Nashville-based Ardent Health Services and Plano, Texas-based LHP Hospital Group have agreed to merge, the companies announced Wednesday.
The combined system would create the second-largest privately owned, for-profit hospital system in the country by revenue, with 19 hospitals in six states and $3 billion in revenue, the companies said in a joint statement. The system would own 3,200 beds and employ about 18,000 employees, including more than 475 physicians.
Terms of the deal were not disclosed. Ardent leaders say they are not worried the size of the merger will raise concerns for the Federal Trade Commission, which in the last year has aggressively fought large mergers between hospital systems. The agency recently won an appeal to halt Penn State Hershey (Pa.) Medical Center's deal with PinnacleHealth System.
Ardent President and CEO David T. Vandewater said there is no overlap in the markets served by Ardent and LHP and he expects an expedited regulatory approval for the merger, perhaps in as little as two weeks.
Ardent Health operates 14 hospitals in New Mexico, Oklahoma and Texas. Chicago-based real estate investment trust Ventas and Equity Group Investments paid $1.75 billion in August 2015 to buy it from its private equity owner Welsh, Carson, Anderson & Stowe. That deal provided Ardent with access to the cash it needed to acquire more hospitals and expand to new markets.
Ardent said it expects to fund the LHP deal through secured debt financing, as well as equity capital provided principally by an Equity Group Investments affiliate. Ventas has committed to secured debt financing, according to the statement.
LHP owns five hospitals through joint ventures in Florida, Idaho, New Jersey and Texas.
The hospitals are: Panama City, Fla.-based Bay Medical Center; Montclair, N.J.-based HUMC Mountainside; Westwood, N.J.-based HUMC at Pascack Valley; Pocatello, Idaho-based Portneuf Medical Center; and Seton Medical Center in Harker Heights, Texas.
According to the statement, Ardent, which will remain headquartered in Nashville, will assume LHP's management and operational responsibilities within each joint venture. Ardent management will lead the combined company with assistance from key LHP executives.
“This transaction dramatically enhances our scale, diversity and geographic reach—creating new synergies that better position us for future growth and investment in new and existing markets,” Vandewater said in the statement.
“LHP's decisions have always been driven by our commitment to advance our mission of restoring and enhancing the health of our patients,” LHPPpresident and CEO John Holland said in the statement. “We recognized we had a unique opportunity to accelerate that mission by joining forces with Ardent and tapping into their exceptional resources, skills, track record and reach.”