Sale of 3 Arizona hospitals is finalized

A few weeks after taking control of the daily operations of three Steward Health Care hospitals in Arizona, HonorHealth now has taken ownership of the facilities.

HonorHealth has acquired three Arizona hospitals from Steward Health Care.

HonorHealth has acquired three hospitals and a host of physician practices from Steward, which filed for bankruptcy in the spring and has been selling its properties.

A nonprofit system, HonorHealth received court approval to take over the properties last month and assumed full ownership last week.

With the deal, HonorHealth now owns Mountain Vista Medical Center, St. Luke’s Hospital in Tempe and Florence Hospital in Florence. HonorHealth also acquired Mesa Emergency Center and several other outpatient facilities. The facilities now carry the HonorHealth brand.

Todd LaPorte, CEO of HonorHealth, said in a statement last month that the system welcomes the chance to add the hospitals and other sites to the organization.

“As a trusted healthcare provider and community partner, HonorHealth has a strong track record of patient safety and experience, clinical excellence, and top tier employee and physician engagement,” LaPorte said. “HonorHealth continues to invest in responsible healthcare development where there is a proven need, and we believe assuming operations of these existing facilities is an effective way to optimize our resources.”

With the deal, HonorHealth now operates a total of nine hospitals, including six hospitals in Phoenix and Scottsdale.

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HonorHealth has solid financial performance and a stable outlook from Fitch Ratings, according to a May 2024 report. The health system should see improved margins due to an uptick in patient volume and a favorable mix of payers, Fitch says. HonorHealth holds about 33% of the inpatient market of fast-growing Maricopa County, which includes Phoenix, even as it competes with Banner Health and CommonSpirit Health in the region.

“Fitch expects HonorHealth's strategic initiatives including its focus on safety and quality care, workforce recruitment, development and retention efforts, and expanding its ambulatory presence in target areas will continue to improve margins through 2024 and beyond,” Fitch says.

Arizona Gov. Katie Hobbs was anxious to see new ownership of the Steward hospitals in the state. She welcomed the federal bankruptcy court’s approval of HonorHealth taking over the facilities last month.

“Arizonans' access to high quality and affordable healthcare must not come at the expense of corporate greed and mismanagement,” Hobbs said in a statement. “I have been working tirelessly to protect vulnerable Arizonans and ensure any agreement reached prioritized the health and safety of patients who were failed by Steward Health Care. It was well past time that Steward Health Care stepped aside and for a qualified healthcare provider to assume operations of these facilities without further delay.”

A for-profit system based in Dallas, Texas, Steward filed for bankruptcy in May and has been working to sell its 31 hospitals.

The sale of Steward’s hospitals helped drive the number of mergers in the third quarter to the highest level in the last seven years, according to Kaufman Hall. Steward sales accounted for 11 of the 27 deals in the third quarter. In late August, Steward reached a deal with its landlord, Medical Properties Trust, to help move its hospitals to new ownership and ensure most of the hospitals will survive.

Steward has sold six hospitals in Massachusetts, but the system closed two Massachusetts hospitals after it said a buyer couldn’t be found.

Orlando Health reached a deal to buy three of Steward’s hospitals along Florida’s “Space Coast.” Insight Health Systems, based in Flint, Mich., struck a deal to acquire two Steward hospitals in Ohio that were slated to close.

Steward has angered elected officials in other states over its management of the hospitals. Massachusetts Gov. Maura Healey pushed Steward to transfer ownership of the facilities months before the hospitals were sold.

Members of Congress have hammered Steward’s management of its facilities and denounced private equity ownership of hospitals.