The new partnership Tenet Healthcare Corp. created with a not-for-profit healthcare system in Columbia/HCA Healthcare Corp.'s Nashville, Tenn., back yardcq may be copied in other markets where the investor-owned rivals compete.
Earlier this month, Santa Barbara, Calif.-based Tenet and Nashville's Baptist Hospital formed a joint venture designed to pursue managed-care contracts and develop physician practices and related outpatient services in Coffee, DeKalb and Wilson counties in Tennessee (Jan. 20, p. 4).
No hospital assets changed hands, but Tenet and Baptist contributed equally to the formation of the joint venture company, called Mid-Tennessee Partners.
"This is more of a development company that we are forming, and its initial focus is managed-care related," said Bill Bradley, senior vice president of Tenet's Little Rock, Ark.-based central states region. "We have been looking at similar joint ventures like these. As strategic needs and mutual interests exist, we'll be doing more."
Terms of the joint venture weren't disclosed, but Tenet executives said their company also purchased a "minority" stake in Health Net, a managed-care plan Baptist formed in 1984. Baptist remains the majority owner of Health Net, which has 340,000 enrollees.
The five hospitals involved in the joint venture are three Tenet facilities: University Medical Center in Lebanon, Harton Regional Medical Center in Tullahoma, and Medical Center of Manchester (Tenn.); and two Baptist facilities: Baptist Hospital in Nashville and Baptist DeKalb Hospital in Smithville.
Combined, these five hospitals have nearly $400 million in annual revenues, according to figures from the hospitals and HCIA, a Baltimore-based healthcare information company.
"This protects our market in the eastern corridor," said Calvin McKay, Baptist's executive vice president of corporate finance.
Tenet, second in size only to Columbia among investor-owned hospital chains, is finalizing a $3.1 billion merger with OrNda HealthCorp of Nashville. Once it completes that deal, the new Tenet will operate 126 hospitals in 22 states (Jan. 13, p. 6).
Tenet and OrNda will have special shareholder meetings this week in their respective home cities to approve their proposed merger.
Tenet's only other hospital in Tennessee is St. Francis Hospital in Memphis. Executives aren't ruling out expanding the joint venture, but "at this time, we're just focusing on middle Tennessee," Bradley said.
Although headquartered in Nashville, OrNda doesn't own any hospitals in Tennessee.
Meanwhile, Columbia executives say they aren't concerned about the Tenet-Baptist partnership.
"Their alignment doesn't change our strategy," said Cheryl Read, vice president of marketing and public relations for Columbia's Nashville division, which operates nine hospitals. "We will remain focused on the highest quality of care at the lowest costs."