A Connecticut-based private equity firm is set to divest a network of mental health centers and sober-living facilities through a novel transaction utilizing municipal bonds. This marks an unconventional approach to financing the sale of healthcare assets, typically seen in different market segments.

The deal, orchestrated by Oak Street Capital, involves selling the operations of Saratoga Community Services, a provider focused on behavioral health and substance abuse treatment. Saratoga operates numerous facilities across multiple states, offering a range of services from outpatient therapy to residential care.

Municipal bonds, traditionally used to fund public infrastructure projects like schools and highways, are now being employed to finance the acquisition of these private healthcare assets. This strategy could signal a new avenue for private equity firms looking to exit investments in the healthcare sector while potentially offering tax advantages to investors in the municipal bond market. The specifics of the bond offering and its implications for the future of mental healthcare financing are still unfolding.