Dignity, Tenet, Ascension detail Arizona Carondelet deal

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, unveiled in July, has not yet closed. Dallas-based Tenet will hold 60% ownership in the venture, which would operate Carondelet Health Network, Tucson, Ariz., a poorly performing subsidiary of Ascension Health, St. Louis.

Dignity Health, San Francisco, and Ascension would each hold 20% ownership, according to the bond filing, revealing for the first time publicly what the ownership split 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.

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 proposed deal, which was one among several by Ascension that “demonstrates an ability and willingness to actively manage the system's portfolio of hospitals,” Moody's said in an Ascension ratings report.

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