Steward Health Care will pay Tenet Healthcare Corp. $1.1 billion for five of its Florida hospitals, the Dallas-based for-profit health systems announced late Wednesday.
Steward will acquire Coral Gables Hospital, Florida Medical Center, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital. As part of the agreement, Steward will still use Tenet's Conifer Health Solutions subsidiary for the hospitals' revenue cycle management and Tenet's United Surgical Partners International will continue to operate the associated ambulatory facilities.
"As community anchors, our five hospitals in the Miami-Dade and Southern Broward counties have earned the trust of patients and physicians alike," Tenet CEO Ron Rittenmeyer said in prepared remarks. "We are pleased they will become part of Steward Health Care as the Company's first South Florida network, and we are confident they will continue to thrive."
Steward will continue to employ all current hospital workers and physicians in good standing, executives said. Steward currently has three hospitals in Florida. After this sale, Tenet will have five remaining hospitals in the state.
Dr. Sanjay Shetty, president of Steward North American, will direct the hospitals' operations when the transaction is expected to close in the third quarter of this year, subject to regulatory approvals and customary closing conditions.
"We are looking forward to focusing on investments in infrastructure and new technology, as well as growing the physician network to make it even easier for patients and healthcare professionals to access and provide the care they deserve," Shetty said in prepared remarks.
Tenet continues to shift its focus from the inpatient sector to its outpatient business, which is positioned to account for about half of Tenet's annual revenue.
Tenet reported $399 million in net income to shareholders in 2020, up from a $215 million net loss in 2019. It was buoyed by federal grants as well as sicker patients. In February, Tenet postponed the spin-off of its revenue cycle subsidiary by a year, citing delays related to the COVID-19 pandemic.
The five hospitals included in the sale posted operating margins spanning negative 5.5% to 8.2% in 2019, according to Medicare cost reports gathered by HMP Metrics.
"We're shifting the enterprise portfolio where our hospital business is not the primary driver, and is effectively balanced with the robust and growing ambulatory platform that provides a unique and productive partnership in patient services," Rittenmeyer said during a presentation at the J.P Morgan Healthcare Conference in January.
The physician-owned Steward does not disclose its financial data. It would operate 44 hospitals if the deal goes through.