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October 23, 2017 01:00 AM

Dignity Health, Select Medical to combine urgent-care businesses

Alex Kacik
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    Dignity Health and Select Medical will combine their urgent-care businesses to better align care delivery, executives said in a news release Monday.

    Dignity will merge its urgent-care and occupational medicine subsidiary U.S. HealthWorks with Select Medical's Concentra Group Holdings. Dignity will own a 20% equity interest in the combined entity, valued at $238 million, and receive the remainder of the undisclosed purchase price in cash when the deal is expected to close in the first quarter of next year, pending the customary regulatory reviews.

    Concentra will redeem outstanding equity interests from the existing minority equity holders including Welsh, Carson, Anderson & Stowe and Cressey & Co. to retain a majority voting interest in the merged business. Concentra will acquire all issued and outstanding shares of U.S. HealthWorks' stock from Dignity.

    "Caring for America's workforce creates a healthier population which means more productivity for business, a stronger economy and connected communities," Dignity Chief Financial Officer Daniel Morissette said in a statement. "Combining the two organizations will strengthen the delivery of clinical care, standardize best practices and improve service for employers and employees."

    Providers have looked to bolster their urgent-care businesses as new payment models push for more care delivery outside of hospitals.

    San Francisco-based Dignity Health is one of the nation's largest not-for-profit providers with more than 400 care centers, including 39 hospitals and a number of urgent- and occupational-care centers, imaging and surgery centers, home health, and primary-care clinics in 22 states through its network of more than 9,000 physicians and 63,000 employees. Its subsidiary U.S. HealthWorks operates about 250 medical and on-site clinics in 21 states.

    Select Medical is one of the largest specialty hospital and outpatient rehabilitation clinic operators with 102 long-term acute-care hospitals and 21 acute rehab hospitals in 28 states and 1,608 outpatient rehabilitation clinics in 37 states and the District of Columbia. Select Medical's Concentra operates 315 occupational health centers in 38 states.

    The deal will build upon Select Medical and Dignity's joint venture, formed earlier this year, to build and manage a 60-bed acute inpatient rehabilitation hospital in the Las Vegas area, expected to open in 2019. That agreement also includes joint operation of 12 outpatient rehabilitation clinics around Vegas.

    Dignity is still pursuing a merger with Catholic Health Initiatives to create the nation's largest not-for-profit hospital company by revenue, with combined annual revenue of around $28 billion and 142 hospitals, Morissette said in an Oct. 13 call with investors. The deal, which was announced about a year ago, has been drawn out largely due to the complexity of combining two large organizations, executives said.

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