Dignity Health would invest $30 million in cash and take a minority stake in a proposed Arizona joint venture with Tenet Healthcare Corp. and Ascension Health, according to a bond offering by Dignity.
The deal, first unveiled in July, has not yet closed. Tenet Healthcare, Dallas, will hold 60% ownership in the joint venture, which would operate Carondelet Health Network, Tucson, a poorly performing subsidiary of Ascension Health, St. Louis.
Dignity Health, San Francisco, and Ascension Health would each hold 20% ownership, according to the bond filing, revealing for the first time publicly what the ownership split of the new venture will be.
The deal will bring together three giant health systems with distinctly different ownership models but a similar penchant for the type of recent dealmaking that has united unlikely partners and further consolidated the industry.
Tenet Healthcare is a for-profit hospital giant that acquired Vanguard Health Systems, Nashville, for $4.3 billion roughly a year ago. Ascension Health is the largest not-for-profit Catholic health system and has recently entered into multiple deals that expand its reach and increase its market clout. Dignity Health, formerly Catholic Healthcare West, split from its exclusively Catholic identity in 2012. The move was followed by an acquisition of the for-profit urgent-care operator U.S. HealthWorks.
The proposed joint venture's asset, Carondelet Health Network, includes three hospitals, two medical groups and other assets. Moody's Investors Service in June described the regional system as underperforming with a negative operating cash flow. Analysts have looked favorably on the potential deal, which was one among several by Ascension Health that “demonstrates an ability and willingness to actively manage the system's portfolio of hospitals,” Moody's said in an Ascension ratings report.
Follow Melanie Evans on Twitter: @MHmevans
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