The health system is forced to go back to the drawing board as it attempts to dig its way out of financial trouble.
Optum is backing out of its pursuit of Steward Health Care’s physician group, according to the Massachusetts Health Policy Commission (HCP).
The development is a blow to Steward’s efforts to financially recover through restructuring after filing for bankruptcy, leaving the beleaguered company without a clear buyer for its assets.
Steward revealed its plan to sell Stewardship Health to UnitedHealth Group-owned Optum in March by filing documents with Massachusetts regulators. However, the HCP said Optum is no longer working to finalize the agreement, which had faced scrutiny from state and federal lawmakers for being anticompetitive.
Optum is already the largest employer of physicians in the country and Steward told WBUR that a “challenging” review process at the federal Department of Justice kept the deal from moving forward.
The company stated it will continue to search for buyers.
"Stewardship Health remains a valuable asset that provides excellent care for its patients; there are multiple other parties that remain interested in acquiring the business and Steward is in active negotiations," Steward said in a statement to WBUR.
Despite claiming its assets as valuable, Steward last week pushed back deadlines for bidding on its assets, including its physician group and about half of its 31 hospitals.
In May, Steward filed for Chapter 11 bankruptcy and put all of its hospitals up for sale to pay back over $9 billion in total liabilities. Of that, $6.6 billion are long-term rent obligations, $1.2 billion are loans, almost $1 billion are unpaid vendor bills, and $290 million are unpaid wages and benefits, according to court documents.
Steward had said it finalized debtor-in-possession financing from Medical Properties Trust for initial funding of $75 million and up to an additional $225 million upon the satisfaction of certain conditions.
The health system was hoping to keep its hospitals open as the bankruptcy process plays out, but it’s unclear how the disintegration of the sale of Stewardship to Optum will affect its plans.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Steward Health Care’s sale of its physician group, Stewardship Health, has fallen apart due to UnitedHealth Group’s Optum walking away from the deal.
The transaction was a key step in Steward’s restructuring plans after filing for Chapter 11 bankruptcy in May, when it put all its hospitals on the market.
A challenging review process of the deal, which faced antitrust backlash, was the reason for Optum backing out.