Steward Health Care: A New Contender — John G. Baresky
Largest Private For-Profit Health System In The United States…
At the close of September 2017, Steward Health Care announced it had completed another hospital/health system acquisition and this one has particular significance. Its buyout of IASIS Healthcare now makes it the largest private for-profit health system in the United States. Based in Boston, Massachusetts, it picked up Franklin, Tennessee-based IASIS Healthcare for about $1.9 billion dollars. The deal was originally announced in May 2017 and is now completed.
…Owned by Cerberus Capital Management, Steward Health is expected to generate $8 billion in revenue annually…
…Founded in 1992 and based in New York City, Cereberus is one of the world’s leading private investment firms with over $30 billion in managed assets…
Expansive Organizational Reach…
Deals of this magnitude cumulatively impact the national healthcare provider landscape. Steward gains 18 hospitals primarily in the south/southwest; Arizona, Arkansas, Colorado, Louisiana and Texas. They are now the operator of 36 hospitals distributed across 10 states. It also gets ownership of a managed care business operating in Utah, Arizona and Massachusetts. The IASIS Healthcare acquisition immediately follows other Steward Health deals involving the purchase of 8 hospitals in Florida, Ohio and Pennsylvania. Steward Health has scaled up quickly to gain a new level of competitive respect and fortified its market presence.
Besides hospitals, Steward operates 26 urgent care centers, 42 preferred skilled nursing facilities (SNFs) and offers behavioral healthcare services. Overall, it manages about 7,300 beds and over 1.1 million covered lives through its managed care/health insurance business units. When combined with 36 hospitals, Steward Health Care employs approximately 37,000 persons and has clearly come a long way since 2010; it has become a true contender in the ranks of leading health systems.
Steward Health will now be competing against a variety of new and established health systems across its marketplace coverage. The IASIS acquisition takes them further west than they have ever been. Their organizational size will provide them additional negotiating leverage against health insurers, group purchasing organizations and healthcare product manufacturers. For healthcare product manufacturers or service providers, Steward has much greater prominence in their business and marketing plans as the expanded entity represents enormous sales opportunities.
There is a great deal of M&A activity in the hospital/health system sector across the country. Tenant Health has been divesting some of its hospitals and numerous organizations including Ascension, HCA, OCF Healthcare, Paladin, SSM Health, UPenn and UPMC have been seeking to expand their hospital/health system holdings. Some M&A deals have been scuttled due to regulatory decisions but they have not been enough to blunt the overall trend.
In addition to acquisition activities, a number of health systems have merged such as Baptist Memorial and Baptist Mississippi, Geisinger Health System and Jersey Shore Hospital, Greenview Health and Palmetto Health plus a tri-combination merger of Cooper University Health Care, Lourdes Health and St. Francis Medical Center. Venture capital and private equity continue to expand their presence in multiple sectors of the healthcare sector. Based on the ongoing hospital/health system M&A activity that shows no sign of slowing down, it can be presumed Steward Health will maintain its M&A momentum as the wave of consolidation continues.
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Hi, my name is John Baresky ( pronounced “ buh — ress — key “) and I have over 25 years of experience in healthcare.
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