Boston-based hospital operator Steward Health Care has agreed to acquire IASIS Healthcare in another move to expand its reach beyond Massachusetts.
The companies said the deal would make Steward the largest private for-profit hospital operator in the U.S. with 36 hospitals across 10 states, managed care operations in Arizona, Utah and Massachusetts, and projected revenues of almost $8 billion in 2018.
Steward currently operates 18 hospitals in Massachusetts, Ohio, Florida and Pennsylvania, while IASIS operates 17 hospitals and one behavioral health hospital in Utah, Arizona, Colorado, Texas, Arkansas and Louisiana.
Terms of the deal were not disclosed but Bloomberg and The Wall Street Journal valued the deal at about $2 billion. The merged company will include nearly 40,000 employees and a network of 5,600 doctors.
“We have come from a struggling collection of disparate hospitals to become one of the most influential health care operators in the country,” Dr. Ralph de la Torre, chief executive of Steward, told employees in a memo.
Steward, which is backed by private equity firm Cerberus Capital Management, entered the Massachusetts health care market in 2010 when it bought the financially-distressed Caritas hospitals formerly run by the Archdiocese of Boston.
As The Boston Globe reports, the company “has been building on a model of accountable care, a system under which doctors and hospitals earn more when they stay under budget and meet certain quality scores for patient health.”
To held fund a national expansion, Steward last year sold its hospital buildings to a real estate investment firm, Medical Properties Trust (MPT) for $1.25 billion. In February, it agreed to buy eight hospitals from Community Health System for $304 million.
“Our model shows how the industry can successfully shift toward a more cost-effective local, coordinated approach that puts patients first,” de la Torre said.
Separately, MPT will acquire the real estate of 10 of IASIS’s hospitals and its behavioral health facility for $1.4 billion, subject to long-term leases and loans with Steward.