that the gap between valuations is due to the unique characteristics of each property.
  • Steward's former private equity owner, Cerberus, is accused of saddling the health system with inflated and burdensome rent responsibilities, leading to financial difficulties.
  • Insiders argue that better deals may have been available, casting doubt on the approved sales and their reflection of market value.
  • U.S. bankruptcy court Judge Christopher Lopez stated that the approved sales are "the best deal that's on the table."
  • MPT has approximately $2.3 billion in real estate up for re-leasing or sale as part of the ongoing bankruptcy process.

Statistics:

  • Lease base for the eight Massachusetts hospitals: $1.67 billion
  • Deal for six of the hospitals: $343 million
  • Assessed value of the six hospitals in 2024: over $400 million
  • Total value of real estate up for re-leasing or sale by MPT: $2.3 billion

Sources:

  • Axios research of court documents and local property assessment records
  • BBC: "Steward Health Care's Massachusetts hospitals sold to new operators"
  • Reuters: "Bankrupt Steward Health approved to sell six Massachusetts hospitals at a loss"
  • Medical Properties Trust: "Second Quarter 2024 Earnings Release"
  • Memorandum from Medical Properties Trust regarding Steward's financial situation

Read more