Tenet Healthcare will sell two of its Memphis area hospitals to Methodist Le Bonheur Healthcare, the providers announced Friday.
The agreement includes Saint Francis Hospital–Memphis and Saint Francis Hospital–Bartlett, their associated physician practices and six MedPost urgent care centers. As part of the agreement, Memphis-based Methodist Le Bonheur has agreed to continue to use Conifer Health Solutions as its revenue-cycle management provider after the deal closes.
Methodist Le Bonheur CEO Michael Ugwueke said in a statement that the purchase will increase access and improve the overall health of the communities it serves.
"We look forward to creating a more dynamic team of physicians, nurses and staff dedicated to delivering compassionate high-quality care to anyone who walks through our doors, regardless of their ability to pay," Ugwueke said.
The parties said they expect the deal to close in 2020, pending regulatory approvals and closing conditions. Financial terms were not disclosed.
Data from Modern Healthcare Metrics show the Memphis hospital has struggled financially in recent years, while profit is soaring at the Bartlett hospital.
Saint Francis Hospital – Memphis reported a 2.7% negative operating margin last year, having lost $7 million on $259 million in operating revenue. That's after posting a razor-thin margin in 2017. Before that, the hospital's margin had been relatively stable since at least 2014.
Saint Francis Hospital – Bartlett boasted a nearly 16% operating margin in 2018, having generated nearly $22 million in operating income on $138 million in total operating revenue last year. The hospital's operating margin has been in that range since at least 2014.
Dallas-based Tenet currently operates 65 hospitals and about 500 other healthcare facilities. It has been divesting hospitals in an effort to pay down its long-term debt, which stood at $14.9 billion as of Sept. 30.
The for-profit company, which generated $18.3 billion in revenue in 2018, announced in July it would spin off Conifer into a separate, publicly-traded company after 18 months of fielding underwhelming offers to purchase the revenue-cycle subsidiary. At the time, Tenet's CEO said the company rejected terms proposed by would-be buyers that would have guaranteed Tenet's divested hospitals continued to use Conifer or, if not, that Tenet pay buyers for their revenue-cycle management through the duration of the contracts.