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CommonSpirit unlikely to pursue Steward's Arizona assets

Daniel Morrisette, CFO of Chicago-based CommonSpirit, said he doesn't expect the health system to purchase Dallas-based Steward Health Care's Arizona assets, but said they are evaluating potential opportunities. 

"There are opportunities that occur in many of our markets and Arizona is one of our most important markets and one that we are putting in as much time and resources as possible," Mr. Morrisette said on the health system's May 23 call. "I do not anticipate us purchasing the Steward assets there, but we do look at these opportunities on a consistent basis."

The question was posed by an investor. Steward placed its 31 U.S. hospitals up for purchase after the health system filed for Chapter 11 bankruptcy protection in early May. The for-profit system owns four hospitals in Arizona. 

"Our focus really is on what will help our market succeed and bolster market position," Lisa Zuckerman, CommonSpirit's senior vice president of treasury, capital planning and strategic investments, said on the call. "That and EBITDA are really the lens with which we would look at potential opportunities, so a lot of those probably would not make the bar. But we will see."

Mr. Morissette said that Steward's landlord, Medical Properties Trust, had sold at least 25% of Steward's Utah assets to a third party. There are other assets that MPT has in Arizona that he said CommonSpirit is "certainly evaluating if it makes sense for us to acquire them rather than continue with our lease payments."

"We have made no commitments yet," he said. "What we're talking about now is a significant dollar amount, but it's not as material as the Utah assets would have been. We are looking at it, considering it and at the right price would be interested in it if it's in our strategic interest – particularly in Arizona."  

In court documents filed May 15 in the U.S. Bankruptcy Court for the Southern District of Texas, Steward set a bid deadline for all of its hospitals, excluding the facilities in Florida, for June 24. The auction date for the "first round hospitals" is June 27 and the sale hearing is set for July 2.

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