SSM Health, a growing four-state health system, will expand its operations in St. Louis in a proposed deal with St. Louis University.
SSM, based in St. Louis, would acquire 356-bed St. Louis University Hospital under the deal, and St. Louis University would become a minority owner in SSM's St. Louis operations.
But first, Tenet Healthcare Corp. must sell the hospital back to the university. The Dallas-based hospital chain announced plans to do so last week. Terms of the planned transactions were not disclosed.
Tenet acquired the teaching hospital in 1998. Its sale would leave the investor-owned company with one hospital in the St. Louis market. SSM will operate nine St. Louis-area hospitals after the deal closes.
SSM Health is No. 2 in market share in the St. Louis area behind BJC HealthCare. BJC had 34% of hospital discharges in the area in 2014 and SSM had 21%, according to documents BJC filed this year for potential bondholders.
The acquisition by SSM “gives them strategic advantages that Tenet could not extract from this one particular asset,” said Walt Mayo, an analyst for R.W. Baird. “Tenet is refocusing its strategy, and part of that means getting out of sub-scale markets.” Tenet's remaining St. Louis-area facility, Des Peres Hospital, is in a suburb with favorable insurance coverage, Mayo said.