Baptist Health System and Tenet Healthcare Corp. have signed a definitive agreement to form a joint venture that will operate a healthcare network serving Birmingham and central Alabama. Under the arrangement, Tenet will be the majority partner and will manage the network's operations.
The deal is part of a broad effort by Tenet to form networks with other providers that allow the company to expand its use of value-based insurance contracts.
The new company will unite Birmingham-based Baptist Health System's four hospitals—Citizens Baptist Medical Center, Talladega; Princeton Baptist Medical Center, Birmingham; Shelby Baptist Medical Center, Alabaster; and Walker Baptist Medical Center, Jasper—with Tenet's Brookwood Medical Center in Birmingham. Together, the new system will have 77 outpatient and physician office facilities, including clinics delivering primary and specialty care; 7,300 employees; and 1,500 affiliated physicians.
The systems announced they were exploring an agreement last December, and the transaction is expected to be completed in the third quarter of 2015.
“We are excited about joining with Tenet to provide high-quality healthcare to communities across central Alabama,” said Keith Parrott, CEO of Baptist Health System, in a news release. Parrott will become CEO of the joint venture, which will be overseen by a board made up of five representatives each from Baptist and Tenet.
Baptist Health saw its net patient revenue increase 1.6% in 2014 over the prior year, and its total revenue rose 2.2% to $565.8 million in 2014. The system also saw its charity care fall 10.9% to $130.8 million in 2014 from 2013.
Tenet has experienced a revenue boom in 2014. The Dallas-based system saw its net patient revenue increase 49.7% over 2013, to $16.6 billion.
Tenet has another joint venture deal pending in Arizona that would give the company a stake in Ascension Health's Carondelet Health Network, based in Tucson. And under a joint venture in north Texas, Tenet will operate five hospitals with Baylor Scott & White Health, based in Dallas.
Tenet also has other deals in the works, including an agreement to sell St. Louis University Hospital to SSM Health and a transaction that would give it a majority stake in United Surgical Partners, a large operator of ambulatory surgery centers.