Ascension Health, Dignity Health and Tenet Healthcare Corp. have reached a definitive agreement in a joint venture that would make Tenet the majority owner of the Carondelet Health Network in Arizona.
St. Louis-based Ascension and San Francisco-based Dignity, both not-for-profit systems, would each have a minority stake in the joint venture, which would be operated by Tenet, a publicly traded hospital company based in Dallas.
The Carondelet Health Network is a three-hospital subsidiary of Ascension, the nation's largest Catholic health system. Terms of the deal were not disclosed, but in bond documents released last October, Dignity Health said it would invest $30 million and Tenet would own 60% of the joint venture with the remaining interest evenly split between Dignity and Ascension.
The Tucson, Ariz.-based Carondelet system has had a negative operating cash flow and is one of Ascension's recent strategic divestitures. The system is seeking to shed unprofitable operations and beef up its presence in more favorable markets, according to analysts with Moody's Investors Service.
The jointly operated company would operate St. Joseph's Hospital and St. Mary's Hospital in Tucson, Holy Cross Hospital in Nogales, Ariz. and two medical groups. The Carondelet operations would be included in the Arizona Care Network, an accountable care organization formed by Tenet and Dignity Health.
The deal is expected to close before the end of September. The Diocese of Tucson reached an agreement that would “maintain Carondelet's Roman Catholic heritage and identity,” according to a news release announcing the definitive agreement. That will include continued adherence to the U.S. Conference of Catholic Bishops ethical and religious directives for Catholic healthcare.