Health care company owned by private equity firm buys Steward Health Care’s primary care practices

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A health care company will grow in size by purchasing what it called “one of the largest primary care provider organizations in the country.”

Rural Healthcare Group (RHG), based in Nashville, Tennessee, announced its intention to buy Steward Medical Group and Steward Health Care Network, which operates in nine states, according to a news release and the website of the organizations, together known as Stewardship. RHG describes itself as a primary care provider organization delivering health care to underserved communities in multiple states.

"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," RHG CEO Benson Sloan said in the news release.

"In many ways, RHG 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,” Sloan said. “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."

RHG’s announcement said that company “plans to make significant investments in Stewardship's infrastructure, which will allow providers to continue seeing patients in existing clinics across the Stewardship network.”

RHG is owned by Kinderhook Industries, LLC. The private investment firm said it invests in mid-sized health care businesses that serve the nation's most vulnerable populations.

“RHG's partnership will help keep health care local for patients, allowing them to continue to see providers that are familiar with their medical history,” the company’s announcement said.

Furthermore, the transaction will separate Steward Medical Group and Steward Health Care Network from Steward's hospital system. The clinics will transition from health system-owned to independent, an area of expertise for RHG, and ultimately a benefit to patients, according to the company’s announcement.

"We are excited for this partnership with RHG. Working together, we will improve the patient and provider experience while enhancing the overall quality of care," said Dr. Joseph Weinstein, President of Steward Medical Group and Steward Health Care Network.

Bankruptcy protection

While the deal may bring stability to primary care for some patients, it appeared legal wrangling will continue for Steward Health Care. The company operates with 5,148 health care providers in Arizona, Arkansas, Florida, Louisiana, Massachusetts, New Hampshire, Ohio, Pennsylvania and Texas, according to its website. Steward Medical Group operates more than 160 primary care locations, according to the website.

For months, the company has made national headlines for filing for Chapter 11 bankruptcy protection this year. While the company has tried to reassure patients and communities, elected leaders have called for reviews of Steward’s management practices and pounced on the situation as an example of private equity investors putting profits ahead of people when they buy assets related to health care.

On July 26, Steward Health Care announced it would close Carney Hospital in Dorchester, Massachusetts, and Nashoba Valley Medical Center in Ayer, Massachusetts. Mass.gov, the official website of commonwealth government, has a page devoted to the situation, including announcements of two public hearings about those closures, starting tonight.

The closures are scheduled for the end of August, and the announcement of the closures prompted Massachusetts Gov. Maura Healey to press Steward Health Care to follow a rule requiring 120 days’ notice before closing medical facilities there, according to an ABC News report.

In Washington, the Senate Committee on Health, Education, Labor & Pensions has authorized an investigation into the bankruptcy, and has approved a subpoena for Ralph de la Torre, MD, Steward chairman and CEO, to testify. Massachusetts Sen. Elizabeth Warren called it “a clear-cut case of private equity exploiting for-profit health care.”

“Investors looted the hospitals and got rich while nurses, doctors, and other workers tried to provide care, supplies ran out, and contractors walked away because they weren’t getting paid,” she said at a Senate hearing in Boston earlier this year. “Investors got rich while communities struggled with the reality that they might lose access to reliable health care.”

In Ohio, Sen. Sherrod Brown has issued letters to Steward demanding involvement by the U.S. Departments of Justice and Labor.

Steward’s words

“Once a collection of struggling hospitals in Massachusetts, Steward is the largest private, tax-paying hospital operator in the country,” said the steward.org website. The company, headquartered in Dallas, Texas, “owns and operates the largest private physician-owned for-profit health care network in the United States, said the bankruptcy case summary posted online by Kroll’s Restructuring Administration practice.

Steward Health Care has 31 hospitals across eight states, with 400 facility locations, 4,500 primary and specialty care physicians, 3,600 staffed beds and a total workforce of almost 30,000 people. The company provides care to more than 2 million patients a year, according to the bankruptcy summary.

“This Chapter 11 filing is intended to provide the company with the access to additional liquidity and protections it needs to maintain operations in the ordinary course and continue to serve patients without disruption,” said the bankruptcy summary. “It is Steward’s goal to resolve these issues as quickly as possible, with the help of the court, with a view to the long-term and sustainable financial health of the system.

“Steward’s hospitals, medical centers and physician’s offices are open and continuing to serve patients and the broader community,” the summary said.