WellStar Health System announced it will acquire five Tenet Healthcare Corp. hospitals in a deal valued at $661 million.
The deal, which is expected to close by the end of March, would expand Marietta, Ga.-based WellStar's geographic reach into Atlanta and add two trauma centers and 26 physician clinics to the system's operations. WellStar will borrow to finance the cost of acquisition, which includes a sale price of $575 million and the assumption of $86 million in debt, the system's CEO, Candice Saunders, said.
For Tenet, the proposed sale is the latest in a string of deals as the company evaluates where the company can and can't build integrated delivery networks.
Tenet hospitals were scattered around Atlanta, and the system did not see an opportunity there to expand beyond its single-digit market share, Tenet Senior Vice President Trip Pilgrim said. “We look for opportunities or paths to achieve reasonable scale,” Pilgrim said.
For WellStar, the deal will deliver the growth the system failed to achieve when it broke off talks this summer to merge with Emory Healthcare. The not-for-profit system, which ended last year with $1.8 billion in revenue, would double the number of its hospitals to 10 with the acquisition.
WellStar is seeking growth to expand the reach of its population health programs, which includes the launch of a clinically integrated network this year, Saunders said. The system will extend its clinical and quality improvement programs to the newly acquired hospitals and clinics.
The system also plans to acquire West Georgia Health in LaGrange.
The Tenet deal includes the two-campus Atlanta Medical Center; North Fulton Hospital in Roswell; Spalding Regional Hospital in Griffin; and Sylvan Grove Hospital in Jackson.
Executives from the Tenet-owned hospitals and WellStar have yet to evaluate how their combined services might overlap, Saunders said. However, Atlanta Medical Center would bring a Level 1 trauma center to WellStar and North Fulton Hospital would give the system a second Level 2 trauma center. “We'll learn further as we sit down with the clinical leaders,” she said.
Tenet has divested other hospitals in markets where the company did not see a chance to grow. In November the company said it would sell two hospitals and 19 physician groups in North Carolina to Duke LifePoint. In June, Tenet divested St. Louis University Hospital to SSM Health. Tenet has entered joint ventures to expand in other markets, such as one with Ascension Health and Dignity Health in Tucson, Ariz.
