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January 08, 2017 11:00 PM

Tenet is selling more noncore hospitals

Dave Barkholz
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    tenet Health
    AP

    Tenet's Dallas headquarters

    SAN FRANCISCO—Tenet Healthcare Corp. is trying to sell multiple hospitals and its home health and hospice business, CEO Trevor Fetter told an audience Monday at the J.P. Morgan Healthcare Conference.

    The Dallas-based system intends to focus its capital and management resources on ambulatory care and hub markets where it has first- and second-place market share or a strong, profitable niche.

    Fetter said Tenet has letters of intent to sell “multiple hospitals” as well as for its home health and hospice business.

    Tenet joins Franklin, Tenn.-based Community Health Systems as another of the investor-owned hospital companies selling rather than buying hospitals. Like CHS, some of the proceeds would be used to pay down debt, though Tenet is not in a rush to sell.

    Fetter said he couldn't estimate what prices divested hospitals and the home health business might bring until the deals reach definitive agreements.

    Last year, Tenet sold its five hospitals in the Atlanta market to WellStar Health System for $661 million.

    Tenet also is getting out of the health plan business, a disclosure previously announced. The rationale is the same as the noncore hospitals being sold–Tenet believes it can get a better return in some of its key markets, which include San Antonio, Detroit and South Florida among others.

    The company is signaling its bullishness on ambulatory care by rapidly buying out the unowned share of ambulatory surgery giant United Surgical Partners International, a company that it agreed to buy for about $425 million from Welsh, Carson, Anderson & Stowe in early 2015.

    Tenet has increased its ownership to more than 55% today from a bare majority in 2015. That will jump to 69% this year and 81% in 2018.

    Ambulatory volumes are expected to grow at 5% to 6% this year, Fetter said in a breakout session after the company's presentation. That is twice the organic growth of hospital volumes, he said.

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