Healthcare Business News

Ascension Health plans joint-venture with Dignity, Tenet to run Ariz. hospitals

By Beth Kutscher
Posted: July 22, 2014 - 5:00 pm ET

Ascension Health plans to transfer part of its ownership in the Carondelet Health Network in Arizona into a three-way joint venture that includes Tenet Healthcare Corp. and Dignity Health.

The three hospital groups Tuesday signed a letter of intent (PDF) to form a Tucson, Ariz.-based joint venture in which Tenet would hold a majority stake and Ascension would be a minority partner. Dignity Health also would hold an undisclosed interest in the joint venture, which would own and operate Carondelet.

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The partnership would also allow Carondelet's three hospitals to participate in accountable care organizations and other initiatives with Tenet and Dignity's hospitals in Southern Arizona.

Carondelet will retain its Catholic identity under the joint venture.

Tenet last year acquired five Phoenix-area hospitals as part of its takeover of Vanguard Health Systems. San Francisco-based Dignity has three hospitals in the Phoenix region.

The Carondelet Health System includes 449-bed St. Joseph's and 429-bed St. Mary's hospitals, both in Tucson, as well as 56-bed Holy Cross Hospital in Nogales, Ariz., the Carondelet Medical Group, the Carondelet Specialist Group and ancillary businesses.

Ascension did not break out revenue for the group in its most recent annual report. However, its utilization statistics (PDF) showed a 7.5% decline in acute discharges between 2012 and 2013 in Tucson and Nogales. Admissions across all of Ascension's hospitals increased 1.3% year-over-year.

The three parties are conducting due diligence, they said in a news release said. They did not disclose a timeline for a definitive agreement.

Ascension declined to comment. In February, the St. Louis, Mo.-based system dropped plans to sell its two-hospital Kansas City subsidiary, also known as Carondelet Health, to investor-owned HCA. The deal was abandoned after a prolonged Federal Trade Commission review.

Follow Beth Kutscher on Twitter: @MHbkutscher

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