It has been a busy and successful two months of deal-making for Steward Health Care, a physician-owned hospital system based in Dallas.
In the most recent deal, announced this week, Steward will sell the operations of five hospitals in Utah to Nashville, Tenn.-based HCA Healthcare. In the last few months, Steward also has seen success with entering into sale-leaseback transactions with real estate investor Medical Properties Trust.
Becker's caught up with Sanjay Shetty, MD, president of Steward North America, to discuss how the funds from its most recent deal with HCA will be used and the strategy behind its partnership with Medical Properties Trust.
Proceeds from the deal
Steward plans to use the proceeds from the HCA deal to expand its ACO, Steward National Care Network, especially in states like Florida and Texas, Dr. Shetty explained.
"As a physician-led company, it's particularly important to us, being able to push a model forward that we think is absolutely necessary for the country," Dr. Shetty said.
Specific investments will include bolstering its physician network so it has a broad base of providers to serve its growing population, ensuring it has more access points for patients and embarking on facility improvements.
Dr. Shetty said the expansion of its ACO model is a very exciting opportunity, especially given the recent performance in CMS' shared savings program. ACOs in the shared savings program work together to coordinate care of Medicare beneficiaries, ensuring they receive the right care at the right time while preventing duplication of services and medical errors.
In data updated Aug. 25 for CMS' shared savings program, Steward National Care Network ranked first in membership, tied for first in quality and earned the second highest shared savings payout of 513 participants.
"We did this on a national footprint … and do this in incredibly diverse communities across the country. That's a pretty special success," Dr. Shetty said. "I'm so proud of the team that has done it. They were able to deliver 100 percent quality results, it's truly stunning."
Working with Medical Properties Trust
In the last few months, Steward's partnership with Medical Properties Trust has grown. In particular, Steward purchased five Florida hospitals from Dallas-based Tenet Healthcare in August for $1.1 billion. After the deal closed, Medical Properties Trust bought the real estate of the facilities acquired by Steward for nearly $900 million and entered into the sale-leaseback transaction.
Additionally, Medical Properties Trust agreed to sell a 50 percent stake in a portfolio of eight Massachusetts hospitals owned by Steward to Macquarie Infrastructure Partners V LP, an infrastructure investment fund managed by Macquarie Asset Management. Steward will remain the operator of the eight hospitals and pay lease payments to the new joint venture.
Dr. Shetty said entering the sale-leaseback transactions has been beneficial to Steward because it allows the organization to focus on what it does best: operations and caring for patients.
"Medical Properties Trust has been a terrific partner to Steward for many years," Dr. Shetty said. "The sale-leaseback model works not just for Steward, but it's proven throughout the industry. It has allowed us to focus on what we do best: operations, clinical care, managing populations and managing high-quality facilities. Medical Properties Trust focuses on its core strength, the property itself."
Dr. Shetty said the deals with Medical Properties Trust have also been a "vehicle of growth for the company."
Read more about Steward's recent deals here.