Orlando Health has made an offer to buy bankrupt Steward Health Care’s “Space Coast” Florida properties for $439 million, according to a court document filed Wednesday.
The qualified, binding purchase agreement includes Rockledge Regional Medical Center and Melbourne Regional Medical Center, both in Brevard County, and Sebastian River Medical Center in Indian River County. The deal also includes some of Steward’s medical clinics in those areas.
According to the document, Steward designated Orlando Health a “stalking horse bidder,” which is the first to negotiate a purchase agreement with a debtor in bankruptcy. The bidder sets a minimum price and protects the debtor from low bids.
The bid will be subject to higher bids received by Aug. 26. A bankruptcy court-approved auction, if necessary, would be Aug. 29. A sale hearing, which had been postponed from an earlier date, is scheduled for Sept. 10.
"We look forward to reviewing any additional bids that are received between now and August 26, and are encouraged by Orlando Health’s vote of confidence in our northern Florida operations," Steward president Mark Rich said in a news release.
The sales price could be adjusted based on a series of factors in the purchase agreement. The transaction is subject to bankruptcy court and regulatory approval, with closing expected by the end of the year.
Steward’s eight Florida hospitals are scheduled to be part of a second round of sales in its bankruptcy proceedings. Steward also owns Coral Gables Hospital, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital in Miami-Dade County; and Florida Medical Center in Broward.
Steward purchased the Brevard hospitals from Wuesthoff Health System and Sebastian River from Community Health Systems. Sebastian River completed an $80 million expansion in June 2020.
Orlando Health, a private, nonprofit chain with 17 hospitals in Florida, has been busy expanding its footprint. Last week, it entered into a $910 million deal to become a managing partner in Alabama’s Brookwood Baptist Health, which includes five hospitals and affiliated physician practices.
Dallas-based Steward Health, which filed for Chapter 11 in May, has been undergoing a lengthy and sometimes controversial process to shed assets in several states. The private, for-profit system has had a difficult time unloading many properties.
After months of uncertainty, Massachusetts Gov. Maura Healey unveiled a plan Friday to save five hospitals in that state operated by the bankrupt chain.
Healey said her administration would take control of St. Elizabeth’s Medical Center in Boston through eminent domain to facilitate the transition to a new owner. Tentative deals have been reached, she said, to sell the remaining Steward facilities to local nonprofit health care providers.
Healey said the state was using eminent domain because the property owner, Apollo Global Management, was holding up the deal.
Healey said the state would offer Apollo $4.5 million for St. Elizabeth's Medical Center, which she characterized as "fair market value," followed by an order to take the property.
Two other Steward facilities, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, are slated to close by the end of this month, after Steward said it didn’t receive any viable offers. The closures have drawn protests from health care workers and community members who worry patients will suffer from longer wait times and worse health outcomes.
Despite the outcry, Healey has declined to stop those closures, blaming Steward and saying the hospitals were in such poor condition that no other operator wanted them.
“It's because of Steward, and because of what Steward did in running them to the ground," she said.
Steward has postponed the court hearing for its Massachusetts hospital sales until Aug. 22.
Earlier this week, Steward announced a deal to sell its 5,000-doctor Stewardship physicians network to Nashville-based Rural Healthcare Group for a proposed $245 million. RHG is owned by the private-equity firm Kinderhook Industries.
That transaction is receiving strong criticism from state officials, including Sen. Elizabeth Warren, who wrote on X that Massachusetts is already losing two hospitals “because of private equity’s looting of Steward.”
Steward disclosed in court documents that it was in debt for more $9 billion, including $1.2 billion in loans, $6.6 billion in rent obligations, nearly $1 billion in unpaid bills and $290 million in unpaid wages and benefits.
Information from NPR affiliate WBUR in Boston was used in this report.
